Shanghai Jin Jiang International Hotels Co.Ltd(600754) (600754)
Key investment points
The hotel industry has entered the stage of steady increase in volume and price, with franchise chain and product upgrading as the main melody. China's hotel industry has developed for more than 40 years, experienced two upgrading waves, and its scale has expanded steadily. From 2016 to 2019, the CAGR of hotel / room volume in China was 5.4% / 7.7% respectively, with a stable growth. According to Euromonitor, In 2020, the market scale of China's hotel industry will be 275.9 billion yuan (yoy-45.8%), which is expected to reach 105.18 billion yuan by 2026 (CAGR is 25% from 2020 to 2026). Low barriers to entry lead to single hotels occupying the main body, and the chain rate is only 31% at the end of 2020. Compared with the mature markets in Europe and America, Chinese chain brand hotels have broad space. From the perspective of market structure, the proportion of economy / mid-range / high-end hotels in China will be 79% / 16% / 5% respectively in 2020, compared with the United States (20% / 41% / 39%), product upgrading and midrange capacity expansion are still the main trends.
The epidemic situation bottomed out, the supply was cleared, and the leader took advantage of the situation to accelerate the chain expansion. The end of 2019 is the bottom of the last cycle. The impact of the epidemic has led to repeated friction in the industry at the bottom. In 2020, the hotel industry will have a net decrease of 59000. The three chain leaders of Jinjiang / Huazhu / BTS took advantage of the trend to accelerate the expansion, and the monopoly pattern of chain hotels became clearer, In 2020, the CR3 of the chain hotel market will reach 43% (YoY + 2.5pct). In the medium term, the risk of uncertainty brought by the epidemic to the industry still exists, but the certainty of improving the leading competition pattern is becoming stronger and stronger. In the long term, the three oligarchs will double the market space of the chain hotel, enjoy the improvement of market share and growth value, and the valuation center will continue to move upward.
Shanghai Jin Jiang International Hotels Co.Ltd(600754) : China's hotel scale is longyi, multi brand and full price coverage. Relying on the SASAC of Shanghai, the company has formed four brand series of Jinjiang, Vienna, Botao and Louvre through M & A integration, comprehensively covering economy to medium and high-end hotels. By the end of September 2021, the company has opened 10195 hotels and signed more than 15000 hotels. It is the largest chain hotel group in China. According to the top 225 global hotel groups in 2020 published by hotels magazine, Shanghai Jin Jiang International Hotels Co.Ltd(600754) ranks second in the world with more than 1.13 million rooms.
Brand card + excellent market-oriented operation of state-owned enterprise resources, and the epidemic situation expanded rapidly against the trend. Under the impact of the epidemic, state-owned enterprises have particularly obvious advantages in financing and property resources. Jinjiang exclusively provides low interest loans totaling 3.5 billion yuan with an annual interest rate of less than 4.5% to its franchise hotels; The company has more advantages in obtaining land in self operated hotels, and helps franchisees obtain more preferential land resources and establish a good brand image. The company set up China in May 2020 to accelerate the bottom layout. With the help of: 1) accelerating the brand integration at the front end, accelerating the expansion of foreign franchises, and assessment + incentive, the company aims to double the scale and profit by 2023; 2) The back-end promotes the coordination of middle and back-end management to improve internal operation efficiency. The establishment of Jinjiang China is an important signal of the company's transformation from scale to efficiency. The brand effect and card position brought by the first mover leader are superimposed. The improvement of store expansion speed and efficiency is continuously verified, and it is expected to continue to expand the industry leading position in the medium and long term.
Profit forecast and investment rating: Based on the assumption that 1500 new stores will be added from 2021 to 2022, and the proportion of franchised Hotels & medium and high-end hotels will further increase under the continuous promotion of medium and high-end / asset light strategy, and considering that the performance in 2021 will be under pressure due to the epidemic since Q4, and is expected to improve in 2022. In the long run, we are optimistic about the company's medium and high-end expansion potential and the performance elasticity brought by the improvement of operating efficiency. We expect that the company's revenue in 2021-23 will be RMB 11.93/16.02/18.07 billion, with a corresponding year-on-year growth rate of 20.5% / 34.3% / 12.9%. The net profit attributable to the parent company in 2021-23 will be RMB 2.0/14.0/1.96 billion, with a corresponding year-on-year growth rate of 82.0% / 599.8% / 39.6%. The current stock price corresponds to dynamic pe294 / 42 / 30 times, maintaining the rating of "overweight".
Risk tips: macroeconomic fluctuations, continuous and repeated epidemic risks, intensified brand competition risks, expansion quantity & quality is lower than the market expected risks, and the integration of the middle and back office is lower than the market expected risks.
