\u3000\u3000 Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) (301073)
Event overview: 140 million cash to acquire the equity of Junlan, Jinglan Hotel and Junlan trademark. Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) the announcement said that 79% equity of Zhejiang Junlan Hotel and 70% equity of Jinglan hotel were acquired in cash at the purchase price of 66 / 14 million yuan respectively. The transfer price of “Junlan” series trademarks was 60 million yuan, a total of 140 million yuan. The source of funds was raised from the listing. After this transaction, the target company will become a holding subsidiary of the company.
The acquisition of Junlan is a milestone for the company to achieve leapfrog integrated development. 1) Break through the bottleneck of scale and move from region to country. As of 2021q3, Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) has opened 47 hotels and signed 19 hotels to be opened. After the acquisition of Junlan / Jinglan, Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) has nearly 300 managed stores (including those not opened after signing the contract), breaking through the bottleneck of scale; Stores cover most provinces in China. 2) Broaden the hotel brand / category /. Junlan resort hotel is the leader of Chinese resort hotels. Junlan hotel is a five-star business hotel. Jinglan hotel has a unique style and positioning, which can fully complement the current brand combination and product line of Junting. After the merger and acquisition, Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) group will form a medium and high-end multi brand matrix spanning two categories: vacation and business travel, covering mainstream high-end tonality and stylized aesthetics, holding high and building brand potential. 3) Complementary models help light asset expansion. Jun Lan has implemented the light asset mode with the power of the first mock exam, and has supported 230 stores’ volume (including signing the contract not yet opened) under the mode, and has the mature team and mechanism to promote the entrusted management mode. 4) The team has the same root and origin, and is optimistic about the smooth progress of integration: Wu Qiyuan, chairman of Junting, is the founder and early helmsman of Junlan. The members of Junting’s core team are mainly from the original Junlan team, and have full experience in Junlan related businesses. At present, Junting has completed the M & A of Junlan after its listing, and is optimistic about the rapid integration of team culture / business collaboration.
Overview of Junlan Hotel: Junlan resort is a leading enterprise in high-end vacation in China, and the three brands form a diversified product matrix. Junlan resort is the main brand of the company. The number of stores has accounted for more than 50% in recent three years, and has been increasing. After more than ten years of deep cultivation and precipitation of operation capacity, Junlan resort has realized diversified vacation product coverage and accumulated brand reputation. At present, it is in the period of rapid growth of store scale and brand potential energy, and is expanding in the post epidemic era, occupying the golden spot of China’s core scenic spots.
The resort hotel has ushered in great development, and the performance elasticity in the recovery period brings imagination space. High end resort hotels are expected to usher in a golden period of development with the help of policies such as consumption upgrading / the 14th five year plan tourism planning / the return of outbound tourism; At the same time, the supply of high-end hotels is difficult to repair after clearing, and the price elasticity is prominent. It is expected to realize high performance elasticity in the subsequent recovery period.
Investment suggestion: the company is expected to break through the bottleneck of scale and move from “regional to national” by acquiring the equity of Junlan / Jinglan hotel; And form a good complementarity with the target brand / category / expansion mode. The team has the same root and source, and is optimistic about the smooth integration of “1 + 1 > 2”. After the integration, the company has formed a multi brand layout of medium and high-end stages with obvious advantages. It is optimistic that the company will take advantage of the wind of industry upgrading to achieve leapfrog development and expand its stores through endogenous and extension. We expect the company to realize a net profit attributable to the parent company of 37.35 million yuan / 89.9 million yuan / 118 million yuan from 2021 to 2023, and the corresponding PE is 80x / 42x / 31x respectively, maintaining the “recommended” rating.
Risk tips: the risk of repeated epidemic, the progress of vaccination / specific drugs is less than expected, the expansion of stores is less than expected, and the integration after M & A is less than expected.
