\u3000\u3000 Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) (301073)
Key investment points
Event: the company released the performance forecast for 2021: the net profit attributable to the parent company is expected to be 36.1 ~ 37.7 million yuan in 2021, and 35.07 million yuan in the same period of 20 years. Deduct 30.8 ~ 31.95 million yuan of non net profit, which is 30.36 million yuan in the same period of 20 years. The company plans to acquire 79% equity of Zhejiang Junlan Hotel Management Co., Ltd. (RMB 66 million), 70% equity of Jinglan Hotel Investment Management Co., Ltd. (RMB 14 million) and the trademark of “Junlan” series (RMB 60 million).
The epidemic situation in China repeated in the third and fourth quarters, and the company’s performance slightly exceeded expectations. Q4 performance was a loss of 3 ~ 1.3 million yuan. Considering the frequent sporadic epidemic in China in the third and fourth quarters, the company basically achieved profit and loss balance in the fourth quarter, slightly exceeding expectations.
With the acquisition of nearly 300 Junlan back door stores, Junting opens the road of expansion of local high-end brands. Junlan hotel group is one of the top 10 Chinese hotel groups and the top 40 global hotel groups. Junlan wine management and Jinglan investment have invested in more than 230 hotels. After the acquisition of Junlan, Junting has nearly 300 stores, becoming the head group of local high-end brands in one fell swoop. Junlan brand covers Junlan Resort Hotel, Junlan Hotel and Jinglan Hotel, which is unique in the field of high-end resort hotels. Junlan Hotel and Jinglan hotel are business oriented and urban leisure oriented hotel brands integrating their own high-end vacation genes. Through the acquisition of Junlan series, Junting has greatly increased its market share and brand value, and officially opened the road of building and expanding national high-end brands.
The acquisition of Junlan fully improved the volume of the company’s revenue performance and laid a solid foundation for further expansion. It is estimated that Junlan liquor management and Jinglan investment will bring the company an incremental revenue of 110 million yuan and an incremental performance of nearly 20 million yuan in 2023. The properties under Junlan liquor management and Jinglan investment are of good quality, and the store structure dominated by high-end / star hotels has high performance flexibility in the travel recovery cycle.
Profit forecast and rating: Junting is positioned as a medium and high-end selected hotel, deeply cultivated in the Yangtze River Delta, and the business model dominated by direct sales has higher performance and upward repair flexibility in the recovery period of the industry. After completing the acquisition of Junlan group, the company will become the head national high-end hotel brand. We raised the net profit attributable to the parent company for 21-23 years to RMB 0.37/0.94/148 million respectively, corresponding to the compound growth rate of 21-23 performance to 62%, gave 35 times PE for 23 years, converted to 22 years by 6%, raised the target market value / target price to RMB 4.9 billion / RMB 60.32, and raised the rating to “buy”.
Risk tip: the risk of macroeconomic downturn, repeated epidemics, consolidated progress of acquisition targets and achievement of performance may be lower than expected.
