\u3000\u3000 Shanghai Jin Jiang International Hotels Co.Ltd(600754) (600754)
The hotel group is a leader in acquiring high-quality assets to achieve leapfrog development
Shanghai Jin Jiang International Hotels Co.Ltd(600754) is an old state-owned enterprise, which is actually controlled by Shanghai SASAC. The company actively participates in the market-oriented reform of state-owned enterprises. In 2014, Hony capital was introduced to help the company with the mixed reform, and helped the company complete the M & A of famous hotel groups such as French Louvre Hotel, Vienna Hotel and platinum Tao Hotel, realizing leapfrog growth in the M & A. By 2021q3, the company had opened 10200 hotels, accounting for 20% of the market in China's chain hotel industry, ranking first in China.
The hotel business is the core, the domestic and overseas two-way development, and the franchise model enhances the profit stability
The company's main business is service-oriented hotel business, accounting for about 98% of the operating revenue. After the acquisition of Louvre, France, the company officially entered the overseas hotel market. In 2020, the overseas business revenue accounted for about 19%, and the internationalization process was ahead of other domestic hotel groups. The company's hotel operation mode is divided into direct operation mode and franchise operation mode. At present, the company mainly expands its stores quickly in the franchise mode. The four-year compound growth rate of franchise stores has reached 15.4%. As of 2021q3, the company's franchise hotels account for 91%. In 2020, compared with the direct business, the gross profit margin decreased by 37 PCT, and the gross profit margin of franchise business only decreased by 4 PCT. With the increase of the proportion of franchise hotels, the profit stability is expected to increase.
Optimize the organizational structure in China and "one center and three platforms" to improve innovation and management efficiency
In order to avoid the impact of M & A on the brand, the company has adopted the "sixteen character" policy for gradual reform since 2017, and the reform results have been gradually implemented. Set up Shanghai Jin Jiang International Hotels Co.Ltd(600754) China at the front end, break the barriers between subsidiaries and re sort out the organizational structure; "One center and three platforms" have been established at the back end. As the strongest brain enabling hotel of the company, the innovation center GIC has been upgraded. Wehotel, a global Internet sharing platform, has opened up the group membership system. In June 2021, the number of members has reached 186 million. The procurement platform GPP and Financial Sharing Platform FSSC help the company's business process automation. With the deepening of reform, each sub group has steadily increased in the number of stores and net interest rate.
Lead the industry with first mover advantage, strengthen the moat with strong scale and brand advantages
High quality property resources are the key to the competition in the hotel industry. The company grasps the first mover advantage. Among the top ten brands in the market share of economy hotels and medium and high-end hotels, medium-end brands occupy four seats, accounting for 39.3%, and economy hotels occupy two seats, accounting for 11.8%, with significant scale advantages. In the process of M & A and innovation, the company has more than 40 hotel brands, covering all price tracks from economical to high-end hotels. It continues to develop medium and high-end hotel brands, and its profitability is expected to be further improved.
The epidemic situation has accelerated and the industry has been cleared. There is wide room for the chain of low-level cities and the proportion of medium and high-end hotels to increase
China's hotel industry has a wide space. In terms of quantity, the chain level of hotels in low tier cities is low. In 2020, the chain rate of low tier cities was only 24.3%, far lower than the global average level of 41.9%. There is a broad sinking market space. Under the influence of covid-19 pneumonia epidemic, individual hotels fell by 15.3% year-on-year in 2020, and chain hotels bucked the trend and increased by 9%. The company opened stores in the sinking market with a compound growth rate of 15.4% in five years, and the leading concentration is expected to accelerate. In terms of structure, the hotel distribution structure roughly matches the income structure of China's population. At present, the number of middle-class hotel rooms in China accounts for about 16%. According to the "14th five year plan", the middle-income group will expand significantly by 2035, and the proportion of medium and high-end hotel brands is expected to continue to increase. By 2021q3, the proportion of medium and high-end hotels in the company has reached 50.9%, which is expected to further increase with the growth of the industry.
Both volume and price have risen, and profitability has improved. It is expected to meet the release of strong performance after the epidemic
At the beginning of 2020, the company proposed the goal of opening 15000 stores within three years, and the speed of expanding stores was accelerated; With the support of the company's asset light franchise strategy and medium and high-end strategy, the proportion of franchise and medium and high-end hotels is expected to further increase in the future, driving the improvement of the company's RevPAR; At the same time, the improvement of management efficiency brought by the implementation of the company's reform results has been gradually released, and the company is expected to usher in a strong rebound in performance under multiple benefits.
Profit forecast and valuation
We select A-share companies Btg Hotels (Group) Co.Ltd(600258) , Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) as comparable companies. The average static PE value of comparable companies in 2021 is 84x. We estimate that the net profit attributable to the parent company in 2021, 2022 and 2023 will be 240 million yuan, 1.25 billion yuan and 2.02 billion yuan respectively, the corresponding EPS will be 0.25, 1.30 and 2.10 yuan respectively, and the corresponding PE of the current stock price will be 226x, 43x and 27x respectively. Considering that the company has the first market share in China and the clearing of the industry during the epidemic period will contribute to the improvement of the leading market share, it is assumed that the company can steadily achieve the store opening goal and with the gradual recovery of the demand side, the hotel operation will return to the level of 80% / 90% / 100% before the epidemic in 2021-2023, and the profitability will be improved in combination with the improvement of the company's hotel structure, cost reduction and efficiency increase, We give the company 33 times PE in 2023, the corresponding target price is 69.30 yuan / share, and the corresponding target price is 64.6 yuan / share by 2022. For the first time, give a "overweight" rating.
Risk tips
The global epidemic is repeated, and the recovery of industry demand is less than expected; Intensified competition in the hotel industry; Hotel expansion was not as expected; Franchise stores manage risks.
