摩根士丹利--休闲与住-酒店业之旅要点-20191930-22页

Praveen Choudhary Dan Xd Xu Attractive MORGAN STANLEY ASIA LIMITED Praveen K Choudhary EQUITY ANALYST 852 2848 5068 Dan Xu RESEARCH ASSOCIATE 852 2239 1227 Hong Kong China Leisure 2 both business and leisure travellers are looking for more than basic amenities and designs and branded midscale hotels especially hotels priced at the upper end are still a small fraction of total stock Soft franchising China hotel market has seen more new entrants with a softer franchise model and focusing on non standardized hotel assets in lower tier cities counties However the incumbents have yet to see the impact on the take rate or their ability to source new potential franchises This is mainly due to limited overlap in city exposure and different asset requirements Exhibit 3 Home Inn China Inn and Jin Jiang Chonpines also started soft franchising a few years ago HTHT started its Yisu platform in 1Q19 but these will not be their strategic focus Read Soft Franchising Primer for details Prefer GHG over HTHT We find GHG s recurring income growth to be more resilient than HTHT s due to high exposure of its Franchised includes SBC Core net income reflects the same adjustment from adjusted EBITDA but includes net interest income and tax related deductions Source Morgan Stanley Research E estimates 5 Huazhu Group HTHT O UW PT US 28 We continue to remain cautious on HTHT in view of its rich valuation For 3Q the company guided for revenue growth of 9 11 vs 14 in 1H19 The outlook for like for like RevPAR growth in 2H19 was maintained at negative single digit decline and the company could see EBITDA margin decline as negative operating leverage continues to set in New initiatives into upscale hotels cost Rmb200mn in pre opening expenses in 2019E We think this cost will continue in 2020 when the rental expense shows up and L includes SBC Core net income reflects the same adjustment from adjusted EBITDA but includes interest and tax related deductions Source Morgan Stanley Research E estimates Stong Pipeline Pipeline stayed strong at 1 553 hotels including 300 soft brands as of Jun 19 18 QoQ or 85 YoY despite like for like RevPAR decline Franchising Huazhu s brand becomes more attractive as independent hotels struggle to keep up with the occupancy in a weaker economic environment Moving ahead with upscale strategy The company believes it can find a franchise model for luxury full service hotels as most of the existing upscale hotels are not making good return to landlords Higher end hotels have more stringent requirements on good assets in prime locations and now is a good time to obtain these assets at a less expensive valuations However HTHT admits the upscale model is still an experiment and it will take one to two years to stabilize the occupancy ADR and only then can it start franchising 6 GreenTree Hospitality GHG N OW PT US 16 50 We maintain our preference for GHG over HTHT in view of its attractive valuation GreenTree has 99 of its hotel rooms under its asset light franchise model HTHT 80 as of Jun 19 We estimate over 90 of EBITDA comes from the franchise business HTHT 60 Therefore GreenTree is a more defensive play in a weakening RevPAR growth environment Furthermore with over US 130mn of net cash after two recent acquisitions GHG can continue to add value accretive brands and hotel companies The company began consolidating the Argyle group holdings 28 franchised hotels in Apr 19 which will add 3 6 and 2 4 to annualized revenue and adjusted EBITDA respectively Other takeaways from our trip in Shanghai Exhibit 6 GHG Key estimates for 3Q19E and 2019E in Rmb mn RevenueMS Adjusted EBITDACore Net profit 2019E1 170636497 YoY24 18 16 3Q19E322185146 YoY25 23 20 MS Adjusted EBITDA excludes FX government subsidies interest income and trading gains losses includes SBC Core net income reflects the same adjustment from adjusted EBITDA but includes net interest income and tax related deductions Source Morgan Stanley Research E estimates GHG is the only player with positive RevPAR growth in 2Q19 The reasons why GHG s like for like RevPAR growth was more resilient than peers in the past three quarters are mainly 1 GHG s room pricing was more steady during the upcycle in 2017 18 hence ADR still has potential to increase while occupany fell less than market 2 80 of the customers were business travelers and the company claimed they are more sticky and less price sensitive to GHG s hotels 40 of the franchisees have more than one hotel under GHG s brands 7 GreenTree What s Changed We raise our previously estimated revenue for 2019 2020 and 2021 by 2 4 and 4 respectively to factor in the consolidated Argyle operations As a result adjusted EBITDA for FY20 21E increases by 0 2 after considering the negative impact on operating margin due to Argyle Group s lower operating scale Adjusted EBITDA for 2019E is lowered by 4 to account for initial SG Incl SBC Core