\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 073 Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) )
Events
The company released its annual report for 2021. In 2021, it achieved a revenue of 278 million yuan (+ 8.39%), a net profit attributable to the parent company of 37 million yuan (+ 5.28%), a net profit not attributable to the parent company of 31 million yuan (+ 2.66%), and a basic earnings per share of 0.56 yuan.
The revenue recovered to 73% in 2019, and the proportion of hotel management business increased
In the first half of 2021, the situation of epidemic prevention and control improved and the hotel industry recovered in an orderly manner; In the second half of the year, there were repeated epidemics in the main distribution areas of the company’s hotels, and the operation was under pressure. In 2021, the annual revenue was 278 million yuan (+ 8.39%), recovering to 73% in 2019. Among them, the revenue of hotel operation business in 2021 was 247 million yuan (+ 2.41%), which recovered to 67% in 2019; In 2021, the revenue of hotel management business was 31 million yuan (+ 105.59%), which recovered to 205% in 2019, accounting for 11% (+ 5pct), mainly due to the continuous expansion of the company through entrusted management.
Increase in gross profit rate during the period
In 2021, the gross profit margin of the company was 33.27% (+ 8.13pct), which was mainly due to the restoration of some operations and the improvement of information system construction to reduce operating costs. In 2021, the company’s expense ratio was 20.19% (+ 9.68pct), of which part of the revenue recovered and the sales expense ratio increased by 0.91pct; In 2021, Chengdu hotel was in the decoration stage, and the corresponding rent was included in the management expense, resulting in an increase in the management expense rate of 2.11pct; The implementation of the new leasing standards resulted in a significant year-on-year increase in interest expenditure and an increase in the financial expense rate of 6.66pct.
In the second half of the year, the epidemic disturbance and recovery were under pressure, and the RevPAR recovered to 80% in the whole year
In 2021, OCC, ADR and RevPAR were 58.03% (+ 16%), 398.33 yuan / night (+ 8%) and 231.15 yuan / night (+ 26%) respectively, which recovered to 86%, 93% and 80% in 2019 respectively. Q1 ~ q4occ were 52.12%, 70.44%, 55.99% and 53.95% respectively; Q1 ~ q4adr are 381.61, 403.37, 403.93 and 403.12 yuan / room night respectively; Q1 ~ q4revpar were 198.90, 284.13, 226.16 and 217.48 yuan / night respectively, mainly due to the repeated impact of local epidemic in the second half of the year.
The acquisition and integration of Junlan and Jinglan is expected to achieve leapfrog development
2022q1 company acquired Junlan and Jinglan, and the scale of management and investment hotels has increased from more than 70 to more than 300. The brand matrix has expanded from medium and high-end selected hotels to full-service high-end business and resort hotels. With the integration, it is expected to further contribute to the development: (1) realize scale expansion: make use of the brand influence of Junlan hotel to help the company expand orderly from the Yangtze River Delta to Beijing, southwest and Pearl River Delta, In 2022, there are 100 contracted projects. (2) Expected performance flexibility: under the influence of the epidemic, outbound tourism is under pressure and high-end consumption returns. Junlan hotel is deeply engaged in the field of high-end vacation. With the improvement of the epidemic, the performance is expected to release greater flexibility.
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. In the short term, the company is mainly directly operated, and the industry recovery cycle can release greater performance flexibility; 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. We expect that the company’s EPS from 2022 to 2024 will be 0.73, 1.01 and 1.25 yuan / share respectively, corresponding to 95, 68 and 56 times of the current share price PE respectively, maintaining the “overweight” rating.
Risk tips
The epidemic situation in some areas is repeated, the expansion of entrusted management is less than expected, the rise of rent and labor costs compresses profits, and the market competition intensifies.
