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 fell 42.7% YoY to Rmb4.09bn and net profit attributable to shareholders declined 49.7% YoY to Rmb285mn. Excluding non-recurring items, the firm suffered a net loss of Rmb378mn in 1H20. The firm’s 1H20 results missed our forecast, mainly due to slower-than-expected recovery of RevPAR. Two major factors affected the firm’s earnings in 1H20. First, the COVID-19 outbreak resulted in marked declines in revenue and net profit of the firm’s hotel business. Second, the firm’s gains from fair value changes declined to Rmb8.05mn in 1H20 from Rmb191mn in 1H19.

      Hotel business: Revenue and net profit attributable to shareholders of this business segment fell 43.3% and 50.3% YoY to Rmb3.99bn and Rmb244mn. Domestic hotels’ blended RevPAR fell 42.75% YoY in 1H20 and declined 34.5% YoY in 2Q20 with the decline narrowing QoQ. Domestic hotels’ same-hotel RevPAR fell 40.7% YoY (economy hotels: -44.4% YoY; mid-range hotels: -38.6% YoY) in 1H20. Overseas hotels’ blended RevPAR declined 46.9% YoY in 1H20 and fell 76.8% YoY in 2Q20, mainly due to stricter COVID-19 control measures in Europe in early March. In 2Q20, net hotel openings reached 172 (398 new openings and 226 closures). As of end-1H20, the firm had 8,819 hotels in operation (franchised hotels accounting for an 89.3% share and mid-range hotels accounting for a 44.4% share) and the number of pipeline hotels reached 13,722.

      Food and restaurant business: In 1H20, revenue of this business segment 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 reduce cost.

      Financials and valuation

      We keep our 2020 and 2021 earnings forecasts unchanged. As the firm’s RevPAR and valuation are gradually recovering, and its rapid store openings are likely to continue, we raise our TP for its A-shares by 25% to Rmb36.8 (25x 2021e P/E, 11.5% downside). Considering liquidity and valuation, we keep TP for its B-shares at US$1.62 (8x 2021e P/E, 3% downside). The firm’s A-shares are trading at 28x 2021e P/E and its B-shares are trading at 8x 2021e P/E. We maintain NEUTRAL ratings for the firm’s A-shares and B-shares. Risks: Spread of COVID-19 worse than expected; hotel industry recovery slower than expected.