Introduction to this report:
Optimizing the capital structure, CRS fees, and selling properties will drive significant improvements in short-term performance. Rationalizing the structure and personnel will free up room for long-term efficiency improvement.
Key points of investment:
The rationalization of the company structure and personnel will unleash long-term potential, and efficiency and performance are expected to improve significantly. Maintain the 2024/25/26 EPS at 1.50/1.60/1.93 yuan. After considering rationalizing the internal interest mechanism, there is plenty of room for efficiency improvement. The industry was given an average of 24xPE for 24 years, maintained a target price of 36.45 yuan, and increased holdings.
Multi-dimensional optimization, marginal improvement. ① Historically, Jinjiang's operations and capital are two-wheel drive, and the market capitalization has increased exponentially: 5 billion/10 billion/ 25 billion/ 45 billion, of which 25 billion is lower than acquisition costs; ② the company has accelerated capital structure optimization, and financial expenses are expected to improve significantly in 24Q2; ③ central reservation system charges have brought significant increases, and comprehensive charges have been raised to the level of major leaders; ④ the asset-light strategy continues to advance, and the sale of properties has increased both performance and ROE.
Structural adjustments and personnel rationalization. ① In addition to stores and operations, structure and interests have a greater impact on efficiency. Currently integrated into the deep-water zone. The rationalization of structure/personnel will determine the sustainability of efficiency improvements and profit release. ② Promote territorial transformation to adapt to the new stage of competition where the region is deeply cultivated.
Adjusting the core idea to decentralize decision-making, reduce decision-making levels, and improve response speed will clearly help improve operations.
Competition for efficiency has been around for a long time, and it will once again be concentrated. ① The linkage rate is increasing, but CR3 concentration is declining. Changes in demand, product changes, and increased property supply led to phased fragmentation of the pattern.
② Development requires balancing scale, quality, and franchisee returns. Efficiency determines size boundaries and brand pricing power. Leading supply chains, brands, and membership scale are effective, the efficiency gap will widen, and the industry will once again become concentrated. ③ Asset consolidation will be the main form of integration.
Risk warning: Economic fluctuations affect demand, increased competition, and the risk of further overseas interest rate hikes.