Why Home Inns and Hotels Management Shares Bounced

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Home Inns and Hotels Management (NAS: HMIN) jumped as much as 15% today after the Chinese hotel chain reported second-quarter earnings.

So what: Home Inns beat on both the top and bottom lines as revenue grew 60% to $228.2 million against expectations of just $206.8 million and its $0.34 adjusted EPS topped estimates of $0.31. The company moved forward with its acquisition of Hotel 168, increasing occupancy rates, though that chain still showed a net loss. It also lowered guidance for the 168 chain due to a "softened macroeconomic environment" in the Yangtze Delta region, where those hotels are common. Though overall occupancy rates gained sequentially, they were still down year over year.


Now what: While Home Inns may be one of the more appealing growth plays in China, the recent economic slowdown has banged up the stock, sending shares down about 50% in the last year. Over the long term, this could prove to be a rewarding investment, but with news out today that export growth in China dropped 10% in just a month, it seems the slowdown could be worse than expected. I'll stay away from Home Inns until I see stronger growth in its home market.

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The article Why Home Inns and Hotels Management Shares Bounced originally appeared on Fool.com.

Fool contributorJeremy Bowmanholds no positions in the above companies. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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