Bought 30 HMIN shares (Chinese Home Inns and Hotels Management) on September 30 October 6, 2010Posted by deminvest in China stock, HMIN, HOT, investment strategies, MAR.
Tags: hotels, lodging
After exchanging a few ideas with Andrew about which kind of risk I like to take, I decided to actually take risk for my September stock pick.
Chinese growing business community will need to travel and sleep out. So I chose HMIN, a large chain of economy hotels in China. This was my order on Etrade:
Thu Sep 30 11:55:36 2010 Buy 30 HMIN Executed @ $49.13
What made me chose this hotel chain are its good growth numbers:
Qtrly Revenue Growth (yoy): 25.70%
Qtrly Earnings Growth (yoy): 35.30%
The company has more cash (136 M) than debt ( 26M).
The stock is extremely expensive:
|Trailing P/E (ttm, intraday):||50.11|
|Forward P/E (fye Dec 31, 2011)1:||31.47|
If the company keeps its growth rate the stock will fly. Otherwise it will bust.
I wanted to compare HMIN to other hotel chains. I found out it is not very easy. IHG, Intercontinental Hotel Group, owns great brands like Holiday Inn, but is just a lean Franchisee. As I compare it to HMIN, I have to notice IHG has less direct employees (4000 compared to 15000).
I also like to compare HMIN to westner hotlel chians like Starwood Hotels & Resorts Worldwide Inc. (HOT) and Marriott International, Inc. (MAR). Marriot has losses and is supposed to go back into black P/E=27 next year. Starwood has P/E around 129, expected to reach P/E=37 next year. Doth companies are hardly growing and have debt.
It maybe less risky to bet on HMIN continuing its growth than betting HOT or MAR will recover.