Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

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 recorded steep product sales growth during 618. We raised our C2Q24 revenue by 7.5% and full year by 5.1%, driven by (1) stronger pillow sales during the 618 promotions; </li>
<li>Thanks to retail, Atour’s RevPAR after including retail sales maintained positive growth of 1.7% YoY, although pure hotel RevPAR dropped 2.9% YoY due to a decline in hotel price.</li>
<li>We raise TP by US$1 to US$36/ADS and keep the rating as BUY, factoring in the strong growth momentum of Atour’s retail business.</li>
</ul>


Atour recorded steep product sales growth during 618. We raised our C2Q24 revenue by 7.5% and full year by 5.1%, driven by (1) stronger pillow sales during the 618 promotions; 
Thanks to retail, Atour’s RevPAR after including retail sales maintained positive growth of 1.7% YoY, although pure hotel RevPAR dropped 2.9% YoY due to a decline in hotel price.
We raise TP by US$1 to US$36/ADS and keep the rating as BUY, factoring in the strong growth momentum of Atour’s retail business.


[Atour Lifestyle (ATAT US, BUY, TP US$36) Target Price Change]: 618-Commerce Sales Set a New Record

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Atour Lifestyle Holdings / Equity Capital Markets

<ul>
<li>Legend Capital (LC), one of the principal shareholders of <a href="https://www.smartkarma.com/entities/atour-lifestyle-holdings-ltd" target="_blank" data-smartkarma-citation="entities:33481:1" rel="noopener">Atour Lifestyle Holdings (ATAT US)</a>, is looking to raise around US$168m through a secondary selldown.</li>
<li>This will be the third selldown by Legend Capital in just over a year’s time. Hence, the deal is well flagged.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>


Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US), is looking to raise around US$168m through a secondary selldown.
This will be the third selldown by Legend Capital in just over a year’s time. Hence, the deal is well flagged.
In this note, we will talk about the placement and run the deal through our ECM framework.


Atour Lifestyle Holdings Placement - Well Flagged Deal, past Selldowns Have Done Well

<ul>
<li>Atour reported C1Q23 revenue 4.6%/6.8% higher than our est./cons., and non-GAAP NI 6.9%/8.8% higher than our est./ cons, driven by hotel expansion and new retail products.</li>
<li>The company raised total revenue guidance from 30% to 40% YoY for 2024 due to a strong retail sales trend. </li>
<li>We believe retail sales is a form of increase in Atour’s same store sales. We thus raise TP to US$39 to reflect this retail-driven increase of same store sales.</li>
</ul>


Atour reported C1Q23 revenue 4.6%/6.8% higher than our est./cons., and non-GAAP NI 6.9%/8.8% higher than our est./ cons, driven by hotel expansion and new retail products.
The company raised total revenue guidance from 30% to 40% YoY for 2024 due to a strong retail sales trend. 
We believe retail sales is a form of increase in Atour’s same store sales. We thus raise TP to US$39 to reflect this retail-driven increase of same store sales.


[Atour Lifestyle (ATAT US, BUY, TP US$39) TP Change]: Should Retail Profit Be Accorded a Multiple?

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>The hotel sector has been under pressure in 2Q24 QTD (post-holidays leisure demand is weak and business recovery is slow), and therefore, the outlook is still conservative.</li><li>However, Atour’s retail business has performed well to more than offset this drag. Hence with a healthy retail sales growth target upgrade, we maintain BUY and raise TP to US$27.72, based on 23x FY24E P/E (from 20x), which is still not demanding, given a 29% sales/ 31% adj. net profit CAGR during FY23-26E.</li><li>2Q24E outlook is still conservative. Management is still highly cautious about the hotel demand, because of the macro uncertainty (post-holidays and weekend orders have been week vs last year) and they are still foreseeing a potential YoY drop in RevPAR in 2Q24E. O</li></ul>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.

