Jinjiang Co., Ltd. (600754) 2019 Interim Report Comment: Q2’s main business is growing well, centerline focus on incentive optimization and integration effects appear

Jinjiang Co., Ltd. (600754) 2019 Interim Report Comment: Q2’s main business is growing well, centerline focus on incentive optimization and integration effects appear
The 13% increase in interim results was basically in line with expectations, but the 17% increase in non-deduction in Q2 was slightly better than expected in 2019H1, and the company achieved 71 revenue.4.3 billion / + 2.93%, return to mother’s performance5.6.8 billion / + 12.78% (deduction +13.48%), EPS0.59 yuan, basically in line with expectations.Q2, the company’s revenue increased 3.18%, performance fell slightly.23%, but the deduction is 16.58%, slightly better than expected.Under the new accounting standards, the company conducts without disturbance. Q2 RevPAR is still under pressure. Opening stores and expense control helped the main business to grow steadily in 19Q2. The overall internal hotel RevPAR also increased by 0.26%, before 19Q1 (+1.15%) growth rate has improved, mainly due to macroeconomic pressure and high base.2019H1, domestic hotel overall RevPAR + 0.68%, same store RevPAR downgraded by 3.87%, of which economical / mid-to-high end dropped by 7 each.06% / 0.70%.In the first half of the year, the company newly opened 660 hotels, closed 254 hotels, and increased 406 hotels, of which -15 were directly operated / joined +421, economy-39 / mid-end +445, mid-range & franchise continued to optimize.As of 19H1, the company opened 7,849 hotels, ranking first among domestic hotels by room size.In the first half of the year, the company’s hotel segment revenue was 70.26 billion / + 2.94%, performance 4.9.1 billion / + 25.06%.Among them, domestic hotel revenue increased by 4.49%, performance increased 56.87%, but it was mainly due to the change in the fair value of Botao Yilong’s equity, excluding related changes and an increase of about 17%; the overseas hotel revenue remained flat, and the performance was under pressure due to the adjustment of the deferred tax rate of 18H1 and the French parade this year.In 19H1, the company’s gross profit margin dropped slightly.35pct, during 合肥夜网 which the rate drops by 0.88pct, cost control is good. Shortly following the trend of RevPAR changes, the centerline focuses on incentive optimization and integration effects. Hotel leader estimates are significant and RevPAR is penetrated by economic impact.In the second half of the year, the pressure of the leading hotel company RevPAR is expected to ease gradually, but it still needs macroeconomic trends to stabilize the rebound.The company’s store opening speed in the first half of the year still ranks first among several leading companies. It is expected that it will exceed its target of opening 900 stores / signing 1,500 stores in 19 years to support growth.At present, the industry’s competition pattern is relatively certain. The company ranks first in the scale of limited service hotels, and its first-mover advantage is prominent, especially in the mid-range layout.The company’s air force is subject to the state-owned enterprise mechanism, the improvement and optimization of future incentive mechanisms, and the potential for integration of internal hotel sectors.With the continuous advancement of state-owned enterprise reform and the comprehensive deepening of acquisition and integration, the company’s internal operation improvement has room for breakthrough improvement. Risks suggest that the risk of goodwill impairment, acquisition integration or state-owned enterprise reform or lower than expected, macro-systematic risk, Hony reduction. Performance of joint venture expansion, optimization of mid-line incentives and integration effects, maintaining “buy” and maintaining EPS1 in 19-21.18/1.34/1.54 yuan, corresponding to 20/18/16 times of the estimated A shares (hotel main business deduction amortization EPS0.92/1.12/1.31 yuan), short-term changes in macroeconomic & RevPAR trends, but the addition of expansion support good performance, and mid-line company management optimization and acquisition and integration potential, maintaining the mid-line “buy”.

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