1. Financial performance: 24Q2 revenue of 6.1 billion slightly exceeded expectations, and net profit to mother reached 1.067 billion yuan
24Q2's revenue was 6.148 billion yuan/yoy +11.2%, slightly above the guideline (7-11%), up 115% from 19Q2; net profit to mother was 1.067 billion yuan/yoy +5.1%, up 74% from 19Q2. Among them, Huazhu's domestic hotel revenue was 4.8 billion yuan/yoy +11.2%, at the upper limit of the guideline (7%-11%), achieving net profit of 1 billion yuan/yoy +1%, mainly from the expansion of the hotel network; Deutsche Hotel's revenue was 1.3 billion yuan/yoy +11.6%, achieving net profit of 0.034 billion yuan and 23Q2 net profit of 0.022 billion yuan. Among them, the Group's direct revenue was 3.681 billion yuan/yoy +2.5%, franchise revenue 2.334 billion yuan/yoy +25.8%, and franchise revenue accounted for 38% /yoy+4.4pct.
24Q2 The company's operating profit was 1.572 billion yuan/yoy +13.5%, and the operating profit margin was 25.6% /yoy+0.5pct, an increase of 2.6 pct over 2019. During the same period, the company's sales expense ratio was 5.2% /yoy+0.5pct; management expense ratio was 9.8% /yoy+1.2pct.
2. Operating performance: In 24Q2, Huazhu's domestic RevPAR recovery dropped to 118%, and overseas RevPAR recovered to 116%.
The 24Q2 Huazhu domestic RevPAR was 244 yuan/yoy -2%, which was 118% lower than the overall recovery in 19Q2 and 3pct lower than the 121% recovery in 24Q1. 1) ADR 296 yuan/yoy -3%, OCC 82.6% /yoy+0.7pct; 2) The same-store RevPar was 248 yuan/yoy -3.6%, and the same-store recovery rate was 122.8%. Among them, the economical RevPar is 190 yuan/yoy -4.2%, the recovery rate is 111.1%, the middle and high-end RevPar is 299 yuan/yoy -3%, and the recovery rate is 109.9%.
The 24Q2 German RevPar was 82 EUR/yoy +4.5%, a recovery rate of 116% compared to 19Q2, with ADR120 EUR/YOY +2.7% and OCC 68.3% /yoy+1.2pct. The company continues to focus on reducing costs, improving efficiency, and improving profitability.
3. Store opening situation: 24Q2 Group opened 572 new stores, and the net number of stores opened increased to 469.
24Q2 Group opened 572 new stores +53%, closed 103 stores, opened 469 stores, and Pipeline Hotels 3294 home/yoy +16%, an increase of 122 over 24Q1, an increase of 449 over the previous year. (Compared with 24Q1 Group's 574 new stores, yoy +117%, closed 151 stores, and net opened 423 stores)
In 24Q2, Huazhu opened 567 new stores in China, Yoy +52% (joined 563 homes/yoy +51%), closed 101 stores, and opened 466 net stores. As of 24Q2, Huazhu had a total of 3,294 hotels to open, including 3,266 domestic and 28 overseas. (Compared with 569 new stores, 148 closed stores, and 421 net stores in Huazhu in 24Q1).
IV. Guidelines for 24Q3 and the whole year
24Q3 is expected to increase revenue by 2% to 5% year on year, with domestic growth of 1% to 4%.
The 24 annual store opening guidelines were raised, and the number of stores is expected to exceed 2,200 (previously 1,800).
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 expected to be 23.7/26.4/29.5 billion yuan, yoy +8%/+11%/+11%, net profit to mother 4.1/4.8/5.4 billion yuan, yoy +1%/+13%. The PE corresponding to the current stock price is 16/14/12x, 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.