\u3000\u3000 Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) (301073)
The company has made it clear that the acquisition of Junlan group is of great significance: Junlan / Jinglan brands under Junlan group cover 23 / 13 provinces and cities, with a total investment and management of more than 180 / 75 hotels. The significance of the acquisition of Junlan group lies in: 1) hotel scale and collectivization development, 2) rapid improvement of market scale and brand influence, 3) The mature brand advantages + customer source advantages + high-end hotel management experience of high-end brands Junlan and Jinglan form the core competitiveness. 4) there is a synergistic effect between the company and Junlan and Jinglan – collectivization brings about the improvement of voice, the sharing of business channels can reduce costs, improve the brand layout, enter the high-end and full-service hotel market, and the integration of business travel and Resort Hotel advantages can transform passenger flow. In addition, the company confirmed that the follow-up business does not involve the development and operation of commercial real estate.
The competitiveness of Junlan and Jinglan is reflected in: 1. Brand advantages: 1) market ranking (21 years). Junlan group (Junlan + Jinglan) ranks 14th in China Hotel Group (by 125 stores and 33415 rooms) Junlan hotel / resort under Junlan brand is the 7th / 9th luxury brand of Chinese chain hotels (64 / 36 stores, 17798 / 11465 rooms and 3.1% / 2.0% brand market share respectively). 2. Customer source advantages: first, agreement customers ( China Petroleum & Chemical Corporation(600028) , Alibaba business travel, longtengjie travel, etc.), second, member customers (stock registration of 2.7 million), third, OTA cooperation, and fourth, hotel owner customers (Vanke, Greentown, Minmetals, Hainan, Zhejiang and other tourism investment platforms). 3. High end hotel management experience: many years of deep cultivation in the field of high-end resort hotels, 98 / 28 contracts signed by Junlan / Jinglan in 19-21 years, and 80 / 22 to be opened by the end of 21.
The annual net income of Jun He is expected to be RMB 19.853 million / Lan Jing, and the annual net income of Jun He is expected to be RMB 19.853 million / Lan Jing is expected to be RMB 4.753 million / Lan Jing; Jinglan’s 20-year / 21q1-3 revenue is 1496 / 13320000 yuan and net profit is – 431 / – 670000 yuan. It is expected to generate 2714 / 3011000 yuan and -1.9/842000 yuan in 22 / 23 years. After a 3-5-year climbing period, Junlan / Jinglan’s stable period will generate 100 million yuan / 40120000 yuan and 2781 / 2190000 yuan for the company.
In addition, the revenue CAGR of Junlan and Jinglan is only 10% + in 22-26 years, while the industry overview is that the number of guest rooms of economical / middle end / high-end chain hotels in 2018-20 is cagr-0.83% / 27.18% / 20.22% to 238 / 103 / 1.28 million respectively. Assuming that the medium and high-end annualized growth rate of 20% is maintained in 2022-26, the revenue of Junlan and Jinglan is highly realizable. This time, the company also made a full response to the specific integration and control measures of the acquisition subject matter, as well as the rationality of its valuation, the amortization of trademark intangible assets, the rationality of changing listing and fund-raising, etc.
Profit forecast and investment suggestions: continue to emphasize the early view – we believe that this acquisition is of great strategic significance: first, Junting is more than Junting and will build a comprehensive medium and high-end hotel group; second, Junlan is at the low point of performance and acquisition valuation, and its performance flexibility is large enough after the epidemic. After the acquisition, the company has managed more than 300 hotels and more than 60000 guest rooms. It is expected to further improve the national market share and become a leading enterprise of medium and high-end hotels by expanding the scale of high-end junlanshu brand + middle-end Junting. We expect that the company’s net profit attributable to the parent company in 21-23 years will be RMB 36 / 111 / 169 million, maintaining the “buy” rating. It is recommended to pay active attention!
Risk warning: the expansion of entrusted management is less than expected; The effect of acquisition and integration is less than expected; The operation of the target company fails to meet expectations; Impairment risk of goodwill and intangible assets, etc.
