Chinese hotel stock confounds sellers

Home Inns and Hotels Management beats on profit and revenue, and then impresses on guidance.

By Jim J. Jubak Aug 10, 2012 4:51PM
The ADRs (American depositary receipts) of Home Inns and Hotels Management (HMIN) dropped another 2.53% Thursday as traders continued to sell into the company’s after-the-close earnings report. But they were in for a surprise. 

The Chinese budget hotel company delivered enough to confound the sellers. And to disappoint those of us hoping to buy more on any sell-on-the-news dip. (Home Inns and Hotels Management is a member of my Jubak’s Picks portfolio.)

The ADRs were headed to a gain of 4.15% in the minutes before the Aug. 10 close.

The company reported earnings of 34 cents an ADR, 3 cents above the Wall Street consensus. Revenue came in at $228.2 million, well ahead of the $214.8 consensus. That was good enough for 60.2% revenue growth from the second quarter of 2011.

But what really turned sentiment, in my opinion, from sell-on-the-news to got-to-get-some was the company’s guidance for the third quarter of $243 million to $248 million in revenue -- versus the $238.3 million consensus -- and the increased guidance for all of 2012 of $899.6 to $914.5 million in revenue against the $871.9 million analyst consensus.

As of Aug. 10, I’m raising my target price slightly to $34 a share by May 2013.

At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. The fund did own shares of Home Inns and Hotels Management as of the end of March. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here. 
holdings/
Tags: HMIN
2Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

126
126 rated 1
286
286 rated 2
474
474 rated 3
680
680 rated 4
626
626 rated 5
609
609 rated 6
620
620 rated 7
462
462 rated 8
304
304 rated 9
132
132 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
BIDUBAIDU Inc10
BXTHE BLACKSTONE GROUP L.P10
CELGCELGENE CORP10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.