BrainCo Secures RMB2 Billion in Financing with Participation from LENS and HWORLD-S, According to Reports

The analyst rating of "Outperform" for HWORLD-S (01179.HK) by Haitong International is based on several key factors: 1. Market Leadership: HWORLD-S is recognized as a leader in China's hotel chain market, which positions it favorably within the industry. 2. Increasing Chain Penetration: The company is benefiting from a rising chain penetration rate in the hotel industry, indicating growth potential. 3. Strong Operational Model: HWORLD-S employs a multi-brand matrix and a membership system, supported by an efficient team execution that allows it to continuously gain market share. 4. High Proportion of Mid-Scale Hotels: The company's focus on mid-scale hotels contributes to its resilience and enhances its revenue per available room (RevPAR). 5. Transition to Asset-Light Model: HWORLD-S is shifting towards a high-margin, asset-light franchise model, which includes closing low-quality stores. This transition is expected to lead to continuous profit margin expansion. 6. Valuation Approach: The broker applied a target EV/EBITDA multiple of 13x to derive a target price of $41, reflecting a cautious yet optimistic outlook given the macroeconomic uncertainties. Overall, these factors contribute to a positive outlook for HWORLD-S, justifying the "Outperform" rating.