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华住集团-S(1179.HK):Q24RP温和增长 龙头韧性凸显

Huazhu Group-S (1179.HK): Q24RP shows moderate growth, leading resilience

華泰證券 ·  May 18

1Q24's year-on-year revenue growth and impressive profitability performance showed that the leading company Huazhu Group recorded revenue of 5.278 billion yuan/yoy +17.8%, better than previous guidelines (12-16%); recorded operating profit of 1 billion/yoy +51% (Huazhu domestic 1.1 billion, DH-129 million), operating profit margin 19% /yoy+4.2pct, Huazhu Division operating profit margin 26.6% /yoy+3.7pct. The company's net profit to mother was 659 million, with a net profit margin of 12.5% (vs 1Q23 of 990 million, including the sale of Accor shares of 572 million). 1q24 Huazhu Domestic Hybrid RevPAR (RP) +3.1% YoY, DH RP +4.5% YoY. As of 1Q24, Huazhu's global stores were 9817 home/yoy +14%. Huazhu focuses on limited-service hotels. It has outstanding brand/operational efficiency/traffic advantages. The occupancy rate still achieved positive year-on-year growth under a high 1Q base, demonstrating the resilience of leading companies.

We expect the 24-26 EPS to be 1.31/1.50/1.73. Based on 25X 24E PE, the target price is HK$35.99, which is comparable to the average PE expected by the companies Wind and Bloomberg in 24 to be 23X.

Maintain “buy-in.”

1Q domestic RP is higher than previous guidance, and overseas losses are reduced. 2Q revenue is expected to increase 7-11%. Huazhu's domestic revenue is expected to achieve revenue of 4.245 billion yuan, yoy +18.1%, net profit to mother of 833 million, and net interest rate to mother of 19.8%, respectively. The occupancy rate performance was superior to room prices. In 1Q24, domestic mixed RP/ADR/OCC was +3.1%/+1.6pct, and RP/ADR/OCC compared to +0.9%/-0.6%/+1.1pct. Economical demand is relatively stable, and high-end housing prices benefit from product upgrades. Economical RP/ADR/OCC increased +0.7%/-0.6% /+1.0pct, and mid/high-end RP/ADR/OCC increased +1.0%/-0.7% /+1.3pct.

The DH occupancy rate continued to rise. 1Q24 RP/ADR/OCC recorded revenue of +4.5%/+0.2% /+2.3pct, recorded revenue of 1 billion yuan, yoy +16.6%, adjusted EBITDA of 66 million, net loss to mother of 174 million. The loss narrowed year-on-year, and operating efficiency improved. The company expects total revenue growth of 7-11% year-on-year in 2Q24.

Maintain a steady pace of expansion, and the number of store closures decreased month-on-month

1Q24 continued to expand steadily. As of 1Q24, the number of domestic hotels reached 9,684, with 569/421 newly opened/net opening. The number of store closures decreased month-on-month, including 12 temporary closures due to upgrades, including upgrades, of which 134/287 were net open. There are 133 overseas (DH) hotels in operation, 5 new homes/2 newly opened. There are 3138 domestic stores to be opened, +77 compared to the previous month (including 926 Hanting 785/All Season House/317 Orange House/63 Huajiantang), and 34 overseas. Looking at the structure, the proportion of economic/midrange/middle high-end or high-end above in reserve stores reached 37.4/46.2/13.8/ 2.5%, which was the same as +1.2pct/-2.3pct/+1.0pct/ month-on-month.

Maintain a “buy” rating; give a target price of HK$35.99

The company's brand strength is outstanding, and demand is resilient. We expect EPS to be 1.31/1.50/1.73 in 24/25/26, with a target price of HK$35.99 based on 25X 24E PE. Compared with Wind and Bloomberg in 24, the average PE value is 23X (considering that the company has a solid brand/traffic/operating base and continues to lead in business repair, giving a premium, pre-target price value: HK$35.44). Maintain “buy-in.”

Risk warning: Demand falls short of expectations, industry competition intensifies, macroeconomic fluctuations.

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