大陆业务开店继续加速：截至2024Q3 末，公司门店数达到10707 家，yoy+18.6%，加盟门店数占比达到95%。Q3 单季大陆新开774 家达新高，净开556 家；前三季度累计新开店1910 家，全年新开2200 家目标可完成。储备门店2899 家环比下滑。截至Q3 末，大陆业务房量达103万间，yoy+20%，房量增速较Q2 的19%有进一步提升；其中加盟房量95 万间，yoy+23%，直营房量8.4 万间，yoy-4%。Key investment points
Q3 revenue is at the lower end of the guide, and operating profit decreased by 10%: Q3's revenue was 6.442 billion yuan, +2.4% year over year, and is at the lower end of the guide growth rate range of 2% to 5%. Q3 achieved net profit of 1.273 billion yuan, or -5% year-on-year; however, considering the exchange loss of 0.15 billion yuan in Q3 last year, actual operating profit decreased by 10%. Q3 achieved adjusted net profit of 1.372 billion yuan, -11% YoY; adjusted EBITDA was 2.113 billion yuan, -9% YoY.
Net profit from the mainland business decreased by 1%, and DH's operating net profit loss narrowed year on year: the mainland division's Q3 revenue was 5.162 billion yuan, contributing 1.356 billion yuan, or -1% year over year; DH segment revenue was 1.28 billion yuan, +9% year over year, contributing -0.083 billion yuan to net profit attributable to mother, including one-time restructuring costs of 0.081 billion yuan. Net operating profit was 0.037 billion yuan compared to the same period last year narrow.
Business opening in mainland China continues to accelerate: by the end of 2024Q3, the number of company stores reached 10,707, YOY +18.6%, and the number of franchised stores reached 95%. In Q3, 774 new stores were opened in mainland China in a single season, a net of 556; 1,910 new stores were opened in the first three quarters, and the target of opening 2,200 new stores for the whole year can be achieved. There was a month-on-month decline of 2,899 reserve stores. By the end of Q3, the number of commercial units in mainland China reached 1.03 million units, yoy +20%, and the housing volume growth rate was further increased compared to 19% in Q2; among them, the number of franchised housing units was 0.95 million, yoy +23%, and the number of direct-managed housing units was 0.084 million, yoy -4%.
Due to a high base of 8%, the Q4 revenue growth guide was 2 to 5%: 2024Q3's overall RevPar was 256 yuan, -8.4% year over year; of these, OCC was 84.9%, -1.0 pct year on year, and ADR was 301 yuan, or -7.1% year over year. Huazhu's RevPAR was 244 yuan, -2.4% year over year, of which OCC was 82.6%, +0.8 pct year over year, and ADR was 296 yuan, -3.0% year over year. The Q4 company expects revenue growth of 1% to 5% year over year. In reverse, RevPAR is a decline in the number of units, which is narrower than in Q3.
Profit forecast and investment rating: As a leader in the hotel industry, Huazhu Group's brand, traffic and technology create competitive barriers, and its management culture empowers business development. It bucked the trend and expanded during the pandemic, and the market pattern improved markedly. Fine-tuning Huazhu Group's profit forecast, net profit to mother for 2024-2026 was 3.68/4.07/4.48 billion yuan (previous value was 3.7/4.07/4.48 billion yuan), corresponding to the PE valuation 22/20/18 times, maintaining the “buy” rating.
Risk warning: Competition in the industry intensifies, store growth falls short of expectations, etc.
