BTG Hotel (600258): Expansion in the fourth quarter accelerates future growth

BTG Hotel (600258): Expansion in the fourth quarter accelerates future growth
Event: The company announced its 2018 annual report.The company achieved revenue of 85 in 2018.3.9 billion (+1.45%), net profit attributable to mother 8.5.7 billion (+35.84%), net profit after deduction 69 billion (+15.99%), cash flow from operating activities19.2.3 billion (-7.02%).The company’s operating target for 2019 is revenue of 860,000-880,000 yuan (+0.7%-+ 3.1%), more than 800 new stores opened, more than 50% of high-end.  The hotel and resort business performed well, and the group’s expenses increased by ten years.In terms of revenue composition, for example, the family hotel / first travel hotel / attraction business realized revenue 71 respectively.65/9.36/4.500,000 yuan, ten years +1.45% / + 1.57% / + 1.26%; hotel business by direct sales / franchise revenue 杭州桑拿网 were 66.55/14.33 ‰, at least -0.3% / + 10.7%, gross profit margins were 93.49% / 100%, ten years -0.33pct / + 0.01pct.In the composition of net profit attributable to mothers, such as the family / first travel department / attractions / group budget expenses contributed 8 respectively.11/0.51/0.98 / -1.980,000 yuan, +25 for ten years.5% /-1.4% / + 20.0% /-30.At least 5%, the investment income generated by the company’s sale of 20% equity of Yanjing Hotel in 2018 is attributable to the net profit of the mother.950,000 yuan; the group’s budget expenses increased, mainly because the company accrued 0 for Nanyuan shares.8.2 billion goodwill was impaired.If the impact of goodwill impairment is excluded, the net profit after deduction is 7.5.2 billion (+26.3%).  The growth rate in the second half of the year was due to a slight increase in store revenue.By quarter, 2018Q1 / Q2 / Q3 / Q4 companies achieved revenue of 19 respectively.24/20.78/23.66/21.70 trillion, ten years +0.6% / + 0.1% / + 1.8% / + 3.1%.Return to mother’s net profit 0.75/2.65/4.62/0.56 ‰, +116 for ten years.6% / + 28.5% / + 49.0% /-31.0%.Net profit after deduction is 0.58/2.58/3.48/0.26 trillion, +53 a year.5% / + 28.1% / + 13.9% /-48.4%.Revenue growth improved in the second half, mainly due to the acceleration of the company’s opening of stores in the second half of the year.The growth rate of net profit after deduction is gradually changed. The restructuring was affected by the economic downturn in the second half of the year.  The store opening speed accelerated in 18Q4, and the proportion of high-end and high-end further increased.In 2018, the company added a total of 337 hotels (+9.1%) (622 newly opened stores and 285 closed stores), of which economy / mid-end / others increased by -10/217/130, respectively; in 2017, the company added a total of 310 hotels.In terms of quarters, 2018Q1 / Q2 / Q3 / Q4 have a net increase of 21/55/70/191, respectively, of which the economic type is -17 / -2 / -15 / 24, and the high-end is 24/46/37 /110 stores, the others are 14/11/48/57, the long-term store opening speed has gradually accelerated.Mid-end accounted for 14 from the end of 17.1% to 17 at the end of 18.8%.As of the end of 2018, the company had a total of 4,049 hotels, with 3025/720/304 hotels divided by economy / middle-end / other, accounting for 74.7% / 17.8% / 7.5%, 925/3124 directly operated / joined, accounting for 22.8% / 77.2%.  RevPAR growth rate dropped significantly in the second half of the year, mainly due to the impact of the economic environment.In 2018Q4, Home Inn’s economic direct sales / economical franchise / mid-to-high-end direct management / mid-to-high end franchise RevPAR were 126/142/251/220, multiple +1.4% /-1.0% /-5.2% /-2.According to the same store data, RevPAR for economy direct management / economical franchise / medium and high end direct management and mid and high end franchise same store RevPAR are 126/144/276/253, at least +2.4% / + 1.1% / + 0.9% /-0.4%.In terms of quarters, Home Inn 18Q1 / Q2 / Q3 / Q4 RevPARs at the same store are separated by +2.6% / + 4.1% / + 2.4% / + 1.5%; RevPAR of same-end and high-end stores are +4 respectively.3% / + 5.0% / + 1.4% / + 0.3%.Affected by the economic environment in the second half of 2018, RevPAR growth has improved.  Earnings forecast and investment advice: Maintain “Buy” rating.We predict that the company’s net profit attributable to the mother in 19/20/21 will be 10 respectively.4/12.1/14.0 million yuan, CAGR for 2019-2021 is 16%, corresponding to the current expected PE is 21 respectively.3/18.2/15.8 times.Considering that the company’s leading state-owned enterprise reform progress is expected to fully stimulate the company’s vitality, we believe that the company’s reasonable urban conversion rate is 311 trillion, corresponding to PE is 30 times, and the 19-year target price is 31.75 yuan.  Risk reminder: Macroeconomic downturn, industry oversupply, and company management risk.