H World Group Stock Is Up 49% in a Year: Why a Conviction Buy Has Emerged
Summarize this article with:
After years of restructuring and a brutal post-2021 reset, this steady rebound is starting to look less like a bounce and more like a durable recovery.Singapore-based Serenity Capital Management disclosed a significant buy of H World Group Limited (HTHT +1.86%), increasing its stake by 710,431 shares last quarter and contributing to a value change of approximately $30.7 million from the previous period.What HappenedAccording to a Securities and Exchange Commission (SEC) filing dated November 13, Singapore-based Serenity Capital Management increased its position in H World Group Limited (HTHT +1.86%) by 710,431 shares during the most recent quarter. The fund’s total holding in the company rose to nearly 1.3 million shares, reflecting a post-trade value of $49.8 million. The increase accounted for approximately 6.3% of the fund’s total reportable AUM.What Else to KnowThe buy lifted H World Group Limited to 12.7% of the fund’s AUM, ranking as the fourth-largest holding after the filing.Top holdings after the filing: NASDAQ: BZ: $117.6 million (29.9% of AUM)NYSE: ZTO: $97.1 million (24.6% of AUM)NYSE: TAL: $53 million (13.4% of AUM)NASDAQ: HTHT: $49.8 million (12.6% of AUM)NYSE: EDU: $34.9 million (8.8% of AUM)As of Friday, shares were priced at $48.95, up 49% over the past year and well outperforming the S&P 500's 16.5% gain in the same period.Company OverviewMetricValueMarket Capitalization$15.1 billionRevenue (TTM)$3.4 billionNet Income (TTM)$534 millionDividend Yield3.7%Company SnapshotH World Group Limited operates a diversified portfolio of hotel brands, including HanTing, JI Hotel, Orange Hotel, and Steigenberger, spanning economy to upscale segments.The company generates revenue primarily through leased and owned hotels, as well as manachised and franchised operations, leveraging brand scale and operational efficiency.It serves a broad spectrum of travelers in China and internationally, with over 12,700 hotels.H World Group Limited is a leading hotel operator in China. The company’s strategy centers on expanding its network through a mix of direct ownership and asset-light franchising, which supports scalable growth and margin expansion. With a strong presence in the domestic market and a growing international footprint, H World Group leverages brand diversity and operational expertise to maintain a competitive edge in the hospitality sector.Foolish TakeAfter collapsing more than 55% from its 2021 peak, H World Group has quietly rebuilt earnings power through scale, cost discipline, and an aggressive shift toward an asset-light model. That is the kind of reset long-term investors look for.The latest quarter supports that view. Revenue rose 8.1% year over year to about $978 million, beating guidance, while manachised and franchised revenue jumped more than 27%, reinforcing the strategy of expanding margins without tying up capital. Non-GAAP EBITDA held steady at roughly $346 million, and operating margins improved to nearly 30%, a meaningful signal of operating leverage as growth resumes. The hotel network now spans more than 12,700 locations, with a pipeline of roughly 2,700 additional hotels that supports multi-year visibility.Within the portfolio, this position sits behind larger logistics and internet holdings, but it stands out as a reopening and domestic consumption play with improving fundamentals rather than pure multiple expansion. Shares may still sit about 20% below pre-crackdown highs, but the balance sheet, earnings mix, and growth model are far healthier today.GlossaryAssets Under Management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.Reportable Assets: The portion of a fund's assets required to be disclosed in regulatory filings.Position: The amount of a particular security or investment held by an individual or institution.Dividend Yield: Annual dividends paid by a company divided by its share price, expressed as a percentage.AdvertisementForward Price-to-Earnings Ratio: A valuation metric comparing a company's current share price to its forecasted earnings per share.Trailing Twelve Months (TTM): The 12-month period ending with the most recent quarterly report.Manachised: A hotel management model combining management and franchising, where the brand manages franchised properties for owners.Asset-light Franchising: A business strategy focusing on franchising rather than owning physical assets, reducing capital requirements.Operational Efficiency: The ability of a company to deliver products or services cost-effectively while maintaining quality.Margin Expansion: An increase in the difference between revenue and costs, leading to higher profitability.About the AuthorJonathan Ponciano is a contributing stock market analyst at The Motley Fool. He has nearly a decade of experience as a financial journalist, most recently as an editor and senior reporter at Forbes focused on markets, technology, and entrepreneurship. Jonathan has also written for Investopedia and the Los Angeles Business Journal. He holds a dual B.A. in Business Journalism and Economics from the University of North Carolina at Chapel Hill and an M.B.A. from Columbia Business School. A North Carolina native now based in New York City, Jonathan has also lived in Mexico City and Los Angeles.CMFjonponcStocks MentionedH World GroupNASDAQ: HTHT$49.18 (+0.02%) $+0.90*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.Advertisement