Move over Motel 6, here comes Home Inns & Hotels Management (HMIN)

From The StockMasters

In America hotels make up a gigantic business and we know this ad better than we know the Pledge of Allegiance:
"At Motel 6. We’ll leave the light on for you."
The Marriot (MAR), Hilton (HLT), Wyndam (WYN), and Four Seasons (FS) have a combined market cap of $43.6B, and those four are just a few of the publicly traded hotel chains. In China, there’s a Hotel chain that leaves the light on, and since their IPO in October of 2006 their stock has increased by 220%, its name – Home Inns & Hotels Management (HMIN).

HMIN was named ”2006 IPO of the Year” by Renaissance Capital from a pool of the 198 companies that went public in 2006 and is the first non-U.S. company to receive the award. They have a total of 134 hotels in operation in 39 cities, including 94 leased/operated hotels and 40 franchised/managed hotels. Home Inns continues to grow and has an additional 48 hotels under contract, of which 28 are leased/operated hotels and 20 are franchised/managed hotels. Just check the map to view the empire they’re creating, these boys are on a mission from God, just like the Blues Brothers.

But you don’t live in China and stock has already gone to ridiculous heights, so why do you care?

The answer is growth my fellow Stockmasters, growth.

Home Inn’s has only been together since 2002 and their hotels are one of the best- known economy hotel brands in China. It’s Motel 6 in China people, and the company is just getting started. This isn’t a 4-Star hotel chain but the Home Inn Beijing is a 3-Star Hotel and rooms start as low as $55 USD (this according to Hotels.com). With business travel and tourism on the rise in China thanks to their incredible growing economy, what better place to stay than at the affordable Home Inn. David Sun, Home Inn’s CEO said recently ”We believe that the fragmentation in China’s hotel market today presents many opportunities for us to expand our network going forward…we added 27 hotels in operation to our hotel chain in the fourth quarter of 2006." But if growth is still your concern don’t forget about that little event called the Summer Olympic Games slated for Beijing in 2008.

As usual with Chinese stocks there is the reality that you don’t live in China, you just read about how you need to make a million dollars right now from China’s economy. To that I say, hold the phone, and find the value plays. Another Chinese company we recently featured was online travel company eLong.com (LONG) and HMIN is yet another play on China’s growing economy. The travel and lodging sectors are sure to score due to all the outside investors needing to travel to China and with new money floating around the Chinese are going to travel and party like rockstars. I am not suggesting jumping on the band wagon and buying HMIN after a 200% run, rather put it on your screen and determine if it makes sense for your portfolio. HMIN shares are currently trading around $45 and hit a 52-week high at $47.49. You don’t need me to tell you China is on the move and there are just as many people that will tell you China’s economy is about to burst. This may be true, but one thing is for sure, people are going to keep traveling, they never stop. Just think of all the sights you could see while staying at the Home Inn in China? Just like when the Blues Brothers were cruising through the mall in their 1974 Dodge Monaco…

[while they are driving around in the shopping mall with 2 police cars on their tail]
Elwood: Baby clothes…
Jake: This place has got everything.

You got it Jake, China has everything, including a growing hotel industry.

Article written by: Phil McCallister
Article posted on: February 7th, 2007

Disclaimer: The Author of this article does not own any stock or long/short positions of HMIN.

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