Jinwu Cai Xun | Xingye Securities released the research report, H World Group (01179) achieved revenue of 6.44 billion yuan in Q3 2024, a year-on-year growth of 2.4%, with growth rate falling at the lower end of the guidance provided in Q2 2024. Adjusted EBITDA was 2.11 billion yuan, a year-on-year decrease of 9.5%, with domestic and overseas segments at 2.09 and 0.02 billion yuan respectively, decreasing by 7.5% and 71.2% year-on-year. The adjusted EBITDA margin was 32.8%, a year-on-year decrease of 4.3 percentage points, and a quarter-on-quarter decrease of 0.4 percentage points. Adjusted net income was 1.37 billion yuan, a year-on-year decrease of 10.8%. The decline in profit margin was mainly due to the impact of the high base number last year and cost rigidity caused by pressure on RevPAR and revenue per available room during the period, with the overall and DH-excluded revenue guidance for Q4 2024 indicating a year-on-year growth of 1~5%.

The bank indicated that the company's domestic RevPAR, ADR, and OCC in Q3 2024 were 256 yuan, 301 yuan, and 84.9%, decreasing by 8.1%, 7.0%, and 1.0 percentage points year-on-year. The overseas RevPAR, ADR, and OCC in Q3 2024 were 82 euros, 117 euros, and 69.8%, increasing by 3.7%, 2.5%, and 0.8 percentage points year-on-year. The decline in domestic RevPAR widened compared to Q2, consistent with the industry trend, mainly due to the decrease in ADR, while overseas operation indicators maintained benign growth.

The bank further indicated that in Q3 2024, the company opened 790 new stores domestically, accelerating the pace compared to the first half of the year. The full-year store opening guidance was raised for the second time during the year, from 2200 to 2400 stores. During the period, 231 stores were closed, driven by proactive adjustment of the product structure and iterative property considerations. As of Q3 2024, the total number of company stores reached 10,845. The number of signed contracts in Q3 2024 hit a new high, exceeding 800, providing assurance for future openings.

The bank stated that in Q3 2024, under the impact of the high base number from the previous year, the domestic hotel RevPAR declined, with OCC showing strong resilience and significant ADR decline. The company continues to actively expand new stores, strengthen efforts in mid-to-high-end brands, increase penetration rates in lower-tier cities, enhance corporate travel partnerships, improve member stickiness, and maintain its leading position in the industry. The overseas segment continues to advance light asset management, streamline management structures, and enhance operational efficiency. The bank forecasts the company's revenue for 2024E/2025E/2026E to be 23.7/25.8/28 billion yuan, with year-on-year growth of 8.2%/9.1%/8.3%; net income attributable to shareholders to be 3.7/4.4/4.8 billion yuan, a year-on-year decrease of 9.3%, increase of 17.4%, and increase of 11.2% respectively. The bank maintains a "buy" rating, with the current stock price corresponding to a PE ratio of 19/16/15 times for 2024E/2025E/2026E.