Core views:
The company released its quarterly report for the year 24:24Q1 achieved revenue of 3.21 billion yuan, up 6.8% from 23Q1 and 3.9% from 19Q1; net profit attributable to mother was 190 million yuan, up 34.6% from 23Q1 and 35.7% from 19Q1; net profit without return to mother was 60 million yuan, down 31.2% from 23Q1 and 12.0% from 19Q1. Reasons for profit changes: (1) The decline in net profit after deducting non-attributable income was mainly due to the year-on-year increase in interest expenses on overseas loans due to the year-on-year increase in Eurobank Offered Interest Rates, and the company's overall interest expenses also increased by 60 million yuan to 160 million yuan. (2) Non-recurring profits and losses are mainly income from the disposal of hotel properties by the Louvre Group. The total income from asset disposal is about 120 million yuan.
Improved operating efficiency has led to a decrease in the management cost ratio. According to the company's financial report, the cost rate for the 24Q1 period was 33.1%, +0.4pp. Among them, sales/management/ financial/ R&D expenses were 7.5%/18.7%/6.7%/0.2%, respectively, +0.1pp/ -1.5pp/+1.7pp/+0.05pp.
Housing prices continue to rise, and occupancy rates still have room to be repaired. According to the company's financial report, (1) domestic limited-service hotels: RevPar was 145 yuan, down 1.6% from 23Q1 and 1.0% from 19Q1; ADR was 242 yuan, up 1.3% from 23Q1 and 18.9% from 19Q1; Occ was 60%, down 2.1 pp from 23Q1 and 11.0 pp from 19Q1. (2) Overseas: RevPAR was 36 euros, down 0.1% from 23Q1 and 9.6% from 19Q1; ADR was 63 euros, up 1.6% from 23Q1 and 14.6% from 19Q1; Occ was 56%, down 0.9 pp from 23Q1 and 2.6 pp from 19Q1.
Steadily promote contract signing and store expansion. According to the company's financial report, the 24Q1 company opened 222 new hotels, with a net increase of 147 to 12,595, of which midrange/budget hotels had a net increase of 141/5, respectively. Mid-range hotels accounted for 0.4 pp to 58.6% at the end of 23; as of 24Q1, the number of contracted hotels reached 16,701, a net increase of 46 over the end of 23.
Profit forecast and investment advice: The company's net profit for 24-26 is estimated to be 15.9 billion yuan, 17.8 billion yuan, and 1.97 billion yuan, respectively, up 59.1%, 11.8%, and 10.6%, respectively, maintaining the judgment of a reasonable value of 37.24 yuan/share, and maintaining the “buy” rating.
Risk warning: macroeconomic fluctuations; increased industry competition; progress in store expansion falls short of expectations.