SHANGHAI - Atour Lifestyle Holdings Limited (NASDAQ: ATAT), a prominent hospitality and lifestyle brand in China, has announced the pricing of its secondary offering. The offering consists of 10 million American depositary shares (ADSs) at $16.90 each, totaling approximately $169 million. The ADSs are being sold by entities related to Legend Capital, with each ADS representing three Class A ordinary shares.
The underwriters have been granted a 30-day option to purchase up to an additional 1.5 million ADSs from Legend Capital. Atour will not receive any proceeds from this transaction. The closing of the offering is subject to standard conditions.
Following the offering, Legend Capital's stake in Atour will decrease to approximately 7.6%, provided the underwriters do not exercise their additional purchase option. Concurrent with the offering, Mr. Hongbin Zhou, a director appointed by Legend Capital, will resign from Atour's board.
BofA Securities, Inc., CMB International Capital Limited, and Citigroup Global Markets Inc. are serving as joint bookrunners for the offering. The sale is made under an effective shelf registration statement on Form F-3 filed with the U.S. Securities and Exchange Commission (SEC), and the necessary documentation is available on the SEC's website.
Atour is recognized as a leading upper midscale hotel chain in China and is known for integrating scenario-based retail into its business model. The company emphasizes innovation in China's hospitality sector and the development of new lifestyle brands.
This news is based on a press release statement.
In other recent news, Atour Lifestyle Holdings Limited reported a substantial increase in its first quarter 2024 earnings, with net revenues surging by 89.7% year-over-year. This growth was fueled by an expansion in its hotel network and a significant rise in its retail business. Despite the revenue growth, the company anticipates pressure on profit margins due to fluctuations in RevPAR and changes in its revenue structure.
In a secondary development, entities related to Legend Capital intend to sell 10 million American depositary shares (ADSs) of Atour Lifestyle. The company clarified that it will not receive any proceeds from this sale. Post-offering, Legend Capital is expected to hold about 7.6% of Atour's issued and outstanding share capital, assuming the underwriters do not exercise their additional purchase option.
Meanwhile, Morgan Stanley adjusted its financial outlook on Atour Lifestyle, reducing the price target to $31 from $32, while maintaining an Overweight rating. The firm revised its revenue forecasts for fiscal years 2024 through 2026, increasing them by 5%, 4%, and 4% respectively. This adjustment is in response to Atour Lifestyle's updated retail revenue projections, which are now expected to grow by over 80% year-over-year in fiscal 2024. Despite higher revenue expectations, Morgan Stanley anticipates a lower profit margin for the increased sales.
InvestingPro Insights
As Atour Lifestyle Holdings Limited (NASDAQ: ATAT) navigates the secondary offering of its American depositary shares, investors are closely monitoring the company's financial health and market position. According to InvestingPro data, Atour holds a market capitalization of approximately $2.36 billion, with a notable revenue growth of 107.38% in the last twelve months as of Q1 2024. This impressive growth is a testament to Atour's robust performance in the Hotels, Restaurants & Leisure industry, where it has established itself as a prominent player.
InvestingPro Tips highlight that Atour not only holds more cash than debt on its balance sheet, but its cash flows can sufficiently cover interest payments, indicating a strong financial position. Additionally, the company's liquid assets exceed its short-term obligations, providing further assurance of its ability to meet immediate financial needs. With analysts predicting profitability for the current year and the company having been profitable over the last twelve months, Atour's financial stability appears solid. However, it is worth noting that Atour does not pay a dividend to shareholders, which may influence investment decisions for those seeking regular income.
Investors should also consider Atour's valuation metrics; the company is trading at a high Price / Book multiple of 7.32, reflecting the market's valuation of its net asset value. The P/E ratio stands at 18.38, adjusting to 17.95 for the last twelve months as of Q1 2024, which may offer insights into how the market views the company's earnings potential relative to its share price.
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