Stock (Symbol) |
China Lodging Group (HTHT) |
Stock Price |
$107 |
Sector |
Food & Necessities |
Data is as of |
August 29, 2017 |
Expected to Report |
Nov 13 |
Company Description |
HTHT is a holding company. The Company is a multi-brand hotel group in China with leased, manachised and franchised models. Under the lease model, the Company directly operates hotels located on leased properties. Under the manachise model, the Company manages manachised hotels through the on-site hotel managers the Company appoints and collects fees from franchisees. Under the franchise model, the Company provides training, reservation and support services to the franchised hotels and collects fees from franchisees. The Company has approximately 620 leased hotels; over 2,070 manachised hotels and approximately 80 franchised hotels in operation and over 20 leased hotels and approximately 660 manachised and franchised hotels under development. The Company offers approximately seven hotel brands that focus on various segments of customers: Joya Hotel, Manxin Hotels & Resorts, JI Hotel, Starway Hotel, Elan Hotel, HanTing Hotel and Hi Inn. Source: Thomson Financial. |
Sharek’s Take |
China Lodging (HTHT) is a hotel group within China that’s taking the country by storm with a manchised model which combines the benefits of franchising with managing the property. As of December 31 it had 624 leased and owned hotels, 2471 manchised hotels and 174 franchised hotels in operations with 15 leased/owned and 427 manchised hotels under development. The company has 8 hotel brands, listed below with the number of hotels at the end of last year in parentheses:
China Lodging is a stock I owned earlier in the decade — and sold it when fundamentals deteriorated and research (earnings estimates) became limited. I was basically flying blind with this stock and discontinued coverage on it. Meanwhile, I sold HTHT at $17 in 2011 and today the stock is over $100 after a parabolic run this year. This stock is obviously too-high to buy now but I want it on my radar as its an obvious winner. |
One Year Chart |
Wow, what a chart. I should have been all over this stock when profit growth came in at 59% three qtrs ago. Last qtr sales grew 20% and profits increased 22%, the latter which beat estimates of 10%. The occupancy rate jumped from 84% 2QtrsAgo to 90% LastQtr. The stock is parabolic, so we can’t buy here, but the P/E of 38 isn’t too bad considering the Est. LTG is a robust 28% per year. |
Fair Value |
My Fair Value on HTHT is going to be a P/E of 30. I may adjust this up in the coming qtrs, as the stock has been worth a P/E of 35 in the past. But after more than doubling in price this year I feel the stock needs a breather. |
Bottom Line |
China Lodging has been a great stock to own, and in retrospect I should have picked up coverage again when profits grew 33% in 2015. Now the shares are too high and could come crashing down if we get a correction in the Chinese or American stock markets. Still, business is growing rapidly right now so I feel this is one we need to own — just at a lower price. HTHT is on my radar for the Growth Portfolio. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |