\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 258 Btg Hotels (Group) Co.Ltd(600258) )
Matters:
The company issued the 2021 performance express. In 2021, the revenue will reach 615386600 yuan / + 16.49%; The parent company’s performance was 556769 million yuan, an increase of 5516822 million yuan over the same period of last year; The deduction of non performance is 109458 million yuan.
Guoxin social service’s view: 1) in 2021, the performance turned from loss to profit. Among them, the performance of Q4 was still under pressure due to the impact of the epidemic, but the opening of stores in a single quarter was further accelerated, making the company’s new stores hit a record high in 2021. 2) Considering the recent repeated outbreaks, we assume that RevPAR of the company’s hotels in 20222023 will recover by 84% and 99% (previously 93% and 101%), and then reduce the company’s eps0 from 2021202305 / 0.61/1.04 yuan (previously estimated eps0.85/1.09 yuan after 22-23 years of dilution), corresponding to the valuation of 557 / 46 / 26x. 3) Considering the high proportion of the company’s Direct stores and the flexibility of the industry recovery, supported by the three-year goal of 10000 stores, the company’s stores have actively expanded, the asset integration of major shareholders has been actively promoted, and the growth of the middle line is interesting, so the “buy” rating is maintained. 3) Risk tips: macroeconomic fluctuations, epidemic and other systemic risks, the marginal relaxation rhythm of prevention and control policies is lower than expected, and the reform of state-owned enterprises is lower than expected.
Comments:
In 2021, the performance turned from loss to profit. With the repeated Q4 epidemic, the single quarter performance is still under pressure
According to the 2021 performance express released by the company, the company expects to achieve a revenue of 615386600 yuan / + 16.49% in 2021; The net profit attributable to the shareholders of the listed company was 556769 million yuan, an increase of 5516822 million yuan over the same period of last year; After deducting non recurring profits and losses, the net profit attributable to the shareholders of the listed company was 109458 million yuan, which turned loss into profit as a whole, which was within the previous performance forecast range (the overall profit was 45 ~ 65 million yuan, and the non performance was deducted by 8-12 million yuan). The overall performance of the company is also basically consistent with our previous performance forecast of 58 million yuan.
In 2021q4, the company achieved a revenue of 1.427 billion yuan / – 16.32%, only 69% of that before the epidemic. The performance and deduction of non performance lost 69 million yuan and 83 million yuan respectively, which is still under pressure, mainly due to the repeated impact of Q4 epidemic again. Overall, the company gradually recovered in Q1 and Q2 last year, but its performance remained under pressure after repeated outbreaks in the second half of the year.
Business Review: RevPAR was high before recovery and low after recovery, and the opening of Q4 stores was further accelerated
Combined with our industry tracking, RevPAR in the hotel industry fluctuated with the impact of the epidemic in 2021. It recovered rapidly from March to May. It was under pressure in South China in June. After the end of July, the spread of the epidemic in Nanjing brought overall pressure, and after the end of October, the epidemic in Northwest China brought fluctuations. In 2021, the company’s RevPAR increased by 20.2% compared with that in 2020. Among them, the RevPAR of Q1 Hotel recovered to 44% in 2019. Later, with the effective control of the epidemic in China and the impact of small and long holidays, Q2 RevPAR has recovered to 91%. Q3 was damaged by the repeated peak seasons of the epidemic, RevPAR only recovered to 71%, and Q4 continues to be under pressure due to the repeated prediction of the epidemic again.
2021q4 further speed up the opening of stores. In terms of opening stores, the company opened 1418 stores in the whole year, an increase of about 56.0% over the same period last year. The scale of opening stores reached the highest level in history and achieved the business goal of 14001600 stores planned in 2021. Among them, considering the impact of the epidemic, we expect the soft brand stage to account for 50% +. By the end of 2021, the number of hotels of the company had reached 5916, an increase of 20.9% over the end of last year. Quarterly, 184 / 324 / 325 / 585 new stores were opened in 2021q1-q4, with a net increase of 97 / 240 / 223 / 461 stores. Among them, the pace of opening stores in Q3 was suppressed, and the speed of opening stores in Q4 was significantly accelerated.
