\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 073 Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) )
Hotel leaders with different positioning grow differently and differentiate in the post epidemic era. Economy hotels pay attention to the ultimate cost performance, and scale efficiency comes first under high standardization; The front-end style of middle-end hotels is slightly differentiated, but the scale and efficiency are still the core. After the epidemic, the trend of leading enterprises accelerating and concentrating is obvious. Medium and high-end hotels focus on the balance between quality and efficiency, differentiated and personalized premium. At present, the pattern is uncertain, the mode is different, the path is diverse, and there are differentiated development opportunities under different subdivision positioning. The epidemic situation is repeated, and the medium risk and opportunity coexist. For high-end and luxury hotels, brand comes first and foreign capital dominates. However, after the real estate fever fades, efficiency is taken into account under the brand premium, the epidemic situation accelerates the test, and there are welcome opportunities for local high-end hotels in China. Among them, high-end resort hotels are more difficult to manage than business hotels due to seasonal + regional differences, but there are new opportunities for resort projects around core cities after the epidemic.
“Small and beautiful” is the leader of medium and high-end hotels Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) was founded in 2007. It has a medium and high-end positioning and is deeply rooted in the Yangtze River Delta. The core management team holds nearly 70% of the shares and has rich experience in hotel operation. In the past, the company was dominated by direct sales (the performance of direct sales before the epidemic accounted for 80-90%), supplemented by the expansion of entrusted management, with a small scale. Nearly 70 hotels were opened + contracted by the end of 2021, of which 47 had been opened by the end of September. However, under intensive cultivation, the company’s Direct stores operate well, the net interest rate of mature projects is around 20%, and the profit-making Direct stores account for 80% in 2019. In September 2021, the company was successfully listed on the gem; In January 2022, the company announced that it planned to acquire the homologous high-end local hotel brand Junlan group (to build the first brand of local high-end resort hotels), so as to help scale expansion, brand positioning and light and heavy modes complement each other.
Growth highlights: the stock of direct business laid the foundation, and the accumulation + listing platform is expected to help speed up the scale expansion. The company’s stock of direct business is stable and excellent, and has built a basic market. After the acquisition of Junlan, the ranking of the company’s room scale is expected to rise from the previous 49th to 13th. In the future, after the integration of Junting + Junlan, with the support of brand accumulation and listing platform, the company’s future scale expansion, especially light asset expansion, is expected to accelerate; Second, after the recovery of the industry, the proportion of Junlan hotel is expected to increase, which will help the revenue and performance growth; Third, based on the support of the listing platform, the company still does not rule out the expectation of potential further extension acquisition in the medium and long term in the future; Fourth, with the increase in the proportion of asset light projects and the acceleration of scale effect, the line profit center is expected to improve, and when the industry recovers, the incentive management fee (GOP Commission) is also expected to bring some flexibility.
Profit forecast and Valuation: with the help of M & A integration and listing, the company is expected to meet the inflection point of accelerated expansion and adjust the company’s EPS to 0.44/0.95/1.66 yuan in 21-23 years (previously 0.45/1.05/1.55 yuan, repeated downward revision of the epidemic in 22 years and slight upward revision of Junlan and other potentials in 23 years), corresponding to pe132 / 62 / 36x. Based on the absolute and relative valuation, we believe that the reasonable valuation range of the stock is 62.7-67.9 yuan, with a premium of 6.8% – 15.6% over the current price, maintaining the “overweight” rating.
Risk tip: systemic risks such as epidemic situation, store expansion is lower than expected, and extension integration is lower than expected.
