\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 073 Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) )
Event:
Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) released the annual report of 2021 and the first quarterly report of 2022: 1) in 2021, the operating revenue was 278 million yuan / + 8.39%, the net profit attributable to the parent company was 36.92 million yuan / + 5.28%, and the net profit not attributable to the parent company was 31.17 million yuan / + 2.66%; 2) 2021q4 achieved an operating income of 65.58 million yuan / – 25.50%, deducting 390000 yuan / – 97.64% of the net profit not attributable to the parent company; 3) In 2022q1, the operating income was 61.51 million yuan / – 3.72%, the net profit attributable to the parent company was 3.92 million yuan / – 44.58%, and the net profit not attributable to the parent company was 2.87 million yuan / – 48.32%.
Key investment points:
The annual revenue has recovered steadily, and 2022q1 has declined repeatedly due to the epidemic. In 2021, the company achieved an operating revenue of 278 million yuan / + 8.39%, of which 2021q4 was 65.58 million yuan / – 25.50%, a month on month increase of + 0.16%; 2022q1 was 61.51 million yuan / – 3.72%, a month on month increase of – 6.22%. The company has some direct stores that have not been requisitioned as isolation hotels, mostly in the Yangtze River Delta. Due to the severe impact of the current round of epidemic, the overall income has declined.
Sub business: in 2021, the hotel operation (direct operation) achieved an operating revenue of 247 million yuan / + 2.41%, accounting for 89.01%, including 202 million yuan / + 11.93%, accounting for 72.93%, catering service of 24.38 million yuan / + 8.68%, accounting for 8.78%, and other supporting facilities of 20.25 million yuan / – 46.66%, accounting for 7.30%; The hotel management business (entrusted management) is 30.51 million yuan / + 105.58%, accounting for 10.99%.
By Region: in 2021, the operating revenue of Zhejiang Province was 133 million yuan / – 3.79%, accounting for 47.86%, and that of Shanghai was 103 million yuan / + 31.23%, accounting for 37.08%; The total operating revenue in the Yangtze River Delta is 240 million yuan / + 9.28%, accounting for 86.44%, and that outside the Yangtze River Delta is 37.62 million yuan / + 13.50%, accounting for 13.56%.
The business situation recovered in 2021, and the supply of isolated hotels was increased in 2022q1 to improve OCC. 1) The business indicators in 2021 increased year-on-year, and the epidemic situation in 2021q4 decreased month on month. In 2021, RevPAR was 231.15 yuan / + 26.19%, recovering to 80.50% in the same period in 2019; OCC was 58.03% / + 8.14 PCT, up from – 9.19 PCT in 2019; ADR was 398.33 yuan / + 8.50%, up from – 6.75% in 2019. In 2021q4, RevPAR was 217.48 yuan / – 14.81%, recovering to 75.22% in the same period in 2019 and – 3.84% month on month; OCC was 53.95% / – 15.55%, up from -14.82pct in 2019 and -2.04pct month on month; ADR was 403.12 yuan / + 9.74%, with a year-on-year ratio of – 4.12% in 2019 and a month on month ratio of – 0.20%. In the first half of 2021, China’s business travel market recovered orderly, superimposed on the low base effect in 2020, and the annual business indicators increased significantly year-on-year. The decline of 2021q4 business indicators was affected by the rebound of the epidemic, the suppression of passenger flow and the insufficient supply of isolated hotels at that time; 2) In 2022, the supply of Q1 isolated hotels increased significantly, and OCC led RevPAR to increase year-on-year. In 2022q1, RevPAR was 209.07 yuan / + 5.11%, recovering to 80.34% in the same period in 2019, with a month on month ratio of – 3.87%; OCC was 59.70% / + 7.58%, up from -1.76 PCT in 2019 and + 5.75 PCT month on month; ADR was 350.2 yuan / – 8.23%, up from – 17.28% in 2019 and – 13.13% month on month. Since March, the Yangtze River Delta has been seriously impacted by the epidemic. The company has significantly increased the supply of isolated hotels. The company’s hotels in Shanghai, Jiangsu Province and some hotels in Zhejiang Province are engaged in isolated hotel business. Therefore, although ADR has declined year-on-year, RevPAR is still driven by OCC.
