类别:公司 机构:中国国际金融股份有限公司 研究员:Sijie LIN/Haiyan GUO/Ningfei LIU 日期:2020-09-01

  1H20 results missed our forecast

      Jin Jiang International Hotels announced 1H20 results: revenue fell42.7% YoY to Rmb4.09bn and net profit attributable to shareholdersdeclined 49.7% YoY to Rmb285mn. Excluding non-recurring items, thefirm suffered a net loss of Rmb378mn in 1H20. The firm’s 1H20results missed our forecast, mainly due to slower-than-expectedrecovery of RevPAR. Two major factors affected the firm’s earnings in1H20. First, the COVID-19 outbreak resulted in marked declines inrevenue and net profit of the firm’s hotel business. Second, the firm’sgains from fair value changes declined to Rmb8.05mn in 1H20 fromRmb191mn in 1H19.

      Hotel business: Revenue and net profit attributable to shareholdersof this business segment fell 43.3% and 50.3% YoY to Rmb3.99bn andRmb244mn. Domestic hotels’ blended RevPAR fell 42.75% YoY in1H20 and declined 34.5% YoY in 2Q20 with the decline narrowingQoQ. Domestic hotels’ same-hotel RevPAR fell 40.7% YoY (economyhotels: -44.4% YoY; mid-range hotels: -38.6% YoY) in 1H20. Overseashotels’ blended RevPAR declined 46.9% YoY in 1H20 and fell 76.8%YoY in 2Q20, mainly due to stricter COVID-19 control measures inEurope in early March. In 2Q20, net hotel openings reached 172 (398new openings and 226 closures). As of end-1H20, the firm had 8,819hotels in operation (franchised hotels accounting for an 89.3% shareand mid-range hotels accounting for a 44.4% share) and the numberof pipeline hotels reached 13,722.

      Food and restaurant business: In 1H20, revenue of this businesssegment fell 10.5% YoY to Rmb104mn due to the COVID-19 outbreak.

      Trends to watch

      Full recovery to take time.

      Rapid store openings to continue; back office integration to reducecost.

      Financials and valuation

      We keep our 2020 and 2021 earnings forecasts unchanged. As thefirm’s RevPAR and valuation are gradually recovering, and its rapidstore openings are likely to continue, we raise our TP for its A-sharesby 25% to Rmb36.8 (25x 2021e P/E, 11.5% downside). Consideringliquidity and valuation, we keep TP for its B-shares at US$1.62 (8x2021e P/E, 3% downside). The firm’s A-shares are trading at 28x2021e P/E and its B-shares are trading at 8x 2021e P/E. We maintainNEUTRAL ratings for the firm’s A-shares and B-shares. Risks: Spreadof COVID-19 worse than expected; hotel industry recovery slowerthan expected.