GreenTree Hospitality Group Ltd. · NYSE:GHG
GreenTree Hospitality — Q2 2018 Earnings Presentation
25 slides from GreenTree Hospitality's earnings presentation, Aug 23, 2018
Slide 1: GreenTree Hospitality Group Q2 2018 Results Presentation
Comfort Quality Value Convenience GreenTree Hospitality Group Ltd. Q2 2018 Results Presentation | August 23, 2018
Slide 2: Disclaimer
Disclaimer This presentation does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities. Neither this presentation nor any part of it shall form the basis of or be relied upon in connection with any cont
Slide 3: Agenda
Agenda 1 Business and Strategy Review 4 2 Operational and Financial Highlights 11 3 Appendix: Hotel Performance and Financial Statements 22 3
Slide 4: 1. Business and Strategy Review
1. Business and Strategy Review 4
Slide 5: Q2 2018 Performance Overview
Q2 2018 Performance Overview As of June 30, 2018 98.9% F&M Hotels (1) 2,434 Hotels 70.9% Revenue Contribution from F&M Hotels 201,275 Rooms ADR: +5.1% YoY to RMB164 Occupancy: -0.6% YoY to 82.6% 477 F&M Hotels Contracted for or under Development RevPAR: +4.6% YoY to RMB136 Revenue +20.3% YoY to RMB2
Slide 6: Continued Strategic Focus on the F&M Model
Continued Strategic Focus on the F&M Model 98.9% of Our Hotel Portfolio are F&M Hotels F&M Hotels Contribute ~71% of Our Revenue % of F&M hotels Revenue, % 100 100 5 7 7 8 8 98.9 98.9 98.9 24 22 21 99 80 28 32 98.4 98 60 97.6 97 40 69 70 71 63 65 96 20 95 0 2015 2016 2017 18Q1 18Q2 2015 2016 2017 18
Slide 7: Fast-Growing Loyal Membership Base
Fast-Growing Loyal Membership Base 95.4% of rooms nights sold through direct sales Robust Membership Growth Increase in Corporate Clients MM ‘000 25 1,000 24 930 820 21 20 750 15 500 Dec 31, 2017 Jun 30, 2018 Dec 31, 2017 Jun 30, 2018 7
Slide 8: Consistently Strong RevPAR Growth
Consistently Strong RevPAR Growth Quarterly RevPAR RMB 150 145 142 131 131 135 124 123 139 124 119 135 115 117 129 111 108 129 100 117 100 92 50 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 F&M L&O RevPAR YoY Growth for L&O Hotels RevPAR YoY Growth for F&M Hotels RMB RMB 150 150 142 135 131 130
Slide 9: Continue to Build up Hotel Pipeline to Fuel Accelerated Growth
Continue to Build up Hotel Pipeline to Fuel Accelerated Growth All 477 pipeline hotels are franchised-and-managed, strengthening our position as the leading F&M hotel operator in China Business to Mid-to-up-scale and Economy Segments Strengthening Hotel Pipeline Fuel Stronger Growth and a More Diver
Slide 10: Further development of Business to Mid-to-up-scale Brands
Further development of Business to Mid-to-up-scale Brands (1) Gme Gya VX ● Mid-to-up-scale business hotels designed to ● Mid-to-up-scale smart, fashionable and ● Mid-to-up-scale leisure hotels that combine be a calm and unique haven for business trendy hotels highlighting individuality youthful tren
Slide 11: 2. Operational and Financial Highlights
2. Operational and Financial Highlights 11
Slide 12: Rapid Organic Growth with Low Hotel Closure Rate
Rapid Organic Growth with Low Hotel Closure Rate Increasing Number of Hotels in Operation Hotel Openings / Closures Number of hotels 2,500 2,434 26 500 2,289 26 400 300 2,035 328 339 1,964 27 200 2,000 32 100 Opened in Opened in 62 97 80 104 Q2 2016 Q2 2017 0 (88) (100) (15) (24) (100) 2016 2017 18Q
Slide 13: Improving ADR and Occupancy Lead to Sustained RevPAR Growth
Improving ADR and Occupancy Lead to Sustained RevPAR Growth The Company has achieved accelerating 4.7% RevPAR YoY growth for F&M hotels. ADR Occupancy RevPAR RMB % RMB 250 100 150 142 135 129 131 84 83 124 82 201 200 80 120 182 111 72 71 69 161 163 152 155 150 60 90 100 40 60 50 20 30 0 0 0 16Q2 17Q
