Event Overview:
1) The company achieved revenue of 534 million yuan/yoy +56.2% in 2023, a recovery of 140% compared to 2019; net profit to the mother of 0.31 million yuan/yoy +2.6%, a recovery of 42% compared to year 19, net profit after deducting net profit of 28 million yuan/yoy +8.3% compared to 2019. The rental agreement signed after the subleasing commercial property was returned to the owner confirmed the 12-year rent difference balance of 0.1 million yuan, and the cumulative management expenses for the current period were still included in rent. Performance had a big impact; net cash flow from operating activities was 245 million yuan/yoy +103.9%.
Looking at a single quarter, 23Q4 revenue was 152 million yuan/yoy +61.5%, a recovery of 160% compared to 19Q4; net profit to the mother was 0.07 billion yuan/yoy +71.4%, after deducting net profit of 06 billion yuan/yoy +48.3%; net cash flow from operating activities was 100 million yuan/yoy +99.6%.
2) Junlan's revenue/net profit in '23 was 0.77/31 million yuan, +15.8%/35.4%, net profit margin 40.5% /yoy+5.9pct; in '23, Jinglan's revenue/net profit was 0.26/0.03 billion yuan, +19.9%/+26.9% YoY, net profit margin 11.7% /yoy+0.6pct.
3) The company achieved revenue of 160 million yuan/yoy +67.3% in 24Q1, a recovery of 195% compared to 19Q1; net profit to mother of 0.05 billion yuan/yoy +13.9%, net net profit of 0.5 billion yuan/yoy +52.4%; net cash flow from operating activities was 51 million yuan/yoy +160.7%.
Direct revenue in '23 increased 61.7% year over year, RevPar increased to 116% over year 1) Total direct operating revenue in '23 was 417 million yuan/yoy +61.7%, gross profit margin 29.4% /yoy+3.6pct, of which accommodation/dining/other ancillary revenue was 3.53/0.47/ 0.17 billion yuan, +79.2%/42.1%/-38.4%, gross profit margin 38.2%/-42.0%/44.6%.
2) RevPar 332.78 yuan/yoy +53% for directly-managed hotels in '23, recovery rate 116% compared to '19, mainly due to occupancy rate of 67.9% /yoy+13.8pct, +0.6pct compared to '19 and room price of 490.46 yuan/yoy +22% per night, and 115% recovery compared to '19.
3) In a single quarter, the 23Q4/24Q1 direct-managed hotel RevPAR was 320/315 yuan, +46%/+12% compared to 19; the occupancy rate was 65.1%/61.5%, +10.3/-1.8pct, the same as the 19 same period; the average housing price was 492/512 yuan, +23%/+15%, compared to 19. (RevPAR for 19Q4, average room price not announced).
In 24Q1, the Hangzhou and Shanghai regions were steady, moderate and positive. For example, Shanghai Zhongxing Junting had a occupancy rate of over 80% and a RevPar of about 550 yuan, reaching the 19 same period; the Shanghai Pagoda Junting RevPar was +9.6% compared to the same period, +21.3% compared to the same period in the same period, and the Hangzhou multi-store RevPar exceeded 19 in the same period; the climbing situation of Junting Shangpin Q1 in Luohu Dongmen, Shenzhen was in line with expectations. For example, the occupancy rate for the first month of operation of Junting Hotel in Chongqing was 60% +, and the average room price for the next month was 450 yuan+.
Hotel management revenue increased 39% year on year in '23, gross margin increased significantly by 9.3 pct. hotel management revenue in '23 was 117 million yuan/yoy +39.1%, and gross profit margin was 76.6% /yoy+9.3 pct. In 24Q1, Junlan performed well. The revenue of the Grand Hotel Series/Resort hotels increased by 7.5%/2.4% year on year. Revenue from 16 stores exceeded budget targets, and hotel revenue and RevPAR in multiple regions all rose.
The signing progress of the three major brands exceeded expectations, and project expansion progressed steadily
1) In '23, the company signed 55 new hotels, including 27/12/16 of the Junlan/Junting/ Jinglan brands; 34 newly opened hotels, including 16/9/9 of the Junlan/Junting/ Jinglan brands. Junting completed the three regional layouts of North China, South China, and Southwest China; Junlan increased cooperation with state-owned enterprises and first-class domestic companies, focusing on deepening the strategic layout of Beijing, Shanghai, Guangdong, etc.; Jinglan increased its national regional expansion efforts and entered Jiangxi, Shandong, Shaanxi and Ningxia for the first time.
2) As of 24Q1, the company had opened 219 hotels, including 118/64/37 of the Junlan/Junting/ Jinglan brands; 177 hotels to be opened, including 122/24/31 of the Junlan/Junting/ Jinglan brands. In 24Q1, Jinglan signed 3 new contracts and added nearly 500 guest rooms, penetrating the sinking markets of Shandong, Zhejiang and Fujian; Junlan opened its first Fuzhou Hot Spring Resort, and 17 hotel management teams are ready to enter the market.
3) In 2024, the Group aims to sign 60 contracts and open 63 new businesses.
Profit prediction and investment suggestions: We believe that the integrated development of Junting and Junlan will launch a path of group expansion. Junting insists on maintaining outstanding single-store profits through fixed capital raising and speeding up the implementation of direct-run stores. Junlan has accelerated the pace of signing contracts to seize excellent vacation resources and unleash greater performance flexibility after the epidemic through the company's outstanding management capabilities. We expect the company's 24-26 results to be 1.2/17/220 million yuan (the value was 1.5/240 million yuan before 24/25, a slight reduction considering the impact of new store opening expenses on performance releases and one-time asset disposal losses in the 23-year sublease business). The current stock price corresponding PE is 39/27/21X, respectively, maintaining a “buy” rating.
Risk warning: the risk of macroeconomic fluctuations, market competition intensifies the risk, and opening a store falls short of expectations