Core views
2024Q1's revenue was 1,845 billion yuan, up 11.47% year on year after retroactive adjustment, net profit to mother was 121 million yuan, and after retroactive adjustment, +49.83%, after deducting non-net profit of 97 million yuan, +102%, the growth rate was strong. Among them, the number of Q1 visitors to Nanshan Scenic Area reached a new high, with revenue of 206 million yuan, +10.9%, and total profit of 122 million yuan, +5.7%. The total profit of the hotel business was 51.81 million yuan, and the 23Q1 was only close to a break-even balance of 3.63 million yuan. 24Q1 showed a year-on-year recovery growth, and there is still a slight gap from -12.4% in '19. In 24Q1, OCC/ADR/RevPar, which excluded light management of some main stores, was -0.1 pct/ +2.2%/+2% year over year, respectively. Against the backdrop of relative pressure on business demand, the company still achieved year-on-year growth by relying on structural ADR increases. From a store opening perspective, the company opened a total of 205 companies in the first quarter, with a net opening of 32, of which the core drivers are high-end brands. Since last year, the company has gradually sorted out and adjusted the quality of light management parts, and the pipeline structure has also focused significantly on core brands. It is expected that the quality of hotels will continue to improve in the future, leading to structural increases.
occurrences
The company released its 2024 quarterly report: 2024Q1's revenue was 1,845 million yuan, up 11.47% year on year after retroactive adjustment, net profit to mother was 121 million yuan, +49.83% after retroactive adjustment, after deducting non-net profit of 97 million yuan, +102%.
Brief review
Scenic area profits contributed significantly during the peak season. The restorative growth of the hotel business in the first quarter decreased by 5% compared to 2019Q1. The company developed franchise business, and the number of direct-run stores was optimized and reduced. The revenue side declined to a certain extent but the structure became better. Net profit to mother was +63% compared to 19Q1, after deducting non-net profit +73%. Looking at the business split, the hotel business revenue for the first quarter was 1,639 million yuan, +11.5%, and total profit of 51.81 million yuan, -12.4% year on year 19 (23Q1 was only close to break-even balance of 3.63 million yuan); scenic spot business revenue was 206 million yuan, +10.9%, +21.3% year on year 19, and total profit was 122 million yuan, +5.7%, +23.2% year on year 19, taking into account shareholding ratio (74.8%) and income tax (15%). The estimated contribution to net profit to mother is 77 million yuan in the first quarter The number of visitors to the Nanshan Scenic Area was 2.47 million, an increase of 17.3% over the previous year, reaching another record high, with outstanding performance contributions.
The Q1 core brand RevPar continued to grow year over year. ADR was the main driving force of the 2024Q1 company's hotel business OCC/ADR/RevPar -0.8 pct/ +1.4%/+0.1% year over year, excluding light-managed hotels -0.1 pct/ +2.2%/+2% year over year. Against the backdrop of relative pressure on business demand, the company still achieved year-on-year growth due to increased ADR. Q1 Same store OCC/ADR/ RevPar -0.9 pct/ -0.4%/-1.9% year on year. Among them, economic/middle and high-end reVPARs were -3.2%/0.3%/-7.3%, respectively. Light management recovery was relatively weak. The company has gradually sorted out and adjusted the quality of some of these hotels since last year, and it is expected that subsequent quality will improve.
Reserve stores focus on core brands, and store closures have been reduced
As of Q1, the total number of the company's stores was 6,295. A total of 205 stores were opened in the first quarter, and 173 were closed, a net increase of 32, of which 103 were light management; 36 were closed; 56 were closed; and the middle and high-end stores were 66 and 14 were closed, contributing mainly to the net increase. From a brand perspective, such as Home Select has 17 clean stores, business travel 15, Ai Fei 8, Yifei 5, Blue Pai Yiju 5, and Puyin 4. The number of clean opens is the highest. As of Q1, the number of Pipelies was 1940, a decrease of 95 compared to 23Q4. Mainly, there were many changes in light management - 146, with +23/29 economical and high-end companies respectively. This year, the company proposed to further focus on core brands, and the signing situation was consistent with the plan. The company recently announced the acquisition of 9% of the shares and claims of Beijing Huanhui Real Estate Co., Ltd. held by the controlling shareholder to achieve the purpose of investing in and operating a commercial supporting complex project in the Tongzhou Cultural Tourism Zone. The project includes three types of businesses: Olay (operated by Wangfujing), high-end hotels (commissioned by First Travel Annuo and operated under the company's own brand “Nolan”), and the construction of a small town. The project will be the flagship hotel of “Nolan”, targeting vacationers, meetings, and business guests, with a view to creating a characteristic hotel service and artistic atmosphere.
Profit forecast and investment advice: The company is expected to achieve net profit of 901 million yuan, 1,029 million yuan, and 1,190 billion yuan in 2024-2026. The current stock price corresponds to PE of 19X, 16X, and 14X, respectively, maintaining an “increase in holdings” rating.
Risk analysis
1. The risk that consumption recovery falls short of expectations: Consumer consumption perceptions and habits may change. Although the economy is in the process of recovery, there is also a possibility that marginal consumption tendencies will decline. Consumption recovery falling short of expectations will have an impact on company performance; 2. Risk that opening stores will fall short of expectations: As the uncertainty of the economic environment still exists, it may further cause franchisees to have insufficient motivation to open stores, which in turn causes the company to expand less than expected risk;
3. Human resources management risk: Since the company's high-star hotels are positioned as an international customer source, the knowledge structure and work level requirements of relevant workers are relatively high, and the labor quality of employees will directly affect the company's business performance.
4. High-end and downturn competitive trends in the hotel market: Competition for high-end hotels is fierce, and the sinking market is gradually improving hotel quality. If there is a risk of hotel positioning, it may affect overall brand recognition.