Slide 14: Robust Revenue Growth - 18Q2 vs. 17Q2
Robust Revenue Growth - 18Q2 vs. 17Q2 Total Revenue Revenue from F&M Hotels RMB MM RMB MM 200 165 250 134 233 100 0 17Q2 18Q2 200 194 Revenue from L&O Hotels RMB MM 150 60 47 50 30 0 100 17Q2 18Q2 Membership Fees 50 RMB MM 20 18 13 10 0 0 17Q2 18Q2 17Q2 18Q2 14
Slide 15: Robust Revenue Growth - 18H1 vs. 17H1
Robust Revenue Growth - 18H1 vs. 17H1 Total Revenue Revenue from F&M Hotels RMB MM RMB MM 400 309 500 246 200 438 0 17H1 18H1 400 360 Revenue from L&O Hotels RMB MM 300 120 89 94 60 0 200 17H1 18H1 Membership Fees 100 RMB MM 40 35 25 20 0 0 17H1 18H1 17H1 18H1 15
Slide 16: Effective Cost Structure - 18Q2 vs. 17Q2
Effective Cost Structure - 18Q2 vs. 17Q2 Total Operating Costs and Expenses(1) Hotel Operating Costs RMB MM % of Revenue RMB MM % of Revenue 120 40 29.8% 28.1% 160 60 66 58 60 20 0 0 17Q2 18Q2 % YoY Growth 13.7% 44.1% 43.9% 120 45 Selling and Marketing Expense 102 RMB MM % of Revenue 20 4.8% 5.0% 6
Slide 17: Effective Cost Structure - 18H1 vs. 17H1
Effective Cost Structure - 18H1 vs. 17H1 Total Operating Costs and Expenses(1) Hotel Operating Costs RMB MM % of Revenue RMB MM % of Revenue 250 31.9% 29.8% 40 300 60 115 131 125 20 0 0 47.6% 17H1 18H1 45.5% % YoY Growth 13.9% 199 Selling and Marketing Expense 200 40 RMB MM % of Revenue 172 40 5.3%
Slide 18: Strong and Improving Profitability - 18Q2 vs. 17Q2
Strong and Improving Profitability - 18Q2 vs. 17Q2 Gross Profit and Margin Adjusted EBITDA and Margin(1) Core Net Income and Margin(2) RMB MM % RMB MM % RMB MM % 250 80% 250 70% 250 60% 71.9% 70.2% 59.2% 59.6% 47.5% 45.9% 168 136 139 125 40% 125 115 35% 125 30% 111 89 0 0% 0 0% 0 0% 17Q2 18Q2 17Q2 1
Slide 19: Strong and Improving Profitability - 18H1 vs. 17H1
Strong and Improving Profitability - 18H1 vs. 17H1 Gross Profit and Margin Adjusted EBITDA and Margin(1) Core Net Income and Margin(2) RMB MM % RMB MM % RMB MM % 500 80% 500 70% 500 50% 70.2% 44.5% 68.1% 43.0% 57.7% 56.2% 308 253 245 250 40% 250 35% 250 25% 202 195 155 0 0% 0 0% 0 0% 17H1 18H1 17H1
Slide 20: Abundant Cash Balances to Support Capital Investments and Acquisitions
Abundant Cash Balances to Support Capital Investments and Acquisitions Strong Earnings and the IPO Proceeds Provide Resources for Future Business Expansion RMB MM Total cash and cash equivalents, restricted cash, short-term investments and trading securities of RMB1,899MM as of Jun 30, 2018 2,500 2,
Slide 21: Guidance; Thank you! Q&A
Guidance • Expect total revenue for the full year of 2018 to grow 20-25% from 2017 Thank you! Q&A 21
Slide 22: Appendix: Hotel Performance and Financial Statements
Appendix: Hotel Performance and Financial Statements 22
Slide 23: Our Diverse Hotel Brands
Our Diverse Hotel Brands We have established a full product suite to capture a wide spectrum of market opportunities Year Hotels Hotel Rooms Our Brands Price (RMB) Founded in Operation in Operation Business to Mid-to-up-scale: 300–600 2012 59 6,650 (1) (1) 280–350 2017 1 110 Mid-scale: 180–400 2004
Slide 24: Hotel Breakdown by Segment
Hotel Breakdown by Segment Number of Hotels in Operation Number of Hotel Rooms in Operation 2017Q2 2018Q2 2017Q2 2018Q2 Economy hotels 172 312 9,964 16,850 Vatica 83 111 6,224 8,295 Shell 89 201 3,740 8,555 Mid-scale 1,829 2,062 159,837 177,665 GreenTree Inn 1,604 1,785 141,553 155,470 GreenTree All
Slide 25: Hotel Operational Data
Hotel Operational Data 2017Q2 2018Q2 2017Q2 2018Q2 Occupancy rate (as a percentage) Total hotels in operation 2,035 2,434 Leased-and-owned hotels 72.1% 70.7% Leased and owned hotels 27 26 Franchised hotels 83.5% 82.9% Blended 83.2% 82.6% Franchised hotels 2,008 2,408 Average daily rate (in RMB) Leas
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