Incident: Junting Hotel issued an announcement on November 7, 2023, and signed a membership strategic cooperation framework agreement with Hong Kong China Travel Hotel, a subsidiary of China Travel Hotel: both parties will share member information; with the member's authorization and consent, when a new member registers through both parties' direct sales channels, they can simultaneously register as each other's member. The member will enjoy both members' membership status and membership prices and membership benefits provided by both parties; in the future, the two sides will adopt unified membership marketing activities to attract existing members to each other.
Backed by state-owned enterprises, China Travel Hotel has a global high-end hotel layout and a large number of high-quality member resources. China Travel Hotel is a wholly-owned subsidiary of China Travel Group. As of the end of '22, it had 38 years of experience in hotel operation and management, operating 200 hotels and more than 50,000 guest rooms worldwide; currently, it has about 6.08 million members. The domestic company owns four high-end hotel brands: Metropark Hotel, Metropark International Hotel, Ruijing Hotel and Residence, and Yipai Coffee, a coffee brand; the company acquired KGH Hotel in 2015 and operated hotels in the United Kingdom, Southeast Asia and other countries.
Opening up a membership system with China Travel Hotel is conducive to complementing resources and helping brand development. After Junting Hotel and China Travel Hotel's membership pools are connected, the two sides will form a membership system with nearly 13 million customers, and the overall number of members will rise. Furthermore, Junting's brand Junlan Vacation, as the leading domestic resort company, covers a large number of holiday members, while China Travel has accumulated deep membership in the core high-end business hotel sector, and the two sides have complementary advantages, and can gain “1+1＞2” market attention and appeal. Jointly lay out the high-end hotel market, and work together to achieve scale expansion and brand development.
The cooperation content of the framework agreement is gradually being implemented, opening up space for imagination for subsequent ecological integration. According to the strategic cooperation framework agreement issued on February 17 this year, in the future, the company will also cooperate with China Travel Hotel in co-brand building, coffee product cooperation, joint marketing and promotion, direct leasing, talent exchange, etc., to gradually carry out comprehensive and multi-level business cooperation around the upgrading of the hotel industry, giving full play to the business synergy between the two sides, opening up space for ecological integration and imagination, promoting the expansion of the business scale between the two sides, and further consolidating and enhancing the company's competitive position in the market and brand influence.
Investment suggestions: Junting's operations are recovering well, direct-run stores are expanding at an orderly pace, and project implementation is progressing steadily.
The Junting Shangpin brand will boost the mid-range market and have performed well; cooperating with the members of China Travel Hotel has achieved a shift in membership size and opened up space for ecological integration and imagination. Its Junda City commercial management project is progressing rapidly, and it is expected that the scale expansion of the company's direct business projects will accelerate in the future. It is estimated that the company's net profit from the company in 23-25 will be 0.50/162/302 million yuan, and the corresponding PE value will be 97x/30x/16x, maintaining the “recommended” rating.
Risk warning: Store expansion falls short of expectations, and strategic cooperation falls short of expectations.