Huazhu Group Stock Gains After Q2 Results

Huazhu Group Ltd HTHT reported second-quarter sales growth of 83.7% year-over-year to RMB3.6 billion ($556 million), lower than revenue guidance of 87% - 89%.
Adjusted earnings per ADS improved to $0.22, beating the consensus of $0.15.
As of June 30, 2021, Legacy-Huazhu had 7,004 hotels in operation, including 675 leased and owned hotels and 6,329 manachised hotels and franchised hotels.
The occupancy rate for Legacy-Huazhu hotels in operation was 82.3%, compared to 68.8% in 2Q20, and 86.9% in 2Q19. The ADR (average daily room rate) was RMB255 in the quarter, compared to RMB185 in 2Q20.
Legacy-DH had 122 hotels in operation, including 74 leased and owned hotels and 48 manachised and franchised hotels. The occupancy rate for all Legacy-DH hotels in operation was 24.4%, compared with 18.3% in 2Q20. The ADR was EUR82 in the quarter versus EUR87 in 2Q20.
Income from operations was RMB629 million ($97 million), compared to a negative RMB(494) million a year ago, and the operating margin stood at 17.5%.
Adjusted EBITDA was RMB1.0 billion ($161 million), with Legacy-Huazhu adjusted EBITDA of RMB1.1 billion.
Huazhu's Operating cash inflow for the quarter was RMB1.2 billion ($192 million).
The company had a total cash balance and cash equivalents of RMB6.2 billion ($960 million) and restricted cash of RMB57 million ($9 million).
As of June 30, 2021, Huazhu had 2,734 unopened hotels in the pipeline, including 2,696 hotels from the Legacy-Huazhu business and 38 hotels from the Legacy-DH business.
Q3 Outlook: Huazhu expects Revenue growth of 8%-12% year-over-year or 4%-8% if excluding DH.
FY21 Outlook: The company expects revenue growth of 29%-33% year-over-year, or 34%-38% if excluding DH.
Price Action: HTHT shares are trading higher by 3.45% at $46.73 on the last check Tuesday.

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