BTG Hotels(SH:600258)2024-09-05 01:30Investment Rating - The report maintains a "Hold" rating for the company, with a target price adjusted to RMB 12.8, reflecting a potential upside of 9.4% from the current price of RMB 11.7 [3][10]. Core Insights - The company's revenue in Q2 2024 decreased by 3.3% year-on-year due to high base effects, while the net profit margin improved by 2.1 percentage points to 12.6% driven by store structure optimization and cost reduction measures [1][2]. - The report highlights that the RevPAR (Revenue per Available Room) declined by 6% year-on-year in Q2 2024, primarily due to last year's surge in travel demand and an imbalance in hotel supply and demand [1][2]. - The management expects the ADR (Average Daily Rate) to remain under pressure in Q3 2024 but stabilize sequentially, with expectations for steady performance in 2025 [1][2]. Financial Performance Summary - Revenue projections for 2024E are set at RMB 7,883 million, reflecting a slight increase of 1.2% year-on-year, while net profit is expected to reach RMB 894 million, a 12.4% increase [2][5]. - The gross profit margin for the first half of 2024 improved by 1.5 percentage points year-on-year, attributed to an increase in the proportion of franchise stores and mid-to-high-end hotels [1][5]. - The report indicates a decrease in selling and administrative expense ratios by 0.9 percentage points and 1 percentage point respectively in Q2 2024, contributing to profit margin enhancement [1][5]. Store Structure Optimization - As of mid-2024, the number of franchise stores reached 5,847, accounting for 90.3% of total stores, which is a 1 percentage point increase year-on-year [1][5]. - The proportion of mid-to-high-end hotels increased to 28.6%, up by 2.7 percentage points year-on-year, enhancing pricing power [1][5]. - The report notes that 47.8% of the newly opened stores in the first half of 2024 were standard stores, indicating a strategic shift towards improving store quality and structure [1][5]. Financial Forecast Adjustments - The earnings forecasts for 2024-2026 have been adjusted downward due to the high base effect impacting operational data [1][9]. - The target price is based on a valuation of 6x the 2025E EV/EBITDA, reflecting a cautious outlook amid the current market conditions [1][9].