JINJIANG HOTELS(SH:600754) HTSC·2024-07-15 01:07Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 27.72, corresponding to a 22X 2024 PE ratio [6][4]. Core Views - The company is expected to see a slight increase in net profit for the first half of 2024, with a forecasted net profit of RMB 800 million to 850 million, representing a year-on-year growth of 52.93% to 62.49%. The core net profit is expected to be between RMB 370 million and 400 million, showing a growth of -0.94% to 7.10% [2]. - The second quarter of 2024 is anticipated to show a net profit of RMB 610 million to 660 million, with a year-on-year increase of 55% to 68% [2]. - The company is focusing on long-term reforms, including revenue increases from CRS, upgrades of old direct-operated products, and optimization of overseas operations, which are expected to enhance operational efficiency and profitability [2]. Summary by Relevant Sections Earnings Forecast - The company forecasts EPS for 2024, 2025, and 2026 to be RMB 1.26, 1.42, and 1.67 respectively [4][5]. - The expected revenue for 2024 is RMB 14.738 billion, with a slight increase of 0.60% compared to 2023 [5]. Operational Performance - The company recorded a net opening of 118 stores in the second quarter of 2024, although the pace of expansion has slowed [3]. - The recovery of the hotel industry in China is stabilizing, with the average recovery rate for the second quarter of 2024 at 88% compared to the same period in 2019 [3]. Profitability and Efficiency - The company is expected to achieve a significant increase in profitability in the second quarter of 2024, with core net profit expected to grow by 394% to 442% [3]. - The optimization of the membership mechanism and the expansion of sticky traffic are anticipated to contribute to new revenue and profit growth [3]. Valuation Metrics - The company’s current market capitalization is RMB 24.59 billion, with a closing price of RMB 22.98 as of July 12 [7]. - The company’s PE ratio for 2024 is projected at 18.17, with a PB ratio of 1.41 [5].