Solid results please Huazhu Group Ltd (NASDAQ: HTHT) stock investors today

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Huazhu Group Ltd (NASDAQ: HTHT) stock fell 4% though the company in the second quarter of FY 19 has reported 13.4% rise in the net revenues to RMB2.9 billion (US$417 million), primarily attributable to the hotel network expansion and blended RevPAR growth. Net revenues from leased and owned hotels for the second quarter of 2019 were RMB2.0 billion (US$292 million), representing a 5.4% year-over-year increase. Net revenues from manachised and franchised hotels for the second quarter of 2019 were RMB803 million (US$117 million), representing a 30.4% year-over-year increase. Net revenues from manachised and franchised hotels accounted for 28.1% of Huazhu’s net revenues in the second quarter of 2019, up from 24.4% a year ago.

Moreover, adjusted income from operations (non-GAAP) for the second quarter of 2019 was RMB688 million (US$100 million), compared to RMB690 million for the second quarter of 2018. The operating margin for the second quarter of 2019 was 23.0%, compared with 26.6% in the second quarter of 2018; this was primarily due to macroeconomic softness. The adjusted net income attributable to Huazhu Group Limited (non-GAAP) for the second quarter of 2019 was RMB495 million (US$71 million), compared to RMB558 million in the second quarter of 2018. The adjusted EBITDA (non-GAAP) for the second quarter of 2019 was RMB1.1 billion (US$155 million), compared with RMB965 million for the second quarter of 2018. Cash, cash equivalents and Restricted cash. As of June 30, 2019, Huazhu had a total balance of cash, cash equivalents and restricted cash of RMB4.1 billion (US$592 million). As of June 30, 2019, Huazhu had a total loan balance of RMB9.2 billion (US$1.3 billion) and the unutilized credit facility available to Huazhu was RMB3.2 billion.

Additionally, the occupancy rate for all hotels in operation was 86.9% in the second quarter of 2019, compared with 89.6% in the second quarter of 2018 and 80.6% in the previous quarter. The year-over-year decrease of 2.7 percentage points was due to the deepening China economic slowdown. The sequential increase was mainly due to seasonality. RevPAR was RMB206 in the second quarter of 2019, compared with RMB203 in the second quarter of 2018 and RMB178 in the previous quarter. The year-over-year increase of 1.3% was attributable to higher ADR. The sequential increase was mainly due to seasonality.

Meanwhile, Huazhu expects net revenues for the third quarter to grow 9%-11% year-over-year. For the full year of 2019, Huazhu adjusts the expected net revenues growth range to 10%-12%.

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