T.H. Capital - Huazhu Hotels Group Ltd.: Expect In Line 1Q16 Results and 2Q16 Guidance; Shanghai Disneyland is A Long-Term Benefit; Raise PT to $40
HTHT will report 1Q16 results on Wednesday, May11 after themarket close followed by an 9pm ET conference call. We believe HTHT is likelyto report 1Q16 results largely in line with consensusexpectations. The 2Q16 guidance can be at least in line with consensus due to ahealthy RevPAR in April, 2016. As the Shanghai Disneyland is scheduled to openon June 16, 2016, we believe HTHT is going to benefit from increasing tourists’inflow. As such we raise our PT to $40.Shanghai Disneyland to be positive to HTHT’sbusiness – Shanghai Disneyland, which is scheduled to open on June 16, 2016, canbe positive to HTHT's business as we believe it is highly likely to boostdemand for travel and lodging in the Shanghai area. On an annual basis, Shanghai receives about 100Mtourists. However, using Hong Kong Disneyland as a reference - for the firstyear of Hong Kong Disneyland’s opening in 2006, Hong Kong Disneyland received5.2M tourists. The number peaked in 2014 to 7.5M (Figure 4). We believe the number of tourists to Shanghai Disneyland(approximately 1,000 acres) is likely to be much more than Hong Kong Disneyland(310 acres) due to larger area.