1. Financial performance: 24Q1 revenue of 5.3 billion yuan exceeded expectations, with net profit of 659 million yuan 24Q1's revenue of 5.278 billion yuan/yoy +17.8%, exceeding the guideline (12-16%), up 121% from 19Q1; net profit of 659 million yuan/yoy -33.4%, up 522% from 19Q1. Among them, Huazhu's domestic hotel revenue was 4.2 billion yuan/yoy +18.1%, exceeding the guideline (11%-15%); achieved net profit of 833 million yuan/yoy -27.9%, mainly due to the sale of Accor shares in 23Q1 to obtain one-time net profit; German Hotel revenue of 1 billion yuan/yoy +16.6%; net loss of 174 million yuan and 23Q1 net loss of 165 million yuan.
Among them, the Group's direct revenue was 3,099 billion yuan/yoy +7.8%, franchise revenue was 2,063 billion yuan/yoy +32.8%, and franchise revenue accounted for 39.1% /yoy+4.4pct.
The 24Q1 company's operating profit was 1,003 billion yuan/yoy +51.1%, and the operating profit margin was 19.0% /yoy+4.2pct, an increase of 7.9pct over 2019. Over the same period, the company's overall operating cost ratio was 67.5% /yoy-5pct, down 5.1 pct from '19, down 4pct from 71.5% in 23Q4; sales expense ratio 4.9% /yoy+0.6pct, +1.7pct compared to '19; management expense ratio 9.6% /yoy+0.2pct, +1.0pct compared to '19.
2. Operating performance: In 24Q1, Huazhu's domestic RevPar recovery rate was 121%, and overseas RevPAR recovered to 98%.
In 24Q1, Huazhu's domestic RevPAR was 216 yuan/yoy +3.1%, up 1 pct from the overall recovery rate of 121% in 19Q1 and the 120% recovery in 23Q4. 1) ADR 280 yuan/yoy +1%, OCC 77.2% /yoy+1.6pct; 2) The same-store RevPar was 218 yuan/yoy +0.9%, and the same-store recovery rate was 123.9%. Among them, the economical RevPar is 167 yuan/yoy +0.7%, the recovery degree is 109.9%, the middle and high-end RevPar is 264 yuan/yoy +1%, and the recovery rate is 111.4%.
The 24Q1 German RevPar was 58 EUR/YOY +4.5%, a recovery rate of 98% compared to 19Q1, with ADR104 EUR/YOY +0.2% and OCC 55.8% /yoy+2.3 pct. The company continues to focus on reducing costs, improving efficiency, and improving profitability.
3. Store opening situation: 24Q1 Group opened 574 new stores, and the net number of stores opened increased to 423.
24Q1 Group opened 574 new stores, closed 151 stores, opened 423 stores, and Pipeline Hotels 3172 home/yoy +36%, 74 more than 23Q4, an increase of 833 over the previous year. (Compared with 23Q4 Group's 462 new stores, 225 closed stores, 237 net stores) 24Q1 Huazhu opened 569 new stores and yoy +24% (joined 567 home/yoy +24%), closed 148 stores, and net opened 421 stores. As of 24Q1, Huazhu had a total of 3,172 hotels to open, including 3,138 domestic and 34 overseas. (Compared with 460 new stores, 225 closed stores, and 235 net stores in Huazhu in 23Q4)
IV. 24Q2 Guidelines
24Q2 revenue is expected to increase 7% to 11% year-on-year (4794-4.973 billion yuan), with domestic growth of 7% to 11% (38.46~3989 billion yuan).
Profit forecast and investment advice: The hospitality industry is still resilient under a high base. I am optimistic about Huazhu's leading scale advantage and excellent operation and management efficiency. Huazhu's 2024-2026 revenue is estimated to be 237/264/29.5 billion yuan, yoy +8%/+11%/+11%, net profit to mother of 41/48/5.4 billion yuan, yoy +1%/+13%. The current stock price corresponds to PE 21/18/16x, maintaining the “recommended” rating.
Risk warning: Risk of macroeconomic fluctuations, increased risk of market competition, risk of falling short of expectations when opening a store.