• H World Group Limited announced past second quarter earnings with revenue of CNY 6.43 billion, increased net income, and declared an interim cash dividend for 2025, alongside issuing third quarter guidance projecting revenue growth of up to 6% year-on-year.
• An important insight is the company's focus on manachised and franchised operations, expected to deliver double-digit revenue growth, highlighting a structural shift in its business model toward asset-light expansion.
• Now, we'll explore how these results and the new dividend might reinforce confidence in H World Group's asset-light growth strategy.

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H World Group Investment Narrative Recap

To be a shareholder in H World Group, you need confidence in its asset-light, franchised expansion strategy as the core driver of long-term value, especially given the macro and industry volatility affecting hospitality. The recent Q2 results, interim dividend, and guidance for 20%-24% manachised and franchised revenue growth may support optimism in this transition, but the primary short-term catalyst remains stable same-store performance. Short-term, these results do little to offset the major risk: persistent pressure on RevPAR from new hotel supply and weaker consumer demand.

Among the recent developments, the declared US$250 million interim dividend stands out, reflecting the company's improved net income and a willingness to reward shareholders during a period of structural business change. This move aligns well with the ongoing shift toward manachised and franchised operations, reinforcing the intent to generate quality returns as the portfolio moves away from leased and owned assets.

However, investors should be aware that despite these dividend payouts, persistent RevPAR weakness due to increased supply and consumer headwinds remains a critical risk that could impact future earnings...

Read the full narrative on H World Group (it's free!)

H World Group's outlook anticipates CN¥28.5 billion in revenue and CN¥5.9 billion in earnings by 2028. This scenario implies a 5.9% annual revenue growth rate and an earnings increase of CN¥2.6 billion from the current earnings of CN¥3.3 billion.

Uncover how H World Group's forecasts yield a $43.37 fair value, a 23% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community contributors provided five fair value estimates ranging from US$18.67 to US$31,138.76 per share. While growth in manachised and franchised revenue looks promising, sharply different fair value opinions highlight how future performance is viewed through many lenses, consider reading through several perspectives before forming your view.

Explore 5 other fair value estimates on H World Group - why the stock might be a potential multi-bagger!

Build Your Own H World Group Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your H World Group research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free H World Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate H World Group's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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