\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 073 Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) )
Event comments
Deeply cultivate medium and high-end products and expand from the Yangtze River Delta to the whole country. Founded in 2007, the company is committed to building a medium and high-end selected service hotel with oriental art characteristics. Its main business includes limited service hotel operation and hotel management business. At present, the company has 51 hotels and 41 stores in the Yangtze River Delta, with a total of more than 7500 guest rooms. With the completion of the M & A of Junlan and Jinglan hotels, the pace of national market expansion will be greatly accelerated.
The epidemic situation promotes the chain rate, and high-end is imperative. Chain operation avoids high rigid costs and expenses, improves the cost control ability of enterprises and reduces business risks. Affected by the epidemic, single hotels have accelerated the liquidation. Chain hotels have strong anti risk ability relying on the strong financial strength and strong brand strength of the parent company, and the chain rate of the industry has increased. China’s hotel supply structure presents a “pyramid”. Compared with the “olive” of the United States, the supply of medium and high-end hotels is insufficient. At present, on the one hand, under the background of consumption upgrading, consumers’ requirements for hotel quality and accommodation experience are constantly improving; On the other hand, with the increasing pressure of rent and labor cost, hotel owners must also improve the room price by upgrading the hotel quality in order to make a profit.
Innovative service model brings high premium. The company creatively put forward the “bas” selection service mode in the industry, showing strong product power. The company provides good hardware facilities and check-in experience, excavates the cultural atmosphere with oriental characteristics, and forms a Junting service system innovation of “product selection, culture selection and service content selection”. Compared with other medium and high-end products, the company has outstanding premium ability. The company is deeply engaged in direct marketing, and the number of Direct stores accounts for 34%, far exceeding the three leading enterprises in China. Different from the traditional franchise mode adopted by China’s leaders, the company realized “from heavy to light” with the help of the entrusted management mode, and the proportion of entrusted management stores reached 66%. “Direct marketing + entrusted management” mode can not only uniformly implement the strict service quality standards with the characteristics of the company, but also carry out differentiated and personalized product competition according to the characteristics of each hotel.
Investment advice
We believe that the turning point of the recovery of the hotel industry is coming. With the continuous improvement of the epidemic situation, the travel passenger flow is expected to recover strongly, driving the rapid recovery of the overall prosperity of the hotel industry. The company made efforts to expand new stores, acquired Junlan and Jinglan, and accelerated the process of scale expansion and high-end. In the future, it is expected to show brilliant performance flexibility in the environment of industry boom recovery. It is estimated that the operating revenue of the company from 2022 to 2024 will be RMB 460 / 6.0 / 700 million respectively, and the net profit attributable to the parent company will be RMB 68 / 123 / 153 million respectively; EPS is 0.84/1.53/1.90 yuan / share respectively. Based on the closing price of 75.47 yuan / share on April 26, 2022, the corresponding PE is 89 / 49 / 40. It is rated as “strongly recommended” for the first time.
Risk tips
Repeated epidemic impact; The expansion of entrusted management stores is less than expected; Industry competition intensifies.
