China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

Atour Lifestyle Holdings / Equity Bottom-Up

<ul>
<li>Atour reported 2Q23 revenue 9.5%/11.7% higher than our estimate/ consensus, which leads to non-GAAP NI 15.1%/21.1% higher than our estimate/ consensus respectively. Both retail and hotel business have positive contribution.</li>
<li>We think the strong sales momentum in 2Q23 hotel business is likely to continue in 3Q23 due to the strong summer season but gradually eased in 4Q23. </li>
<li>We maintain the stock as BUY rating, and raise TP by US$1.5 to US$36.5 to factor in the better operating efficiency in retail business.</li>
</ul>


Atour reported 2Q23 revenue 9.5%/11.7% higher than our estimate/ consensus, which leads to non-GAAP NI 15.1%/21.1% higher than our estimate/ consensus respectively. Both retail and hotel business have positive contribution.
We think the strong sales momentum in 2Q23 hotel business is likely to continue in 3Q23 due to the strong summer season but gradually eased in 4Q23. 
We maintain the stock as BUY rating, and raise TP by US$1.5 to US$36.5 to factor in the better operating efficiency in retail business.


[Atour (ATAT US, BUY, TP US$36.5) TP Change]: Demand Supply Imbalance to Sustain…maintain BUY

<ul>
<li>We expect Atour to report 2Q23 revenue and non-GAAP NI at 94% YoY and 259% YoY, which is 22% and 20% above BBG consensus respectively. </li>
<li>We expect Atour’s RevPAR in 3Q23/2023 increase to 110%/114% of corresponding 2019 level from previous estimate at 105%/112%. </li>
<li>We maintain the stock as BUY rating, and maintain TP at US$35 because the operational gains has been mitigated by FX loss in terms of valuation</li>
</ul>


We expect Atour to report 2Q23 revenue and non-GAAP NI at 94% YoY and 259% YoY, which is 22% and 20% above BBG consensus respectively. 
We expect Atour’s RevPAR in 3Q23/2023 increase to 110%/114% of corresponding 2019 level from previous estimate at 105%/112%. 
We maintain the stock as BUY rating, and maintain TP at US$35 because the operational gains has been mitigated by FX loss in terms of valuation


[Atour Lifestyle (ATAT US, BUY, TP US$35) Preview]: Retail and Summer Travelling Are Two Catalysts

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>We initiate BUY on Atour and put it as our sector top pick, because of outstanding customer satisfaction and room for expansion</li><li>While 3Q23E could be challenge with softening macro numbers and high base, we still believe the upcycle of hotel sector had just begun (even with volatility) and Atour’s FY23E guidance is conservative enough.</li><li>Our TP is based on 35x FY23E P/E, well supported by the 39%/ 135% sales/ np att. CAGR in FY22-25E. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We initiate BUY on Atour and put it as our sector top pick, because of outstanding customer satisfaction and room for expansionWhile 3Q23E could be challenge with softening macro numbers and high base, we still believe the upcycle of hotel sector had just begun (even with volatility) and Atour’s FY23E guidance is conservative enough.Our TP is based on 35x FY23E P/E, well supported by the 39%/ 135% sales/ np att. CAGR in FY22-25E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Atour Lifestyle (ATAT US) – Top-Rated & Fast-Growing with the Right Strategy

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>Q123 Net Revenue was strong, exceeding Q119 (pre-Covid) levels by over 12%</li>
<li>Almost six months into recovery, <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a> has also managed SG&amp;A expenses well</li>
<li>A good result for the company, but we see no reason to alter our long-term view</li>
</ul>


Q123 Net Revenue was strong, exceeding Q119 (pre-Covid) levels by over 12%
Almost six months into recovery, Trip.com (TCOM US) has also managed SG&amp;A expenses well
A good result for the company, but we see no reason to alter our long-term view


Trip.com Q123 | Revenue Surges Past Q119 Level | Decade-High Margin | But Our Thesis Is Unchanged

<ul>
<li>Atour reported its 1Q23 revenue 2.8%/4.3% higher than our est./cons., and non-GAAP NI 22.7%/38.8% higher than our est./cons. The bottom-line beat is driven by strong sales growth from Occ. </li>
<li>We expect 2Q23/2023 rev. to grow 75%/65% YoY, implying 115%/112% of RevPAR recovery rate vs. 2019 and 85/291 net new hotels. </li>
<li>We maintain the BUY rating, and raise TP by US$1 to US$35 to factor in the higher gross margin expectation at 40% in 2023.</li>
</ul>


Atour reported its 1Q23 revenue 2.8%/4.3% higher than our est./cons., and non-GAAP NI 22.7%/38.8% higher than our est./cons. The bottom-line beat is driven by strong sales growth from Occ. 
We expect 2Q23/2023 rev. to grow 75%/65% YoY, implying 115%/112% of RevPAR recovery rate vs. 2019 and 85/291 net new hotels. 
We maintain the BUY rating, and raise TP by US$1 to US$35 to factor in the higher gross margin expectation at 40% in 2023.


[Atour Lifestyle (ATAT US) Target Price Change]: Strong Sales Growth Support Expansion, Maintain BUY

China

Atour Lifestyle Holdings Limited operates as a holding company. The Company, through its subsidiaries, owns and manages midscale hotel chain through offline and online channels, including mobile application and weixin-wechat mini program. Atour Lifestyle Holdings serves customers in China.

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Atour Lifestyle Holdings (ATAT US)

[Atour (ATAT US, BUY, TP US$36.5) TP Change]: Demand Supply Imbalance to Sustain…maintain BUY

We think the strong sales momentum in 2Q23 hotel business is likely to continue in 3Q23 due to the strong summer season but gradually eased in 4Q23.

Blue Lotus Research Institute

[Atour Lifestyle (ATAT US, BUY, TP US$35) Preview]: Retail and Summer Travelling Are Two Catalysts

We maintain the stock as BUY rating, and maintain TP at US$35 because the operational gains has been mitigated by FX loss in terms of valuation

Blue Lotus Research Institute

Atour Lifestyle (ATAT US) – Top-Rated & Fast-Growing with the Right Strategy

We initiate BUY on Atour and put it as our sector top pick, because of outstanding customer satisfaction and room for expansion

CMB International

Trip.com Q123 | Revenue Surges Past Q119 Level | Decade-High Margin | But Our Thesis Is Unchanged

Trip.com posted a strong result in Q123, with Revenue finally above pre-Covid levels and core margins at a decade-high. But management seemed to...

Tracking Traffic

[Atour Lifestyle (ATAT US) Target Price Change]: Strong Sales Growth Support Expansion, Maintain BUY

We maintain the BUY rating, and raise TP by US$1 to US$35 to factor in the higher gross margin expectation at 40% in 2023

Blue Lotus Research Institute

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