Core views:
Incident: The company announced its 23-year results. It achieved full-year revenue of 21.88 billion yuan, an increase of 57.9%, an increase of 95.2% over the same period in 2019, and achieved net profit of 4.09 billion yuan to mother, turning a loss into a profit (loss of 1.82 billion yuan in '22), and an increase of 130.9% over the same period in '19. On a quarterly basis, 23Q4 achieved revenue of 5.59 billion yuan in a single quarter, an increase of 50.7%, an increase of 91.9% over the same period in 2019, and realized net profit of 740 million yuan to mother, turning a loss into a profit (loss of 120 million yuan in 22Q4), and an increase of 20.0% over the same period in 2019.
Operations continued to pick up, and domestic performance was outstanding. According to the company's financial report, (1) Domestic: Revenue in '23 was 17.4 billion yuan, up 64%, up 55% from the same period in '19. RevPAR/ADR/OCC recovered to 122%/127%/96% in the same period in '19, respectively. Hotel structural upgrades and product upgrades supported the rise in housing prices.
(2) Overseas: Revenue of 23 billion yuan, up 39%; RevPAR/ADR/OCC also increased by 14.5%/1.4% /7.2pp. In the future, DH will shift to a lighter asset model, continue to reduce costs and increase efficiency, make full use of the advantages of the membership system to strengthen direct sales, and seek development opportunities in the Asia-Pacific region and the Middle East.
The pace of store expansion is steady, and the structure and products continue to be upgraded. According to the company's financial report, by the end of '23, the number of hotels in the company had reached 9263, with a net opening of 852 hotels throughout the year. The company's guidelines for opening 1,800 stores in '24, of which 1,150 were net. The hotel structure and product upgrades go hand in hand. According to the company's performance conference, by the end of 23, the proportion of mid-range and above hotels in China had risen to 46.4%, an increase of 5.0 pp over the previous year; Hanting 2.7 and above accounted for 71.2%, an increase of 9.9pp over the previous year.
Profit forecasts and investment recommendations. According to the company's financial report, the company's 24Q1/full year revenue guidelines are 12%-16% growth and 8%-12% growth. We expect net profit to be 42.3 billion yuan, 4.77 billion yuan, and 5.39 billion yuan respectively for 24-26, up 3.5%, 12.8%, and 13.0%, respectively. Considering the company's leading hotel size, membership platform and brand strength, the share is expected to continue to increase. Referring to comparable companies, the company was given 25 times PE in 24 years, corresponding to HK$35.06 per share in Hong Kong stocks and $44.77/ADS in US stocks, giving it a “buy” rating. (1 USD=7.83 HKD=7.23 RMB)? Risk warning. Macroeconomic fluctuations; industry competition intensified; store expansion fell short of expectations.