The Zhitong Finance App learned that Daiwa released a research report stating that it reaffirmed the Huazhu Group-S (01179) “buy” rating and raised the 12-month target price from HK$46 to HK$47, based on the constant 12 times 2026 corporate value multiplier (EV/EBITDA), and calculated from the fourth quarter of 2026 to the third quarter of 2027 EBITDA. Huazhu Group's second-quarter revenue increased 11% year on year to 7.1 billion yuan (same below), and adjusted EBITDA increased 20% year over year to 772.5 million yuan, 9% higher than market expectations. It was mainly driven by the expansion of core EBITDA profit margin to 38.3%, which was 35.3% in the same period last year. During the period, Huazhu Group's overall revenue per rentable room (RevPAR) increased 1.1% year-on-year, benefiting from the continuous upgrading of the hotel portfolio.
Yamato pointed out that Huazhu Group's RevPAR increased by 1.1% in the second quarter, outperforming the overall Chinese hotel industry and major competitor ATAT.US (ATAT.US), which mainly benefited from improvements in the structured hotel portfolio. Management maintains RevPAR's “slight year-over-year growth” guideline for the whole year. The bank expects RevPAR to rise 0.6% year over year, in line with management guidelines, but may be better than market expectations.
The Group added a net of 677 hotels in China in the first half of the year, compared to 991 in the same period last year, but it still maintains the target of adding 1,600 to 1,700 hotels for the whole year, which means that the pace of opening stores will accelerate in the second half of the year. Daiwa predicts that the compound annual growth rate of core EBITDA will reach 12% from 2025 to 2028, mainly driven by continued hotel expansion, increased share ratio, stable RevPAR, and improved hotel portfolio. The Group has given back US$2 billion to shareholders from 2024 to 2026 and announced the renewal of the 2026-2028 shareholder return plan, totaling US$2.5 billion, which is equivalent to an annual shareholder return of more than 6%.