FAST NEWS: H World Raises $260 Million in Share Placement

The latest: Hotelier H World Group Ltd. (HTHT.US; 1179.HK) on Tuesday announced it will raise $260 million by selling 6.19 million American depositary shares (ADSs), or about 1.95% of its enlarged share capital, at a price of $42 each.

Looking up: H World will use the funds to enhance the competitiveness of its hotel portfolio and develop its regional-based operating model in the post-Covid era, as well as for investing in technology infrastructure and its supply chain ecosystem.

Take Note: The sale price represents a 4% discount to H World’s closing price the day before the announcement, indicating tepid demand for the shares. H World added the deal is also subject to market and other closing conditions.

Digging Deeper: H World is a China-based hotel group with nearly 800,000 rooms in 8,402 hotels both inside and outside China at the end of September. The company’s low-cost Hanting chain is the backbone of its business, and it operates higher-end brands like Mercure, Ibis and Ibis Styles in China through a strategic partnership with France’s Accor (AC.PA). The company’s revenue grew 16% year-on-year in last year’s third quarter and is expected to grow 7% to 11% in the fourth quarter, benefiting from the start of a tourism recovery in the non-China international markets where H World does business.

Market Reaction: H World’s New York-listed shares rose 0.89% on Tuesday after the announcement. But its Hong Kong-listed shares dropped on Wednesday to close down 0.7% at HK$35.10 by the midday break. They now trade at the upper end of their 52-week range.

Translation by Jony Ho

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