Episode Details

H World Group (HTHT) Q2 2026 — The 6-K cleared EDGAR at 6:30am ET on August 17, with the call at 7:00am - BEFORE the open, so August 17 was the reaction session itself: the ADSs opened plus 8.66 pct at USD45.51, ran to USD46.73, never traded below Friday's USD41.88 close, and finished plus 11.37 pct at USD46.64 on 2.2x volume. H World Group is the largest hotel operator in China - Hanting, JI, Orange, plus the Steigenberger brands abroad - with 13,539 hotels and 1,335,445 rooms at June 30. June-quarter revenue was RMB7,121m, up 10.8 pct, and adjusted earnings USD0.78 per ADS against a USD0.74 bar. But same-hotel RevPAR, for every China hotel open at least 18 months, FELL 3.0 pct to RMB233. THE CALL: BUY (3/5, MEDIUM - A FEE BUSINESS PRICED LIKE A HOTEL OWNER) — base-case value ~$55.38 vs ~$46.64 today. KEY METRICS: - CALL: BUY, 3/5. Fair value USD55.38 per ADS vs the USD46.64 close, plus 18.7 pct. Bear USD42.47 / base USD55.38 / bull USD72.18, weighted 50/30/20 across a ten-year cash flow discount at 12.0 pct, 11x 2026 adjusted EBITDA and 21x adjusted earnings, on 316.1M ADSs. - THE PRINT: revenue RMB7,121m, up 10.8 pct, about USD1,050m at the filing rate. Manachised and franchised fee revenue RMB3,586m, up 25.2 pct. Leased and owned revenue RMB3,233m, DOWN 4.9 pct by design. Operating margin 31.1 pct against 27.8 pct. Adjusted EBITDA RMB2,725m, up 20.0 pct. - THE EPS BASIS, PROVEN: the USD0.78 is ADJUSTED diluted per ADS, not GAAP. The filing prints RMB5.29, and 5.29 divided by the company's own RMB6.7851 rate is 0.7796. GAAP diluted was RMB4.87, or USD0.72 - a miss on that line. Q1 RMB3.36 plus Q2 RMB5.29 foots to the filed half of RMB8.65. - THE ANGLE: same-hotel RevPAR, every China hotel open at least 18 months, fell 3.0 pct to RMB233 from RMB240, on a flat room rate and occupancy down 2.4 points. The blended figure the release leads with rose 1.1 pct - but that blend includes hotels opened inside eighteen months. - WHY GAAP LOOKED FLAT: net income attributable rose only 2.1 pct to RMB1,577m and GAAP EPS per ADS was RMB4.87 against RMB4.85. One line explains it: currency gains were RMB366m a year ago and RMB49m this year, a RMB317m non-cash swing. Strip it and adjusted net income rose 26.9 pct. - THE GUIDANCE ARITHMETIC: full-year revenue growth was RAISED to 4-8 pct from 2-6 pct. But the first half already grew 11.0 pct. Against FY2025 revenue of RMB25,307m and a first half of RMB11,821m, that implies second-half growth of MINUS 2.1 pct to PLUS 5.4 pct - a raise embedding a slowdown. - THE BALANCE SHEET: RMB14,249m of cash against RMB4,226m of total debt - RMB10,165m of NET cash, about USD1,498m. A USD2.5bn three-year return plan was approved the same morning, and RMB2,844m of dividend plus RMB1,857m of buyback went out in the June quarter alone. What to watch: UP: same-hotel RevPAR turning positive through the September peak quarter, or a second-half revenue print above the top of the raised 4-8 pct guidance range. DOWN: the closure rate climbing above the 35 pct of gross openings it ran at this quarter, or overseas adjusted EBITDA falling further from RMB131m. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.