1H18 performance meets expectations
Jinjiang Co., Ltd. announced 1H18 results: operating income 6.94 billion yuan, year-on-year + 10.3%; net profit attributed to the parent company 503 million yuan, year-on-year + 22.1%, corresponding to 0.53 yuan per share. The net profit after deducting non-profit was 316 million yuan, + 58.2% compared with the same period last year. The performance is in line with expectations.
Hotel business: 1) 1H18 revenue 6.83 billion yuan, year-on-year + 10.7%, net profit 392 million yuan, year-on-year + 15.1%. 2) 1H18 has opened 548 new stores, with a net opening of 341. the total number of hotels has reached 7035 and 10162 hotels have been signed. 3) domestic hotels: revenue is 4.85 billion yuan (71% of total hotel revenue), + 10.9% compared with the same period last year, of which the first franchise fee is 266 million yuan, + 18.8% year-on-year, continuous franchise fee is 560 million yuan, year-on-year + 24.3%, franchise fee accounts for 17.1% of domestic hotel revenue. Domestic hotel RevPAR year-on-year + 6.97%, of which the average room rate is + 10.1% year-on-year, and the occupancy rate is year-on-year-2.3pct. 4) overseas hotels: revenue 257 million euros, year-on-year + 6.4%, net profit 15 million euros, year-on-year-24.8%. Overseas hotel RevPAR year-on-year-0.46%, of which the average room rate is-3.2% year-on-year, and the occupancy rate is + 1.7pct year-on-year.
Food and catering business: 1H18 income 110 million yuan, year-on-year-8.9%, net profit 130 million yuan, year-on-year + 27.1%, net profit higher than income mainly because the investment income of Shanghai KFC increased compared with the same period last year.
Trend of development
1) the company expects 3Q18 hotel business income from 3.7 billion yuan to 4.09 billion yuan, including Chinese mainland domestic business income of 2.69 billion yuan to 2.97 billion yuan, Chinese mainland overseas business income of 13100 euros to 145 million euros. 2) the macroeconomic environment has a direct impact on the hotel industry, and the growth rate of hotel RevPAR at home and abroad slowed down in July. RevPAR of domestic hotels is + 4% year-on-year, and RevPAR of overseas hotels is + 3% year-on-year. 3) Import Expo will be held in Shanghai in November and will contribute to the annual results.
Profit forecast
We maintain 2018 Universe 19e profit forecast of 10.65 Universe 1.36 billion yuan.
Valuation and suggestion
At present, the A-share price of the company corresponds to the price-to-earnings ratio of 23 in 2018 and 18 times earnings in 1919. We maintain our recommended rating, but due to the recent sharp market adjustment, we have lowered the price of A & B by 16%, 26%, to 32.66 yuan / 2.67, which is still 26% higher than the current share price. The list price of A & B shares is based on the price-to-earnings ratio of 23 to 12 times 2019.
Risk
The macroeconomic environment changes; the supply growth of the hotel industry is higher than expected.