H World's Asset-Light Strategy Could Support Margin Expansion

Dow Jones09-07 16:50

0850 GMT - H World's asset-light strategy is likely to support continued margin gains, says Moody's Ratings in a note. The Hong Kong-listed hotel operator has a diversified portfolio of more than 30 brands, Moody's says. Its increasing use of advanced technology, including artificial intelligence, should boost its efficiency and innovation, the ratings company adds. Moody's expects H World's revenue to rise by a high single-digit percentage annually over the next 12-18 months. It also projects the company's adjusted-debt-to-Ebitda ratio to fall to 2.5X in 2027-2028 from 2.8X in 2025, thanks to a strong cash position and stable free-cash-flow generation. Still, Moody's flags that market competition and a slower macroeconomic environment could pose headwinds to H World's profitability and expansion plans.

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