JP Morgan: Industry consolidation is more beneficial for HWORLD-S (01179) and Atour Lifestyle Holdings Ltd. Sponsored ADR (ATAT.US). We maintain a "neutral" rating.

J.P. Morgan released a research report stating that in the past month, there has been a significant divergence in the trend of Chinese hotel stocks. H World-S (01179) and Shanghai Jin Jiang International Hotels (600754.SH) have performed well, while Atour Lifestyle Holdings Ltd. Sponsored ADR (ATAT.US) and BTG Hotels (600258.SH) have underperformed in the industry. The bank believes that stock price movements are not solely supported by fundamentals, as J.P. Morgan's tracking data shows that H World Group Limited Sponsored ADR may have upward risks in average revenue per available room (RevPAR) in the fourth quarter of this year, indicating a short-term upside potential in stock price; whereas the average revenue per available room of Shanghai Jin Jiang International Hotels may be more subdued than reflected in its stock price. J.P. Morgan stated that year-to-date performance of H World Group Limited Sponsored ADR, Atour Lifestyle Holdings Ltd. Sponsored ADR (up 41% and 59% respectively) significantly outperformed Shanghai Jin Jiang International Hotels and BTG Hotels (down 2%, up 7% respectively), but still recommended investors to "overweight" H World Group Limited Sponsored ADR and Atour Lifestyle Holdings Ltd. Sponsored ADR in the next 12 months, as their brands and products offer clearer long-term growth prospects, with valuations in line with Shanghai Jin Jiang International Hotels and BTG Hotels, or even cheaper. Key points from J.P. Morgan's consumer forum suggest that the hotel industry's discipline exceeds expectations, which is favorable for H World Group Limited Sponsored ADR and Atour Lifestyle Holdings Ltd. Sponsored ADR. J.P. Morgan's tracking data also shows that among the four hotels covered, the growth rate of new rooms in the fourth quarter of this year has slowed down, while H World Group Limited Sponsored ADR and Atour Lifestyle Holdings Ltd. Sponsored ADR have expanded significantly faster than Shanghai Jin Jiang International Hotels and BTG Hotels since the beginning of the year, indicating that the industry consolidation trend is more favorable for H World Group Limited Sponsored ADR and Atour Lifestyle Holdings Ltd. Sponsored ADR.