The hotel sector has been under pressure in 2Q24 QTD (post-holidays leisure demand is weak and business recovery is slow), and therefore, the outlook is still conservative.However, Atour’s retail business has performed well to more than offset this drag. Hence with a healthy retail sales growth target upgrade, we maintain BUY and raise TP to US$27.72, based on 23x FY24E P/E (from 20x), which is still not demanding, given a 29% sales/ 31% adj. net profit CAGR during FY23-26E.2Q24E outlook is still conservative. Management is still highly cautious about the hotel demand, because of the macro uncertainty (post-holidays and weekend orders have been week vs last year) and they are still foreseeing a potential YoY drop in RevPAR in 2Q24E. OContent 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) - Guidance Raised, Backed by Robust Retail Sales

<ul><li>4Q23 results were a slight beat but the FY24E guidance is slightly disappointed.</li><li>However, we are not that pessimistic because: 1) sequential improvement is likely (high base in 1H), 2) OCC rate is still the best among its peers implying further market share gains, and 3) PMI has started to improve in Mar 2024.</li><li>And a 16x FY24E P/E is not demanding at all given a 26%/ 41% 3-year sales/ net profit att. CAGR.</li></ul>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.

4Q23 results were a slight beat but the FY24E guidance is slightly disappointed.However, we are not that pessimistic because: 1) sequential improvement is likely (high base in 1H), 2) OCC rate is still the best among its peers implying further market share gains, and 3) PMI has started to improve in Mar 2024.And a 16x FY24E P/E is not demanding at all given a 26%/ 41% 3-year sales/ net profit att. CAGR.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) - Prudent Guidance but QoQ Recovery Is Likely

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Atour Lifestyle Holdings (ATAT US)

[Atour Lifestyle (ATAT US, BUY, TP US$36) Target Price Change]: 618-Commerce Sales Set a New Record

Atour sees strong sales growth during 618 promotions, with retail driving positive revenue and maintaining positive RevPAR growth. Analysts raise...

Blue Lotus Research Institute

Atour Lifestyle Holdings Placement - Well Flagged Deal, past Selldowns Have Done Well

Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US), is looking to raise around US$168m through a...

Sumeet Singh

[Atour Lifestyle (ATAT US, BUY, TP US$39) TP Change]: Should Retail Profit Be Accorded a Multiple?

Atour's Q1 revenue and non-GAAP NI beat estimates, driven by hotel expansion and new retail products. Raised 2024 revenue guidance to 40% YoY due...

Blue Lotus Research Institute

Atour Lifestyle (ATAT US) - Guidance Raised, Backed by Robust Retail Sales

The hotel sector has been under pressure in 2Q24 QTD (post-holidays leisure demand is weak and business recovery is slow), and therefore, the...

CMB International

Atour Lifestyle (ATAT US) - Prudent Guidance but QoQ Recovery Is Likely

Management mentioned that the RevPAR recovery so far in 2024 has been lower vs last year (CMBI est. 114%), however, this was actually an...

CMB International

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Atour Lifestyle (ATAT US, BUY, TP US$36) Target Price Change]: 618-Commerce Sales Set a New Record

​Atour sees strong sales growth during 618 promotions, with retail driving positive revenue and maintaining positive RevPAR growth. Analysts raise...

Blue Lotus Research Institute

Atour Lifestyle Holdings Placement - Well Flagged Deal, past Selldowns Have Done Well

Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US), is looking to raise around US$168m through a...

Sumeet Singh

[Atour Lifestyle (ATAT US, BUY, TP US$39) TP Change]: Should Retail Profit Be Accorded a Multiple?

​Atour's Q1 revenue and non-GAAP NI beat estimates, driven by hotel expansion and new retail products. Raised 2024 revenue guidance to 40% YoY due...

Blue Lotus Research Institute

Atour Lifestyle (ATAT US) - Guidance Raised, Backed by Robust Retail Sales

The hotel sector has been under pressure in 2Q24 QTD (post-holidays leisure demand is weak and business recovery is slow), and therefore, the...

CMB International

Atour Lifestyle (ATAT US) - Prudent Guidance but QoQ Recovery Is Likely

Management mentioned that the RevPAR recovery so far in 2024 has been lower vs last year (CMBI est. 114%), however, this was actually an...

CMB International

Atour sees strong sales growth during 618 promotions, with retail driving positive revenue and maintaining positive RevPAR growth. Analysts raise...

Atour's Q1 revenue and non-GAAP NI beat estimates, driven by hotel expansion and new retail products. Raised 2024 revenue guidance to 40% YoY due...