| Over a quarter ago | ||||
Huazhu Group responded to… Huazhu Group responded to allegations made in an additional short seller report published by Bonitas Research. The company said, "Similar to the initial report published by Bonitas Research on September 22, 2020, the Company believes the additional report is without merit and that it contains numerous errors, unsubstantiated statements, and misleading conclusions regarding the Company's business and operations. Given that it has already responded to Bonitas Research's allegations twice, the Company may not respond to future allegations by Bonitas Research, unless required by the applicable laws or listing rules, and the market should not interpret that as an admission that any future allegations are true. The Company reiterates its commitment to maintaining the highest standards of corporate governance, as well as transparent and timely disclosure in compliance with the applicable rules and regulations of the United States Securities and Exchange Commission, the Nasdaq Global Select Market and The Stock Exchange of Hong Kong Limited." | ||||
Huazhu Group announced… Huazhu Group announced that the Company's board of directors had formed a special committee to conduct an investigation of the allegations raised in a short seller report issued by Bonitas Research on September 22, 2020. While the Company believes the Bonitas Report is without merit and that it contains numerous errors, unsubstantiated statements, and misleading conclusions regarding the Company's business and operations, the Board decided to form the Special Committee to review the allegations in the Bonitas Report and to conduct any related investigation, in order to provide transparency to the shareholders. The Special Committee is comprised of three members, including the chairman of the audit committee, the chief financial officer, and the secretary and general counsel of the Company, and is chaired by the chairman of the Company's audit committee. The Special Committee is authorized to retain outside legal, accounting and other advisors. Cleary Gottlieb Steen & Hamilton LLP has been retained as the Special Committee's independent outside counsel. The Company will release the results of the internal investigation in due course once it is completed. Based on guidance from the Hong Kong Stock Exchange for issuers subject to market commentaries or rumours, the Company will also make a preliminary submission to the Hong Kong Stock Exchange identifying several key errors in the Bonitas Report. The Company will also, at the request of the Hong Kong Stock Exchange, publish in due course a clarification announcement describing those errors on the websites of the Hong Kong Stock Exchange and the Company. The Company will then promptly furnish the clarification announcement on Form 6-K with the U.S. Securities and Exchange Commission. | ||||
Shares of Huazhu Group… Shares of Huazhu Group Limited (HTHT) trading in New York are down $2.08, or 4.95%, to $39.94 at time of writing following the publication of a short-report by Bonitas Research regarding the company. | ||||
Huazhu Group Limited is… Huazhu Group Limited is "a real company that lied about the ownership of its hotel portfolio to produce fake financials," according to a short-report published by Bonitas Research. The firm said its fieldwork in Beijing and Shanghai "confirmed that Huazhu secretly supported operating costs of franchisee hotels owned by undisclosed current Huazhu employees and other undisclosed related parties." The report, published on the firm's website, added: "We believe that Huazhu generated significantly less profit and held significantly less PP&E assets than reported in both its SEC filings and HKEX Global Offering. We are short Huazhu because we believe that Huazhu's actual financial performance justifies a significantly lower stock price." Reference Link | ||||
Huazhu Group announced… Huazhu Group announced the pricing of the global offering of 20,422,150 new ordinary shares, which comprises an international offering and a Hong Kong public offering. The final offer price for both the International Offering and the Hong Kong Public Offering has been set at HK$297 per Offer Share. Based on the ratio of one ordinary share per Nasdaq-listed American depositary share, the Offer Price translates to approximately US$38.321 per ADS. Goldman Sachs L.L.C. and CMB International Capital Limited are the joint sponsors, joint global coordinators and joint bookrunners for the proposed Offering. CLSA Limited, J.P. Morgan (Asia Pacific) Limited and Morgan Stanley Asia Limited are also acting as the joint global coordinators and joint bookrunners. | ||||
Reports Q2 revenue… Reports Q2 revenue $277.0M, consensus $283.1M. As of June 30, 2020, Huazhu's worldwide hotel network in operation totaled 6,187 hotels and 599,235 rooms. The occupancy rate for all hotels in operation was 69% in Q2, compared with 86.9% last year and 46.7% in Q1. Blended RevPAR, defined as revenue per available room for all hotels in operation, was RMB127 in Q2, compared with RMB206 last year and RMB88 in Q1. The company said, "We are pleased to see our negative adjusted EBITDA narrowed significantly by RMB613 million from RMB704 million in first quarter 2020 to only RMB97 million in second quarter 2020, mainly due to the strong recovery of legacy Huazhu's hotels during the second quarter, following the upward trend in its RevPAR. Legacy DH's RevPAR has also been steadily recovering from the trough in late March and beginning of April. We are happy to see the recovery trend for both legacy Huazhu and legacy DH continue in July and August during the third quarter. Additionally, we are encouraged to see us record positive operating cash flows during the second quarter." | |
As previously reported,… As previously reported, BofA analyst Billy Ng upgraded Huazhu Group to Buy from Neutral with a $48.50 price target. The analyst, who raised his 2020 and 2021 EBITDA forecasts for Huazhu, cites RevPAR tracking better than expected, the stock's re-rating potential and the fact that the stock has been a laggard compared to hotel peers as the three reasons for his rating change. | |
BofA analyst Billy Ng… BofA analyst Billy Ng upgraded Huazhu Group to Buy from Neutral with a $48.50 price target. | |
BofA analyst Billy Ng… BofA analyst Billy Ng downgraded Huazhu Group to Neutral from Buy with a $38 price target following its Q1 miss, citing limited visibility on a potential RevPAR recovery in both China and Germany. | |
Pre-earnings options… Pre-earnings options volume in China Lodging is normal with puts leading calls 9:2. Implied volatility suggests the market is anticipating a move near 6.8%, or $2.39, after results are released. Median move over the past eight quarters is 5.5%. |