Investment suggestion
Jinjiang Co., Ltd. released hotel operation data in December 2018, RevPAR growth continued to slow.
We expect that the trend of sluggish RevPAR growth will continue until 2019, and Jinjiang's own operating efficiency still has some room to improve compared with Hanting and Home, we downgrade Jinjiang shares to neutral rating. The reasons are as follows:
The overall RevPAR growth of domestic hotels in December was 4.5 per cent year-on-year (slower than 5.7 per cent in November; economy / mid-range-2.2 per cent and 3.4 per cent, down from-1.3 per cent in November), mainly due to product structure upgrading, that is, the proportion of mid-range hotel rooms with higher RevPAR increased significantly to about 42 per cent from about 31 per cent in December 17. ADR (average house prices) continued a relatively rapid growth rate of about 9 per cent, while the decline in OCC (occupancy rate) widened slightly to 3.4 per cent (2.8 per cent in November).
In the short term, the slowdown in economic growth may affect operational performance, waiting for the inflection point of the industry. The decline in economic growth will reduce industry demand and affect occupancy rates, which in turn will be a drag on RevPAR. RevPAR growth in the 3Q18 hotel industry slowed to 2.5 per cent from 4.6 per cent in 2Q18, according to STR. Weak RevPAR growth affects the upward space of stock prices, so it is recommended to wait for the inflection point of the industry.
In the long run, there is still room for development. The supply of China's hotel industry has ended a long period of high double-digit growth, and the growth rate is now close to zero. Under similar circumstances, the US hotel industry has achieved long-term RevPAR growth (RevPAR has grown at an annual rate of 3.1 per cent over the past 15 years, while hotel supply has grown at an annual rate of 1.1 per cent), providing room for the promotion of chain rates and the breeding of large companies.
What is the biggest difference between us and the market? Be cautious about the short-term performance of the hotel industry.
Potential catalyst: the company's share price is at a 12-month low and can perform if the general trend rebounds.
Profit forecast and valuation
Maintain the 2018 profit forecast, reduce the 2019 profit forecast by 7.4% to 1.26 billion yuan, and introduce the 2020 profit forecast of 1.46 billion yuan. At present, the A-share price of the company corresponds to the price-to-earnings ratio of 16 times earnings in 2019 / 20. Lower the target price of Aswab B shares by 9.5% Universe 9.8% to 24.43 yuan / US $2.21 (corresponding to a price-to-earnings ratio of 10 times 2020's price-to-earnings ratio of 16%; there is room for a rise of 13% and 9%).
Risk
The macroeconomic situation is weaker than expected.