net income same adjustment from Adjusted EBITDA but incl interests and tax related deductions Source Morgan Stanley Research E estimates Exhibit 8 Morgan Stanley Estimates vs Consensus MSConsensusVariance Rmb mn2019E2020E2021E2019E2020E2021E2019E2020E2021E Net Revenue1 1701 3851 5771 1481 3551 5331 9 2 2 2 8 Adjusted EBITDA652817953673815919 3 1 0 2 3 7 Core net income5136387595126046820 2 5 7 11 2 Net income574661785N AN AN AN AN AN A Net EPS5 666 527 744 855 896 6816 7 10 7 15 9 Source Thomson Reuters Morgan Stanley Research estimates 8 Scenario Analysis GreenTree we increase our bull case by 7 to US 22 00 This mainly reflects faster ramp up of Argyle group acquisition and a stronger RevPAR growth increase due to completion of L 2 WACC of 9 5 3 2022 26 growth rate of 9 annually 4 terminal growth rate of 3 0 Risks to our price target Upside 1 Industry RevPAR cycle bottoms and imrpves 2 Higher than expected RevPAR growth outperforming the industry 3 market leading midscale hotel brands help generate faster growth than peers in the long term 4 Potential accretive acquisition similar to Crystal Orange 5 share repurchase 17 Disclosure Section The information and opinions in Morgan Stanley Research were prepared or are disseminated by Morgan Stanley Asia Limited which accepts the responsibility for its contents and or Morgan Stanley Asia Singapore Pte Registration number 199206298Z and or Morgan Stanley Asia Singapore Securities Pte Ltd Registration number 200008434H regulated by the Monetary Authority of Singapore which accepts legal responsibility for its contents and should be contacted with respect to any matters arising from or in connection with Morgan Stanley Research and or Morgan Stanley Taiwan Limited and or Morgan Stanley Stock Broker BSE Registration No INB011054237 and NSE Registration No INB INF231054231 Merchant Banker SEBI Registration No INM000011203 and depository participant with National Securities Depository Limited SEBI Registration No IN DP NSDL 372 2014 which accepts the responsibility for its contents and should be contacted with 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York NY 10036 USA Analyst Certification The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report Praveen K Choudhary Unless otherwise stated the individuals listed on the cover page of this report are research analysts Global Research Conflict Management Policy Morgan Stanley Research has been published in accordance with our conflict management policy which is available at A Portuguese version of the policy can be found at br Important US Regulatory Disclosures on Subject Companies As of August 30 2019 Morgan Stanley beneficially owned 1 or more of a class of common equity securities of the following companies covered in Morgan Stanley Research China CYTS Tours Holding Co Ltd Huazhu Group Ltd In the next 3 months Morgan Stanley expects to receive or intends to seek compensation for investment banking services from GreenTree Hospitality Group Ltd Huazhu Group Ltd Within the last 12 months Morgan Stanley has received compensation for products and services other than investment banking services from Huazhu Group Ltd Within the last 12 months Morgan Stanley has provided or is providing investment banking services to or has an investment banking client relationship with the following company GreenTree Hospitality Group Ltd Huazhu Group Ltd Within the last 12 months Morgan Stanley has either provided or is providing non investment banking securities related services to and or in the past has entered into an agreement to provide services or has a client relationship with the following company GreenTree Hospitality Group Ltd Huazhu Group Ltd Morgan Stanley we correspond Equal weight and Not Rated to hold and Underweight to sell recommendations respectively 18 COVERAGE UNIVERSEINVESTMENT BANKING CLIENTS IBC OTHER MATERIAL INVESTMENT SERVICES CLIENTS MISC STOCK RATING CATEGORY COUNT OF TOTAL COUNT OF TOTAL IBC OF RATING CATEGORY COUNT OF TOTAL OTHER MISC Overweight Buy112636 29043 26 52237 Equal weight Hold143246 30646 21 66147 Not Rated Hold10 00 0 10 Underweight Sell56818 7411 13 23116 TOTAL3 1276701415 Data include common stock and ADRs currently assigned ratings Investment Banking Clients are companies from whom Morgan Stanley received investment banking compensation in the last 12 months Due to rounding off of decimals the percentages provided in the of total column may not add up to exactly 100 percent Analyst Stock Ratings Overweight O The stock s total return is expected to exceed the average total return of the analyst s industry or industry team s coverage universe on a risk adjusted basis over the next 12 18 months Equal weight E The stock s total return is expected to be in line with the average total return of the analyst s industry or industry team s coverage universe on a risk adjusted 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