Jinjiang Stock (600754)： The number of REVPAR growth cycles
Jinjiang Stock (600754): The number of REVPAR growth cycles
Core point of view: PMI, railway passenger traffic and other macroeconomic indicators are improving, and the hotel’s prosperity is advancing to an inflection point.The scale of the group is huge, and the one-time expenses have expanded in the past years, which has masked the company’s true profitability. At present, the company’s PE is estimated to be at a historical low level. This year, Davis is expected to welcome a double-click. The long-term supply-demand relationship has improved, and the prosperity of the hotel industry is expected to continue to increase.In the future, demand will grow at a rate of about 10%. The supply side will be shortened to land increments, and the scale will not be expanded. The growth rate will be reduced from more than 20% to about 10%.The supply and demand scissors gap has improved, and the industry’s prosperity will be significantly improved. High-frequency economic data is picking up, and the industry inflection point may come.19M3 PMI is 50.5% (+ 1% qoq.3%), 19M1-M2 social integration twice +25.1% (the same period last year -11.3%), a new high in the past six months; 19M1-M2 rail / civilian passenger traffic +13 per day.4% / + 13.0% (+0 in the same period last year).7% / + 9.4%), both growth rates rebounded.The macroeconomic recovery is obvious, and demand has also shown a marked 夜来香体验网 marginal improvement, indicating that the worst of the industry has passed. The space for growth stocks, the price of cyclical stocks, and the company’s value center will be transformed into the expansion of the number of hotels.The company has two attributes of cycle and growth, which gradually comes from the change of demand side, and the growth comes from the expansion of the number of hotels.Constantly affect the company’s short-term continuous fluctuations, and growth determines the expected long-term trend.In 2018, Jinjiang has a net increase of 799 mid- to high-end hotels, a year of + 48%; we expect that it will maintain an annual hotel expansion rate of about 700 hotels in the next five years, corresponding to a net profit growth rate of about 20%.In the future, the company’s value center will be transformed into an expansion of hotel scale. The product structure is tilted toward franchise, and the increase in the proportion of franchise will increase ROE level.In 2016/17/18, the company added a net increase of 471/826/749 hotels, of which there were 385/792/797 franchises, at least +11.1% / + 18.1% / + 14.0%; Territory net increase of 398/754/748, at least +9.4% / + 16.2% / + 13.9% (excluding the impact of acquisitions).As of 2019M2, the company has a total of 7,559 hotels, of which 6294/1265 are domestic / foreign.According to direct management / joining points, there are 1010/6549 companies, accounting for 13.4% / 86.6%; there are 4,973 / 2586 households divided by economy / high-end, accounting for 65.8% / 34.2%.The hotel structure is significantly inclined to franchise. From 2014 to 2018, the company’s franchise ratio increased from 72% to 86%; through the increase of franchise ratio, Jinjiang’s ROE level (7.6%) is expected to gradually move closer to the international hotel group (20% +). It is estimated to be at a historical low, and net profit is expected to be repaired.At present, the hotel industry is estimated at 26 times, which is already at a historical low (about 40 times in the past), which is also significantly lower than that of foreign hotel groups (30 times).Subsequent changes in demand continued to improve, and industry estimates and earnings expectations were initially repaired.The company’s net profit for 2016/17/18 was 7.2/9.9/12.3 trillion, while the free cash flow (FCFF) for the same period was 18.5/27.6/29.500 million.The difference between net profit and free cash flow mainly comes from depreciation stalls and capital expenditures (from direct-operated stores); in the future, as the proportion of mergers and alliances increases, the company’s net profit will gradually move closer to true profitability (free cash flow). Earnings forecast, estimation and investment advice: Maintain “Buy” rating.We forecast the company’s net profit deducted from non-attribution to 11 in 19/20/21.2/14.6/17.7 trillion with a CAGR of 25 during the period.5%, deducting non-EPS is 1.17/1.53/1.84 yuan, corresponding to the current total PE is 26.1/20.0/16.6 times.We think the company has a reasonable market value of 392 trillion and a 19-year target price of 40.95 yuan, corresponding to 35 times the 19-year PE. Risk reminders: Cycle down, franchise management issues, and risks of macroeconomic fluctuations.