M & A of Junlan Jinglan has greatly expanded its scale and orderly expanded its national key cities. The company intensively cultivates medium and high-end hotels. Its Junting brand is characterized by direct marketing and pays attention to product polishing. It managed and invested in more than 70 hotels in 2021. With the acquisition of Junlan and Jinglan in January 2022, the company invested and managed more than 300 hotels. In 2022q1, Junlan Hotel, which focuses on entrusted management, signed 13 new high-end hotels and realized more than 200 investment management projects. Relying on the three brands of Junting, Junlan and Jinglan, the company plans to gradually expand from the Yangtze River Delta to key cities in China, and aims to sign 100 projects in 2022.
The gross profit margin has been optimized, the impact of the epidemic and the short-term pressure on the cost rate under the new lease criteria. 1) In 2021, the gross profit margin of the company was 33.27%, with a year-on-year increase of + 8.13pct. In terms of business, the gross profit margin of hotel operation was 27.00% / + 5.05pct, the gross profit margin of hotel management was 84.03% / + 7.20pct, and in terms of regions, the gross profit margin of Shanghai was 44.95% / + 8.15pct and that of Zhejiang Province was 22.88% / + 5.27pct; The gross profit margin of 2021q4 was 26.83%, with a year-on-year ratio of -3.64pct and a month on month ratio of -5.86pct; In 2022q1, the gross profit margin was 28.85%, with a year-on-year increase of + 1.33pct and a month on month increase of + 2.01pct. Among them, the leasing expenses of leasing business decreased significantly, which was caused by the adjustment of the new leasing standards. 2) Multiple factors such as the new lease criteria and the decoration of new stores under the epidemic have led to an increase in rates. In 2021, the company’s sales expenses were 13.5 million yuan, a year-on-year increase of + 33.61%, management expenses were 23.14 million yuan, a year-on-year increase of + 45.17%, financial expenses were 19.39 million yuan, a year-on-year increase of + 222913%, and the three rate was 20.19%, a year-on-year increase of + 9.69 PCT; In 2022q1, the company’s sales expense was 3.06 million, a year-on-year increase of + 32.78%, the management expense was 6.77 million, a year-on-year increase of + 68.82%, the financial expense was 4.89 million, a year-on-year increase of – 3.99%, and the three rate was 23.95%, a year-on-year increase of + 6.08 PCT. In 2021, the Commission pushed up the sales expenses, and the financial expenses increased significantly due to the implementation of the new leasing standards. In 2021, the start-up expenses and amortization during the decoration of Chengdu Junting new store increased the management expenses. From January to February of 2022q1, it was still in the decoration period, and the performance affected by the epidemic was not released after operation, so the cost rate was under pressure.
Investment suggestion: Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) is the benchmark of medium and high-end hotels in China. Under the background of medium and high-end upgrading in the industry, the company accelerates the opening of stores through endogenous extension. In the short term, the base camp of the Yangtze River Delta has greatly increased the supply of isolated hotels during the epidemic period, which has buffered the impact of the epidemic. In the medium and long term, the high performance elastic superposition brought by the high proportion of medium and high-end Direct stores accelerates the expansion of stores and improves the growth, which is expected to lead the company into the fast lane of development after the epidemic. We expect that from 2022 to 2024, the company will realize an operating revenue of RMB 426 / 588 / 749 million and a net profit attributable to the parent of RMB 0.6/117174 million, corresponding to 100.56/51.78/34.99xpe. Maintain the company’s “overweight” rating.
Risk tip: the epidemic repeatedly affects the pace of industry recovery, the speed of store expansion is lower than expected, the integration effect after M & A is lower than expected, the industry competition intensifies, and macroeconomic fluctuations.
