GreenTree(US:GHG)2023-11-22 15:20Financial Data and Key Metrics Changes - Total revenues for Q3 2023 were RMB 460.9 million, an increase of 15.3% year-over-year, driven by the recovery in RevPAR and an increase in the number of hotels [8][14] - RevPAR increased by 30.5% year-over-year to RMB 156, reaching 110% of the levels seen in Q3 2019 during July and August [7][8] - Adjusted EBITDA rose significantly by 215% to RMB 173.4 million, with a margin of 37.6% [8][19] - Net income was RMB 117.4 million, reflecting a margin of 25.5% [8] Business Line Data and Key Metrics Changes - Hotel revenues increased by 40.4% year-over-year to RMB 339.1 million, with total revenues from F&M hotels up 20.8% and L&O hotels up 83.1% [14][15] - Average Daily Sales (ADS) for restaurants increased by 7.4% to RMB 6,548, despite the closure of 85 restaurants over the past year [8][20] - The number of individual memberships in the hotel segment grew to 88 million, up from 77 million a year ago [13] Market Data and Key Metrics Changes - The occupancy rate for L&O hotels increased to 79%, while F&M hotels saw an occupancy rate of 81.3% [13] - The company observed a slight decline in RevPAR in early November, attributed to seasonal factors and a potential slowdown in business travel [22][26] Company Strategy and Development Direction - The company is focused on expanding its mid- to upscale hotel segment, with 455 hotels in this category, representing 10.9% of the total portfolio [10] - There is a strategic emphasis on increasing the number of hotels in Tier 3 and lower cities, with 73.7% of hotels in the current pipeline located in these areas [12] - The company aims to improve profitability in its restaurant business by closing unprofitable stores and increasing the proportion of franchise operations [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued recovery of the hotel business, although they noted a slight slowdown in RevPAR post-holidays [26][34] - For 2024, management anticipates ongoing economic recovery but acknowledges uncertainty regarding leisure travel demand [27][34] - The company plans to open 450 to 470 hotels in 2024, representing a 12% to 15% increase from the current year [32] Other Important Information - The company repurchased 554,158 ADS in October 2023 as part of a share repurchase program, indicating confidence in the company's valuation [20][52] - As of September 30, 2023, total cash and cash equivalents were RMB 1,331.4 million, down from RMB 1,440.1 million due to loan repayments and investments [19] Q&A Session Summary Question: RevPAR outlook and November performance - Management noted that RevPAR declined slightly in early November, with a 5% decrease compared to 2019 levels, attributing it to seasonal factors [22][25][26] Question: Hotel opening plans for 2024 - The company plans to sign 650 to 680 hotels and open 450 to 470 hotels in 2024, indicating a strong growth trajectory [32][33] Question: Sustainability of leisure travel demand - Management expressed cautious optimism about leisure travel demand, expecting it to remain stable but not as strong as the previous summer [34] Question: Share repurchase rationale - The share repurchase was seen as a strategic move to enhance shareholder value, with management emphasizing the undervaluation of shares [28][52] Question: Cost savings and margin outlook - Management highlighted significant cost savings across both hotel and restaurant segments, with expectations for continued margin improvement [38][40]