UPDATE: J.P. Morgan Reiterates Overweight Rating, Raises PT on Home Inns & Hotels Management Following Stronger 2Q EBITDA Report

In a report published Tuesday, J.P. Morgan analyst Kenneth Fong reiterated an Overweight rating on

, and raised the price target from $36.00 to $40.00. In the report, J.P. Morgan noted, “HMIN reported stronger than expected 2Q adjusted EBITDA of Rmb394mn (JPMe 371mn). While total revenue of Rmb1.6mn is within guided range, the beat is mainly from better margin (on good cost control, operating leverage and increased contribution high-margin franchise hotels). Management outlook is incrementally positive, citing stabilized demand and saw a slight pick up in July (July's same hotel RevPAR increased ~1% yoy reversing the declining trend). Despite the slight downward revision in top line guidance, HMIN's profit should be more than offset by a stronger margin. With gradual stabilization of China macro and recovery of travel demand, we believe HMIN should see stronger than peer's earnings growth on its large asset base. We raise our PT to US40.0/ADR and move the timeframe to Jun-14 with a higher margin assumption, stay OW.” Home Inns & Hotels Management closed on Monday at $29.17.