Why Home Inns and Hotels Management Shares Bounced
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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