The current situation of the company
Jinjiang Co., Ltd. announced hotel operation data in October 2018:
Domestic hotels: 1) Comprehensive RevPAR increased by 6.5% year-on-year (economical / mid-range-1.0% Universe 2.3%), mainly due to product structure upgrading, that is, the proportion of mid-range hotel rooms with higher RevPAR significantly increased from about 30% in October 17 to about 40%. 2) ADR continued its year-on-year growth rate of about 9 per cent, while OCC fell 2 percentage points to 79 per cent, narrowing the decline compared with September (down 6 per cent), and became the main contribution to the recovery of RevPAR growth compared with September (RevPAR+1.8%).
Overseas hotels: comprehensive RevPAR increased by 2.6% year on year (economy / mid-range + 4.8% Meltel 0.9%), ADR increased by about 2% and OCC increased by about 1%.
Number of stores: by the end of October 2018, the company has opened 7229 hotels, including signed hotels, with a total size of 10596; net opening of 36 hotels in October, and net opening of 535 hotels from January to October.
Comment
1) pay attention to the macro-economic trend. The macroeconomic situation is closely related to business travel demand, and if the economy goes down, it will affect the occupancy rate and thus drag down the performance of RevPAR. At present, many corporate customers are cautious in formulating their 19-year business travel budget. However, at present, the city of Longtou, the three major hotels in China, accounts for only about 9%, and the advantage of chain brands can still help it gain stronger defense capabilities than individual hotels. 2) the single room profit of the company's domestic hotels in 2017 (137000 yuan) is 39% and 75% of that of Huazhu and Home respectively, which has a lot of room for improvement. as this year's economic upgrading and more mid-range layouts go through the climbing period, it is expected to improve profitability.
Valuation proposal
Maintain the 2018 profit forecast for the year 19. At present, the A-share price of the company corresponds to a price-to-earnings ratio of 16 times the price-earnings ratio of 20-pound in 2018. We maintain the recommended rating and the target price of 26.98 yuan / US $2.45 for Aamp B shares, with 19% plus 18% upside compared to the current share price. The list price of A _ peg B shares is based on the price-to-earnings ratio of 19X to 11 times 2019.
Risk
The macroeconomic environment changes; the supply growth of the hotel industry is higher than expected.