Shanghai Jin Jiang International Hotels Co.Ltd(600754) (600754)
Summary of this issue:
The largest hotel group in China. In 10 years, the company replaced the economic hotel assets of the controlling shareholder with star hotel assets, and its main business was changed to limited service hotel operation and management, food and catering. In 15 ~ 16 years, it successively completed the M & A of Louvre, platinum Tao and Vienna Hotel Group, and the scale increased rapidly. At present, it has 39 brands, ranging from economy to high-end. In terms of hotel number and room volume, it is the largest hotel group in China.
Maintain a fast shop expansion speed. Shanghai Jin Jiang International Hotels Co.Ltd(600754) (China) plans to open more than 15000 hotels in 23 years, and plans to add 10000 contracted hotels and 7000 opened hotels in the next three years. In the context of the epidemic situation in the past 20 years, 1842 new stores were opened against the trend, 1500 stores were planned to be expanded in the next 21 years, and 1266 stores were opened in the first three quarters, with the progress in line with expectations.
Integration brings about economic efficiency improvement. The establishment of China will integrate the functional departments of the original brand companies and share resources. Establish “one center and three platforms” to optimize resource allocation and help business collaboration. With the continuous advancement of the company’s integration and the continuous optimization of employees at the headquarters and store levels, the number of employees has decreased by 5729 in the past 20 years, and the sales and marketing expense rate and administrative expense rate are gradually closer to Huazhu.
Wehotel improves the contribution rate of direct sales. Set up wehotel to integrate member resources and aggregate traffic. As of June 21, the total number of members had reached 186 million. Wehotel optimizes the reservation rate and settlement cycle, which is more popular with partners and franchisees. From the perspective of houses sold, the direct selling rate exceeds 50%, and from the perspective of houses available for sale, the direct selling rate exceeds 40%. In the future, with the establishment of private domain traffic and fine operation of members, the direct selling rate is expected to further improve, reduce the distribution proportion of Ota, and then improve the bargaining power of commission rate.
Divest hotel assets and light asset operation. Since January 2020, the company and its wholly-owned subsidiaries have stripped off the assets of economic hotels for many times and continued to be responsible for the operation of these hotels in the form of custody. While releasing the income from asset appreciation, the asset light strategy has gone further. The proportion of franchised hotels and rooms has been increasing in recent years. The proportion of hotels has increased from 82.1% in 17q1 to 91.0% in 21q3, and the proportion of rooms has increased from 79.2% in 17q1 to 89.7% in 21q3
Investment suggestion: from the perspective of the hotel industry, during the epidemic, some hotels were closed and the supply was cleared. With the improvement of the epidemic, the supply and demand pattern improved. The company is a leader in the hotel industry, with leading scale, multi development team cooperation and rapid expansion of stores. The integration in China has brought about the improvement of business efficiency. It is estimated that the EPS in 2021 / 22 / 23 will be 0.21/1.23/1.77 yuan / share. At present, the stock price corresponds to the valuation of 47x / 33x in 2022 / 23, which is covered for the first time and rated as “overweight”.
Risk factors: the impact of repeated epidemic on the tourism industry and the impact of macro-economy on the tourism industry.
