GreenTree Hospitality Group Ltd. · NYSE:GHG
GreenTree Hospitality — Q1 2018 Earnings Presentation
25 slides from GreenTree Hospitality's earnings presentation, May 15, 2018
Slide 1: Q1 2018 Results Presentation
Comfort Quality Value Convenience (Shell Hotel) GreenTree Hospitality Group Ltd. Q1 2018 Results Presentation | May 15, 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 19 3
Slide 4: Business and Strategy Review
1. Business and Strategy Review 4
Slide 5: Q1 2018 Performance Overview
Q1 2018 Performance Overview As of March 31, 2018 98.9% F&M Hotels (1) 2,354 Hotels 70.2% Revenue Contribution from F&M Hotels 195,552 Rooms ADR: +2.6% YoY to RMB156 Occupancy: +1.6% YoY to 79.2% 406 Hotels Contracted for or under Development RevPAR: +5.1% YoY to RMB124 Revenue +23.3% YoY to RMB205M
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 ~70% of Our Revenue % of F&M hotels Revenue, % 100 100 5 7 7 8 98.9 98.9 99 80 24 22 32 28 98.4 98 60 97.6 97 40 69 70 63 65 96 20 95 0 2015 2016 2017 18Q1 2015 2016 2017 18Q1 F&M Hotels L&O
Slide 7: Fast-Growing Loyal Membership Base
Fast-Growing Loyal Membership Base 96% of rooms nights sold through direct sales Robust Membership Growth Increase in Corporate Clients MM ‘000 25 1,000 860 22 820 21 20 750 15 500 Dec 31, 2017 Mar 31, 2018 Dec 31, 2017 Mar 31, 2018 7
Slide 8: Consistently Strong RevPAR Growth
Consistently Strong RevPAR Growth Quarterly RevPAR RMB 150 145 131 135 131 124 123 139 124 119 115 117 129 129 111 108 100 117 100 92 50 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 F&M L&O RevPAR YoY Growth for L&O Hotels RevPAR YoY Growth for F&M Hotels RMB RMB 150 150 124 117 119 100 100 100 50 5
Slide 9: Continue to Build up Hotel Pipeline to Fuel Accelerated Growth
Continue to Build up Hotel Pipeline to Fuel Accelerated Growth All 406 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: Introduction of Business to Mid-to-up-scale Brands
Introduction 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 trends with
Slide 11: 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 44 hotels opened in Q1 2016; 48 hotels opened in Q1 2017 2,354 500 2,289 26 26 400 300 357 377 1,964 1,964 200 2,000 32 30 100 44 48 80 0 (15) (88) (100) (100) 2
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 4.2% RevPAR YoY growth for F&M hotels, 0.7 ppt higher than Q1 2017 ADR Occupancy RevPAR RMB % RMB 250 100 150 124 80 119 200 193 80 77 78 120 115 117 168 100 159 152 155 92 149 59 61 150 60 58 90 100 40
Slide 14: Robust Revenue Growth
Robust Revenue Growth Total Revenue Revenue from F&M Hotels RMB MM RMB MM 200 250 144 112 88 100 0 205 16Q1 17Q1 18Q1 200 % YoY Growth 27.2% 28.2% 166 Revenue from L&O Hotels RMB MM 150 140 60 43 42 44 30 0 100 16Q1 17Q1 18Q1 % YoY Growth (2.0%) 5.8% Membership Fees 50 RMB MM 20 17 12 10 10 0 0 16Q1
Slide 15: Effective Cost Structure
Effective Cost Structure Total Operating Costs and Expenses Hotel Operating Costs RMB MM % of Revenue RMB MM % of Revenue 120 45.0% 50 160 80 34.3% 63 57 65 60 25 31.8% 0 0 16Q1 17Q1 18Q1 61.4% % YoY Growth (9.7%) 14.2% 120 60 Selling and Marketing Expense 51.7% 97 RMB MM % of Revenue 20 5.8% 8 5.5%
Slide 16: Strong and Improving Profitability
Strong and Improving Profitability Gross Profit and Margin Adjusted EBITDA and Margin(1) Core Net Income and Margin(2) RMB MM % RMB MM % RMB MM % 200 80% 200 60% 200 50% 55.4% 52.7% 68.2% 65.7% 41.0% 39.6% 140 114 109 100 40% 100 30% 100 25% 88 84 66 0 0% 0 0% 0 0% 17Q1 18Q1 17Q1 18Q1 17Q1 18Q1 Gros
Slide 17: 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, short-term investments and trading securities of RMB2,077MM as of Mar 31, 2018 2,500 2,077 (23) 2,000 83
Slide 18: Guidance; Thank you! Q&A
Guidance • Expect net revenue for the full year of 2018 to grow 20-25% from 2017 Thank you! Q&A 18
Slide 19: Appendix: Hotel Performance and Financial Statements
Appendix: Hotel Performance and Financial Statements 19
Slide 20: 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 55 6,286 (1) (1) 280–350 2017 - - Mid-scale: 180–400 2004 1,
Slide 21: Hotel Breakdown by Segment
Hotel Breakdown by Segment Number of Hotels in Operation Number of Hotel Rooms in Operation As of Dec 31, 2017 As of Mar 31, 2018 As of Dec 31, 2017 As of Mar 31, 2018 Economy hotels 257 287 14,060 15,810 Vatica 104 111 7,704 8,280 Shell 153 176 6,356 7,530 Mid-scale 1,982 2,012 171,041 173,456 Gree
Slide 22: Hotel Operational Data
Hotel Operational Data As of For the quarter ended Mar 31, 2017 Mar 31,2018 March 31, 2017 March 31,2018 Occupancy rate (as a percentage) Total hotels in operation: 1,964 2,354 Leased and owned hotels 59.4% 60.5% Leased and owned hotels 30 26 Franchised hotels 78.1% 79.6% Blended 77.6% 79.2% Franchi
Slide 23: Consolidated Balance Sheets
Consolidated Balance Sheets Dec 31, 2017 Mar 31, 2018 Mar 31, 2018 Dec 31, 2017 Mar 31, 2018 Mar 31, 2018 MM RMB RMB USD MM RMB RMB USD Assets Liabilities and Equity Current liabilities: Current assets: Accounts payable 7.3 12.0 1.9 Cash and cash equivalents 162.0 1,227.7 195.7 Advance from customer
Slide 24: Consolidated Statements of Comprehensive Income
Consolidated Statements of Comprehensive Income Dec 31, 2017 Mar 31, 2018 Mar 31, 2018 MM RMB RMB USD Revenues Leased-and-operated hotels 41.8 44.2 7.0 Franchised-and-managed hotels 112.2 143.9 22.9 Membership fees 12.3 16.9 2.7 Total revenues 166.3 204.9 32.7 Operating cost and expenses Hotel opera
Slide 25: Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows Quarter Ended Quarter Ended Mar 31, 2017 Mar 31, 2018 Mar 31, 2018 Mar 31, 2017 Mar 31, 2018 Mar 31, 2018 MM RMB RMB USD MM RMB RMB USD Operating activities: Investing activities: Net income 74.5 90.2 14.4 Purchases of property and equipment (4.8) (58.3) (9.3) A
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