Report summary:
Full caliber data: RevPAR recovery rate for the fourth quarter was in line with expectations, reaching 120% for the same period in 2019.
The 2023q4RevPAR for all Huazhu department stores was 229 yuan/ +43.8%, +20.0% compared with the same period in 2019; ADR was 284 yuan/ +18.3%, +22.5% compared to the same period in 2019; the occupancy rate was 80.5% /+14.3pct, compared to -1.7 pct in the same period in 2019. The fourth quarter was a low season, mainly driven by high ADR and OCC recovery. RevPAR maintained a high recovery rate. In October-December, the company's full-caliber RevPAR recovered to 120%/117%/123% in the same period in 2019, respectively. DH department stores: The 2023Q4 RevPAR for all DH department stores was €73/+1.3%/+10.6% compared to the same period in 2019, ADR was €115/-5.9%/+18.6% compared to the same period in 2019, and the occupancy rate was 63.8% /+4.5 pct/-4.2pct compared to the same period in 2019. The same period of 2022 was mainly affected by the hosting factors of the Soccer World Cup and the United Nations Climate Change Conference. ADR declined markedly from the previous year under the high base effect.
Same-store data: 2023q4RevPAR +41% YoY, business indicators continue to recover. Looking at the situation of 2023Q4 in a single quarter: DH has not yet been classified as a same-store caliber. Compared with 2022, 2023Q4 had 6539 Huazhu stores. The 2023Q4 single-season RevPAR was 230 yuan/ +40.8% (of which economy +34.5%/mid-to-high-end +44.2%), ADR was 283 yuan/ +16.7% (including economy +14.9%/mid-to-high-end +16.0%), and the occupancy rate was 81.2% /+13.9pct (of which economy +11.9 pct/mid-to-high-end +15.8pct).
Store opening situation: 2023Q4 opened a net of 237 stores, maintaining rapid store opening. Huazhu had a net opening of 235 stores in 2023Q4 (opening 460/225 stores), net increase of -24/259 economic/high-end stores, and net increase of -1/236 direct-operation/franchisee stores respectively; heavy brand Hanting/ full season net increase of 98/136, soft brand Eli Jingguan 157, continuous cleaning of low-quality stores and implementing a lean growth strategy; as of 2023Q4, there were 9263 Huazhu hotels, a total of 4,295 middle and high-end stores, accounting for 46% /month-on-month +1.7pct The number of stores continues to grow to 3061 home/month-on-month +4%. DH has 2 net stores opened in 2023Q4 (2/1 store closed). As of 2023Q4, there are 131 stores, 84 directly managed, and 47 franchises. There were 37 reserve stores, a slight increase over the previous month.
Investment advice: The company's revenue for 2023-2025 is estimated to be 218/243/262 billion yuan, and net profit to mother is 40.3/43.30/4.90 billion yuan respectively, corresponding to PE 17/16/14X. As a leading hotel, the company has stable barriers and strong long-term growth certainty; and is leading peers in its own management mechanism and operating efficiency; maintaining a “buy” rating.
Risk warning: repeated risks of the epidemic, macroeconomic risks, store expansion falling short of expectations.