\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 073 Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) )
Main points:
Short term: the epidemic situation catalyzes the integration of the industry and ushers in new opportunities for the development of local brands
The epidemic accelerated the differentiation of the industry pattern: (1) the chain process accelerated: affected by the epidemic, single hotels are facing business crisis due to the lack of mature management system, member flow and intensive operation support, and then seek chain. By the end of 2020, China's chain rate was 31.5% (+ 6.6pct, with an average annual growth of 2.3pct from 2016 to 2019), compared with the global average chain rate (41.9%) and the U.S. chain rate (72.9%), there is still room for improvement. (2) Local brands have ushered in new opportunities for development: the epidemic has cut off international passenger flow. Under the background of internal circulation, Chinese consumers' cultural confidence has increased, and real estate has entered the stock era (CAGR of real estate investment from 2015 to 2021 is 8.1%, and CAGR of 2000 to 2015 is 23.7%). The land acquisition advantages of foreign brands have been weakened, and local brands have been superimposed to continuously optimize the product model, which is expected to develop rapidly.
Medium and long term: supply and demand promote structural upgrading, and demand refinement leads to medium and high-end diversification
(1) number of medium and high-end hotels: from the demand side, tourism demand and business demand are the main needs of the hotel industry. Due to the upgrading of consumption and the increase of travel frequency (the number of tourists CAGR in 20142019 is 10.71%, and China's per capita single travel cost increased from 839.7 yuan in 2014 to 953.3 yuan in 2019), tourism consumers' demand for medium and high-end hotels increased; Due to the adjustment of travel expenses, business consumers' preference for medium and high-end hotels has increased. In 2020, 61.1% of business consumers choose medium and high-end hotels (+ 3.4pct); From the supply side, the hotel side in order to alleviate the pressure of profit narrowing caused by the rise of house prices less than the cost of economic hotels, and accelerate the transformation and upgrading of economic hotels to medium and high-end. In the medium and long term, the hotel grade structure matches the population income structure. By the end of 2020, the proportion of China's middle-end hotels (32%) is lower than that of China's middle class (46%), and there is still much room for the development of middle-end hotels. (2) Types of medium and high-end hotels: under the joint action of multiple factors such as consumption upgrading, the rise of emerging consumer groups and the impact of the epidemic, the consumer demand is differentiated. The hotel group accurately locates the core consumers and launches personalized hotels to enhance brand stickiness. By the end of 2020, diversified theme hotels accounted for 66.3%.
Junting: bas mode creates core advantages and expands to the whole country with the Yangtze River Delta as the center
The company focuses on direct marketing, deeply cultivates the core business areas and resort areas of the first and second tier cities in the Yangtze River Delta, creates a medium and high-end bas selection service mode, obtains higher product premium ability through differentiated products and high value-added services, drives the RevPAR of the company to be 20% ~ 30% higher than other medium and high-end liquor stores, improves the profitability of single stores, improves brand competitiveness, and expands light assets with the help of entrusted management mode. While building the moat in the Yangtze River Delta, the company copied the model and expanded to the southwest market, the Pearl River Delta market and other provincial capitals.
Junlan: M & A integration gives play to synergy, seizes high-end vacation opportunities and accelerates expansion
(1) synergy: according to yingdie consulting data, after the company acquired Junlan and Jinglan, the number of guest rooms has rapidly increased from 6345 at the end of 2020 to 39760, the number of hotels has increased from 45 at the end of 2020 to 170, and the scale ranking is expected to rise from 49 to 13. Junting and Junlan brands share the same root and origin, and the integration is expected to proceed smoothly. The brand matrix will be further improved. With the brand advantages of Junlan hotel in the country, Junting brand can accelerate its expansion. (2) Shengeng Resort Hotel: under the influence of the epidemic, high-end vacation consumption returns, and short-term, short-distance, high-frequency and daily tourism has become the mainstream choice of middle and high-income groups. Junlan group has deeply cultivated the high-end vacation market, arranged golden scenic spots and suburban tourist areas of core cities, created a "four South and one north" vacation sector, formed a card advantage, met the needs of consumers through products with unique genes, accumulated brand potential and expanded rapidly. By 2021h1, there were 113 Junlan holiday brands, accounting for 53.6% of the number of hotels in Junlan group. It is estimated that from 2022 to 2024, the number of newly signed hotels in Junlan and Jinglan will be 42, 43, 44, 20, 25 and 30 respectively.
Investment advice
The company locates medium and high-end selected hotels, deeply cultivates the core area of the Yangtze River Delta, improves profitability through differentiated products and high value-added services, shapes brand influence, and then uses the entrusted management mode to expand assets light. From the perspective of the company's short-term recovery cycle, it can release the performance of the company, which is mainly based on the short-term recovery cycle; Junlan group focuses on high-end resort hotels. After the impact of the epidemic fades, the repair flexibility is greater. In the long run, the company is expected to further expand and increase its market share with the help of Junting and Junlan brand influence under the background of the improvement of the chain rate of the industry, the upgrading and diversification of medium and high-end hotels and the development opportunity of local high-end brands. It is estimated that the current share prices of PE and PE are respectively 116.0 and 46.66 times that of 2021 ~ 2023, respectively. For the first time, give a "overweight" rating.
Risk tips
Repeated outbreaks in some areas; Store expansion speed is lower than expected; M & A integration is less than expected
