Investment Rating - The report maintains a "Buy" rating for Shoulu Hotel (600258) with a target price based on the last closing price of 16.90 [1][10]. Core Insights - Shoulu Hotel is investing in new hotel constructions to expand its assets, focusing on mid-to-high-end hotel segments in key urban areas, which reflects a strategic move to optimize its development model and capitalize on industry recovery opportunities [4][6]. - The company is adopting a dual approach of "new construction and leasing" to balance long-term asset accumulation with short-term profit realization, which aligns with the trend of combining light and heavy asset models in the hotel industry [8][9]. Summary by Sections Investment Projects - Shoulu Hotel's subsidiary, Home Inn (China), plans to invest 280.51 million yuan in a new hotel in Suzhou, with an expected internal rate of return (IRR) of about 4% and a construction period of 14 months [3][4]. - The company also intends to lease a property in Beijing for 322.75 million yuan, with an expected IRR of approximately 12% and a construction period of 9-10 months [3][4]. Strategic Positioning - The projects are strategically located in high-potential areas, covering the Yangtze River Delta and Beijing-Tianjin-Hebei economic zones, which are crucial for long-term performance growth [5][6]. - The Suzhou project is positioned in a provincial high-tech zone, benefiting from strong business and leisure demand, while the Beijing project is near major cultural and tourism attractions, enhancing its market presence [5][6]. Brand and Market Strategy - Both projects focus on mid-to-high-end brands, with a multi-brand strategy to cater to different customer segments, thereby avoiding internal brand competition and enhancing overall market competitiveness [7][8]. - The company aims to optimize its product structure and reduce reliance on low-end economy hotels, aligning with the trend of consumer upgrading in the hotel industry [7][8]. Financial Projections - Revenue and profit forecasts indicate a positive outlook, with expected net profits of 8.44 billion, 9.49 billion, and 10.87 billion yuan for 2025-2027, reflecting growth rates of 4.65%, 12.51%, and 14.47% respectively [10][12]. - The projected earnings per share (EPS) for 2025-2027 are 0.76, 0.85, and 0.97 yuan, with corresponding price-to-earnings (PE) ratios of 22X, 20X, and 17X [10][12].

Core Viewpoint - The company is strategically expanding its presence in the mid-to-high-end hotel sector by investing in two key projects in high-potential regions, aiming to optimize its development model and capitalize on industry recovery opportunities [2][3]. Project Summaries - The company plans to invest 280.51 million yuan in a new hotel property in Suzhou, with a construction period of 14 months and an expected internal rate of return (IRR) of approximately 4% [1]. - A lease agreement for a property in Beijing's Tongzhou District is set for 10 years, with a total investment of approximately 43.6 million yuan, including renovation costs, and an expected IRR of about 12% [1]. Regional Focus - Both projects are strategically located in core economic zones: the Suzhou project in the Yangtze River Delta and the Beijing project in the Beijing-Tianjin-Hebei region, aligning with the trend of focusing on core areas in the domestic hotel industry [2]. - The Suzhou project is positioned in a provincial high-tech zone, benefiting from strong business and leisure demand due to its proximity to major cities and established enterprises [2]. - The Beijing project is near the Universal Studios cultural tourism core area, which is expected to generate significant visitor traffic, enhancing the hotel's market presence [3]. Product Structure - Both projects focus on mid-to-high-end brands, aiming to upgrade the company's offerings and reduce reliance on low-end hotels [4]. - The Suzhou project will feature the "Jian Guo Pu Yin" and "Home Inn Select" brands, while the Beijing project will introduce three core brands: "Jian Guo Bo Cui," "Jian Guo Pu Yin," and "Jian Guo Fei Man" [4]. - The company emphasizes a differentiated strategy to avoid internal brand competition, targeting various customer segments within the mid-to-high-end market [4]. Development Model - The company employs a dual model of "new construction + leasing," balancing long-term asset accumulation with short-term profit realization [5]. - The Suzhou project, being a new build, focuses on long-term asset value, while the Beijing project, through leasing, allows for quicker operational deployment and immediate revenue generation [5]. Revenue Expectations - The expected IRR for the Suzhou project is around 4%, reflecting the long-term nature of new hotel developments, while the Beijing project is projected to have an IRR of approximately 12%, benefiting from its strategic location and operational model [6]. - This differentiation in expected returns aligns with the company's strategy to balance long-term stability with short-term profitability [6].

Financial Performance - In the first half of 2025, the company's operating revenue was approximately 3.661 billion yuan, a year-on-year decrease of 1.93% [2] - The net profit attributable to the parent company was approximately 397 million yuan, a year-on-year increase of 11.08% [2] - The net profit attributable to the parent company after deducting non-recurring gains and losses was approximately 336 million yuan, a year-on-year increase of 3.81% [2] Market Trends - The domestic economy showed steady improvement, with a gradual recovery in business travel demand and sustained strong leisure travel demand [2] - During the "May Day" holiday, the tourism consumption market was vibrant, leading to better hotel industry performance compared to the same period last year [2] RevPAR and Hotel Performance - The RevPAR for all hotels under the company, excluding light management hotels, was 153 yuan, a year-on-year decrease of 4.3% [2] - In the second quarter, the RevPAR for all hotels was 143 yuan, a year-on-year decrease of 5.7% [3] - The average room rate in the second quarter was 225 yuan, a year-on-year decrease of 2.8% [3] - The occupancy rate was 63.9%, a year-on-year decrease of 2 percentage points [3] Expansion and Development - In the first half of 2025, the company opened 364 new hotels, including 5 direct-operated and 359 franchised hotels [3] - The number of newly opened mid-to-high-end hotels was 189, a year-on-year increase of 11.8% [3] - As of the end of the reporting period, the total number of hotels was 7,268, with 2,132 mid-to-high-end hotels accounting for 29.3% of the total [4] - The number of signed but not yet opened and in-signing hotels was 1,750 [4]