1-3Q18 performance meets expectations
Jinjiang Co., Ltd. announced 1-3Q18 results: operating income of 10.957 billion yuan, year-on-year + 9.2%; net profit attributed to the parent company 872 million yuan, + 22.5%, corresponding to 0.91 yuan per share.
The net profit after deducting non-profit was 677 million yuan, which was + 37.0% compared with the same period last year. The performance is in line with expectations.
Hotel business: 1) 1-3Q18 revenue of 10.779 billion yuan, + 9.5% compared with the same period last year. Net opening of 499 stores (841 new openings and 342 closures). As of September 30, the company had opened a total of 7193 hotels, accounting for 30.5% and 69.5% of middle-end and economy hotels, and 14.1% and 85.9% of direct and franchised hotels, respectively. A total of 10498 hotels have been signed up. 2) domestic hotels: 3Q18 revenue is 2.85 billion yuan, + 10% compared with the same period last year, of which the franchise fee is 550 million yuan, accounting for 19.4% of domestic hotel revenue. Domestic hotel RevPAR + 4.1% year-on-year, of which the average room rate is + 8.7% year-on-year, and the occupancy rate is year-on-year-3.7pct. 3) overseas hotels: 3Q18 revenue is 140 million euros, + 0.6% compared with the same period last year. The RevPAR of overseas hotels is + 1.4% year on year, of which the average room rate is + 0.2% year on year, and the occupancy rate is + 0.8pct year on year.
Food and catering business: 1-3Q18 income 180 million yuan, year-on-year-6.7%; of which 3Q18 revenue 60 million yuan,-2.5% year-on-year. Jinjiang food revenue increased compared with the same period last year, but Jinjia catering revenue decreased compared with the same period last year. In addition, Jinjiang Tongle Guan restaurant is also the main reason for the decline in revenue.
Trend of development
1) 4Q18 hotel business revenue is expected to range from 3.58 billion yuan to 3.95 billion yuan, including 2.63 billion yuan to 2.9 billion yuan from Chinese mainland's domestic hotel business and 122 million euros to 135 million euros from Chinese mainland's overseas business. 2) the macroeconomic environment has a direct impact on the hotel industry. The occupancy rates of 3Q18 Huazhu and the first Travel Hotel have decreased in varying degrees. If the macroeconomic situation deteriorates in the future, the occupancy rate will be further affected.
Profit forecast
We maintain 2018 Universe 19e profit forecast of 10.65 Universe 1.36 billion yuan.
Valuation and suggestion
At present, the company's A-share price corresponds to a price-to-earnings ratio of 15 times earnings in 2018 and 1919. We maintain our recommended rating, but due to the recent sharp market adjustment, we have lowered the price of AGUP B shares by 17% to 26.98 yuan / US $2.45, which is still 23% upside compared with the current share price. The list price of A _ peg B shares is based on the price-to-earnings ratio of 19X to 11 times 2019.
Risk
The macroeconomic environment changes; the supply growth of the hotel industry is higher than expected.