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 reported C4Q23 revenue vs. our estimate/consensus by 18%/21% and guided a robust 30% yoy revenue growth for 2024, outpacing the consensus by 12% and our estimate by 7%</li>
<li>C4Q23 operating margin decline was due to one-off leased hotel impairment and seasonality in retail marketing. We foresee stable margin in 2024;</li>
<li>We maintain our BUY rating and keep our TP at US$37.5, implying a 2024 P/E of 34x, vs. currently trading at 16x.</li>
</ul>


Atour reported C4Q23 revenue vs. our estimate/consensus by 18%/21% and guided a robust 30% yoy revenue growth for 2024, outpacing the consensus by 12% and our estimate by 7%
C4Q23 operating margin decline was due to one-off leased hotel impairment and seasonality in retail marketing. We foresee stable margin in 2024;
We maintain our BUY rating and keep our TP at US$37.5, implying a 2024 P/E of 34x, vs. currently trading at 16x.


[Atour Lifestyle (ATAT US,BUY,TP US$37.5) Review]:Still a Quality Growth Story in the Next Two Years

<ul>
<li>We expect Atour to report 4Q23 revenue 3.5% higher than consensus, and non-GAAP NI 15.1% higher than consensus, mainly due to (1) stable business travellers in tourism off-season; </li>
<li>(2) raising retail sales drive up gross margin. We think hotel supply and demand will turn to equilibrium in 2024. </li>
<li>Occupancy may stabilize but ADR will fall, especially economy hotels. Atour, however, will be immune to the price fall, in our view.</li>
</ul>


We expect Atour to report 4Q23 revenue 3.5% higher than consensus, and non-GAAP NI 15.1% higher than consensus, mainly due to (1) stable business travellers in tourism off-season; 
(2) raising retail sales drive up gross margin. We think hotel supply and demand will turn to equilibrium in 2024. 
Occupancy may stabilize but ADR will fall, especially economy hotels. Atour, however, will be immune to the price fall, in our view.


[Atour Lifestyle (ATAT US, BUY, TP US$37.5) ]: Hotel Scale Leverage Is Still the Main Driver in 2024

APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC 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$124m through a secondary selldown. </li>
<li>The deal is a large one to digest, at approximately 22.6 days of three month ADV and 5.5% of current mcap.  </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$124m through a secondary selldown. 
The deal is a large one to digest, at approximately 22.6 days of three month ADV and 5.5% of current mcap.  
In this note, we will talk about the placement and run the deal through our ECM framework.


Atour Lifestyle Holdings Placement - Coming Back for Round Two This Year

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>3Q23 results were a beat and FY23E guidance was raised (mostly about retail).</li><li>While we are conservative about the Hotel sector in 4Q23E and 1Q24E, we still think Atour could outperform, thanks to its excellent price to quality.</li><li>Moreover, in the long run, we are fairly excited by its product expansions (e.g. Atour Light 3.0 and Atour 4.0, which are able to capture more new customers outside of their previous price range) and room for growth and consolidation in China</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>

3Q23 results were a beat and FY23E guidance was raised (mostly about retail).While we are conservative about the Hotel sector in 4Q23E and 1Q24E, we still think Atour could outperform, thanks to its excellent price to quality.Moreover, in the long run, we are fairly excited by its product expansions (e.g. Atour Light 3.0 and Atour 4.0, which are able to capture more new customers outside of their previous price range) and room for growth and consolidation in ChinaContent 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 and We Stay Positive in LT

<ul>
<li>Atour reported 3Q23 revenue 6.4%/17.1% higher than our estimate/consensus, non-GAAP NI 5.5%/9.1% higher than our estimate/consensus.</li>
<li>We expect Atour 4Q23/2023 RevPAR recovered to 107%/114% of 2019 level, and revenue to increase 104%/96% YoY respectively. </li>
<li>We maintain the stock as BUY rating, and raised TP by US$1 to US$37.5, reflecting the rapid growth of retail product sales. </li>
</ul>


Atour reported 3Q23 revenue 6.4%/17.1% higher than our estimate/consensus, non-GAAP NI 5.5%/9.1% higher than our estimate/consensus.
We expect Atour 4Q23/2023 RevPAR recovered to 107%/114% of 2019 level, and revenue to increase 104%/96% YoY respectively. 
We maintain the stock as BUY rating, and raised TP by US$1 to US$37.5, reflecting the rapid growth of retail product sales. 


[Atour Lifestyle (ATAT US, BUY, TP US$37.5) Target Price Change]: Brand Value Brings Premium Sales

China

Xinhu Zhongbao Co., Ltd. provides development and sale of residential properties.  The Company operates in import and export trading, hotel management, and construction materials manufacturing.

Chengdu Hi-tech Development Co., Ltd. develops and sells real estate properties.  The Company also designs and produces kitchen cabinets, produces pharmaceuticals, and develops taxation software.

Chengdu Hi Tech Development Co Ltd. (000628 CH)

Greentown China Holdings Ltd. develops real estate.  The Company builds residential villas, low-rise apartment buildings, and high-rise apartment buildings for middle and high-income people.

Shanghai Chinafortune Co Ltd manufactures and markets electrical products and instruments, including electric meters, printed circuit boards, and electric motors. The Company, through its subsidiaries, also operates in network engineering, taxi services, import/export trading, and property management.

Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. operates in land development, property management, and infrastructure facilities construction within the Lujiazui Finance and Trade Zone.  The Company also undertakes building and renovation projects.

Shanghai Lujiazui Finance & Trade Zone (600663 CH)

Gemdale Corporation develops residential buildings and operates in property rental and management. The Company also invests in commercial trading businesses.