Business outlook: the recovery is flexible, the opening of stores is supported, and the integration of major shareholders is promoted
The proportion of Direct stores of the company is relatively high, and it is expected to have good performance elasticity when the industry recovers. As of 2021q3, among the top 3 hotel chains in China, the direct operated hotels under Btg Hotels (Group) Co.Ltd(600258) banner accounted for 14%, which was higher than that of Jinjiang and Huazhu (within China) by about 9%. Due to the high operating leverage of hotel direct stores (rent, amortization and other fixed costs usually account for 50% +), their cycle characteristics are relatively prominent. When the cycle of the hotel industry is upward, the performance elasticity is strong, on the contrary, the pressure is also significant when the industry is at a low point. In the past, regardless of the epidemic situation or other infrequent disturbances, the company’s overall operating profit margin generally changed between 8-15%, with relatively large fluctuations, which were mainly affected by RevPAR fluctuations and the structure of Direct stores.
Furthermore, in the past two years, the epidemic situation in the hotel industry has been repeated, and the single hotel has been cleared, resulting in the reduction of industry supply. When the travel recovers in the future, it is expected to further help the recovery of RevPAR, the leading hotel. According to yingdie.com, at the end of 2020, China operated 450000 hotels and 16.2 million guest rooms, with a year-on-year decrease of 26% and 14% respectively. In 2021, the epidemic situation was repeated. We expect the supply of the hotel industry to decline further and the industry to speed up the liquidation. Some of them may permanently withdraw from the hotel market, and some may enter the hotel market in the future, but they often need to be renovated. There may be a certain time lag, which provides certain favorable conditions for the recovery and rebound of the leader.
In the past performance of the company, the stock price is greatly affected by the economic cycle, and the valuation is also cyclical. Due to the periodicity of hotel business and the relatively high proportion of Direct stores of the first brigade itself, the dynamic valuation of the company shows a certain positive correlation with the trend of PMI. Moreover, with the strengthening of learning effect, the company’s previous share price sometimes reacted slightly before RevPAR, that is, the subsequent expected improvement will lead to the early response of the company’s share price and valuation. On the whole, companies are often expected to meet the challenges when the industry cycle is upward. On the one hand, the economic recovery RevPAR helps its performance elasticity. On the other hand, the economic recovery and expectation also help to boost its valuation. It may even be more than 35x in the peak stage.
In addition, the company continued to promote the integration of hotel assets with major shareholders. 1) ShouLv Jianguo, a wholly-owned subsidiary of the company, has signed a 4-year, 11 month and 5-year discretionary management service agreement with Beijing Liangmahe Building Co., Ltd. and Beijing Xinqiao Hotel Co., Ltd., which are the major shareholders of the company. According to the estimation of historical data, it is expected to charge a total management fee of about 5.17 million and 7.5 million yuan. The specific amount is subject to the actual audited data every year; 2) The indirect wholly-owned subsidiary of the company, such as jiahemei Hotel, signed a commercial property lease agreement with the major shareholder’s Beijing Shangyuan Hotel Company with a lease term of 10 years and a cumulative total amount of 86.218 million yuan for self operated hotel operation.
Investment suggestion: performance turnaround, shop opening accelerated, looking forward to recovery, and maintain the “buy” rating
Considering the repeated epidemic situation since 2022, we lowered the company’s eps0 from 2021 to 202305 / 0.61/1.04 yuan, corresponding to the valuation of 557 / 46 / 26x. Among them, the profit forecast for 2021 is basically consistent with the performance forecast, but the EPS forecast for 22-23 is lower than that in the previous three quarterly reports (it was previously estimated that the EPS for 22-23 is 0.85/1.09 yuan after dilution of equity after additional issuance). This profit adjustment mainly takes into account the repeated impact of the epidemic. The neutral assumption is that the improvement of the epidemic or the relaxation of the control margin in 2022q2 will lead to the recovery of travel, and the restoration assumption of hotel RevPAR from 2022 to 2023 will be revised (from the estimated RevPAR in 22 and 23 years to 93% and 101% respectively before the epidemic to 84% and 99% before the epidemic), resulting in profit fluctuations. From the perspective of valuation, the company’s past comparable dynamic valuation was mostly between 18 and 38x. Considering the disturbance of the epidemic, the current market will refer to the company’s valuation in 2023. On the whole, the proportion of Direct stores of the company is relatively high, and the industry recovery is flexible. At the same time, supported by the goal of 10000 stores in three years, the company’s stores have actively expanded, the asset integration of major shareholders has also been actively promoted, the growth of the middle line is interesting, and the “buy” rating has been maintained.
Risk tips
Macroeconomic fluctuations, epidemics and other systemic risks, the marginal relaxation pace of prevention and control policies is lower than expected, and the reform of state-owned enterprises is lower than expected.
