Morgan Stanley stated that industry consolidation is more beneficial for H World and Atour, maintaining an "Overweight" rating

JP Morgan's research report points out that in the past month, the performance of Chinese hotel stocks has shown significant divergence, with H World (01179.HK) and Jin Jiang Hotels (600754.SH) performing excellently, while Atour (ATAT.US) and ShouLve Hotels (600258.SH) lagged behind the industry. The bank believes that the stock price movements are not entirely supported by fundamentals, as JP Morgan's tracking data for Chinese hotels indicates that H World's average revenue per available room (RevPAR) for the fourth quarter of this year has upward risks, suggesting that there is room for short-term price increases; whereas Jin Jiang Hotels' average RevPAR may be more subdued than what its stock price reflects.

JP Morgan stated that year-to-date, the performance of H World and Atour (up 41% and 59% respectively) has significantly outperformed Jin Jiang Hotels and ShouLve Hotels (down 2% and up 7% respectively), but still recommends investors to "overweight" H World and Atour Hotels over a 12-month period, as their stronger brands and products provide a clearer long-term growth outlook, while their valuations are in line with or even cheaper than those of Jin Jiang Hotels and ShouLve Hotels.

Key points derived from JP Morgan's consumer forum indicate that the self-discipline of the hotel industry exceeds expectations, which is beneficial for H World and Atour. JP Morgan's tracking data also shows that among the four hotels it covers, the number of new rooms added has slowed down in the fourth quarter of this year, while year-to-date, the expansion pace of H World and Atour is significantly faster than that of Jin Jiang Hotels and ShouLve Hotels, indicating that the trend of industry consolidation is more favorable for H World and Atour.

For JP Morgan's ratings and target prices for the aforementioned hotels, please refer to the separate table