China Overseas Property Holdings Limited operates as a property management firm. The Company manages residential communities, commercial properties and government properties in Hong Kong and Macau.

Country Garden Services Holdings Company Limited provides real estate development services. The Company develops residential apartments, multi-functional complex buildings, government and public facilities, industrial parks, highway service stations, and schools. Country Garden Services Holdings serves clients in China.

Poly Property Services Co., Ltd. provides property services. The Company offers property management, property projects pre-consultation, post-delivery evaluation and analysis, professional equipment and facilities maintenance, housekeeping, and other services. Poly Property Services provides services in China.

Hainan Haide Industry Co., Ltd. develops residential properties and operates a hotel.

Asset World Corp Public Company Limited focuses on real estate development and investment services. The Company offers property management. Asset World Corp serves customers in Thailand.

WHA Corp PCL is a built-to-suit distribution center and factory developer in Thailand.

Land and Houses Public Company Limited develops real estate projects including single-detached homes, townhouses, and condominiums. The Company builds single and attached homes, primarily on land that it develops and improves. Land and Houses also operates its own architectural, engineering, design and construction teams for customer's specific designs and orders.

Japan Prime Realty Investment Corporation is a real estate investment trust (REIT) which mainly invests in office buildings and commercial-use facilities nationwide.

Retail Opportunity Investments Corp. is a fully integrated and self-managed real estate investment trust ("REIT").  The Company specializes in the acquisition, ownership and management of necessity-based community, and neighborhood shopping centers in the western and eastern regions of the United States anchored by national and regional supermarkets and drugstores.

Retail Opportunity Investments Corp. (ROIC US)

Industrial & Infrastructure Fund Investment Corporation is a a real estate investment trust (REIT). The Company invests in real estate properties such as facilities for industry and infrastructure institution.

Industrial & Infrastructure Fund Investment (3249 JP)

Industrial & Infrastructure Fund Investment

Nippon Accommodations Fund Inc. is a real estate investment trust (REIT), which invests in income producing properties.  The Company invests in residential buildings.

SPH REIT is a Singapore-based REIT established principally to invest, directly or indirectly, in a portfolio of income-producing real estate which is used primarily for retail purposes in Asia-Pacific, as well as real estate-related assets.

Equity Commonwealth is a real estate investment trust, or REIT. The Company primarily owns office buildings located in Central Business District and suburban areas of major metropolitan markets in the United States, and has a large concentration of properties leased to the U.S. Government and medical related tenants. Equity CommonWealth also owns industrial lands in Hawaii.

Getty Realty Corporation owns and leases properties in the Northeastern and Middle Atlantic states. These properties, consisting of service stations, convenience stores and petroleum marketing terminals are leased to Getty Petroleum Marketing Inc. Getty Realty Holding is also a marketer of heating oil in Pennsylvania and Maryland.

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 Lifestyle (ATAT US,BUY,TP US$37.5) Review]:Still a Quality Growth Story in the Next Two Years

Atour exceeded revenue expectations in C4Q23 and projects strong growth in 2024, despite a decline in operating margin. Analysts maintain a BUY...

Blue Lotus Research Institute

[Atour Lifestyle (ATAT US, BUY, TP US$37.5) ]: Hotel Scale Leverage Is Still the Main Driver in 2024

Atour expected to report higher revenue and non-GAAP NI in 4Q23, driven by stable business travellers and increased retail sales. Hotel supply and...

Blue Lotus Research Institute

Atour Lifestyle Holdings Placement - Coming Back for Round Two This Year

Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US) , is looking to raise around US$124m through a...

Ethan Aw

Atour Lifestyle (ATAT US) – Guidance Raised and We Stay Positive in LT

While we are conservative about the Hotel sector in 4Q23E and 1Q24E, we still think Atour could outperform, thanks to its excellent price to quality.

CMB International

[Atour Lifestyle (ATAT US, BUY, TP US$37.5) Target Price Change]: Brand Value Brings Premium Sales

Atour's 3Q23 revenue and non-GAAP NI exceeded estimates, and we predict strong recovery in RevPAR and revenue for 4Q23 and 2023. We maintain a BUY...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Atour Lifestyle (ATAT US,BUY,TP US$37.5) Review]:Still a Quality Growth Story in the Next Two Years

​Atour exceeded revenue expectations in C4Q23 and projects strong growth in 2024, despite a decline in operating margin. Analysts maintain a BUY...

Blue Lotus Research Institute

[Atour Lifestyle (ATAT US, BUY, TP US$37.5) ]: Hotel Scale Leverage Is Still the Main Driver in 2024

​Atour expected to report higher revenue and non-GAAP NI in 4Q23, driven by stable business travellers and increased retail sales. Hotel supply and...

Blue Lotus Research Institute

Atour Lifestyle Holdings Placement - Coming Back for Round Two This Year

Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US) , is looking to raise around US$124m through a...

Ethan Aw

Atour Lifestyle (ATAT US) – Guidance Raised and We Stay Positive in LT

While we are conservative about the Hotel sector in 4Q23E and 1Q24E, we still think Atour could outperform, thanks to its excellent price to quality.

CMB International

[Atour Lifestyle (ATAT US, BUY, TP US$37.5) Target Price Change]: Brand Value Brings Premium Sales

Atour's 3Q23 revenue and non-GAAP NI exceeded estimates, and we predict strong recovery in RevPAR and revenue for 4Q23 and 2023. We maintain a BUY...

Blue Lotus Research Institute

Atour exceeded revenue expectations in C4Q23 and projects strong growth in 2024, despite a decline in operating margin. Analysts maintain a BUY...

Atour expected to report higher revenue and non-GAAP NI in 4Q23, driven by stable business travellers and increased retail sales. Hotel supply and...