- The Company's operations and performance, while still impacted by COVID-19, showed a steady recovery in the second quarter.
- A total of 4,066 hotels with 296,307 hotel rooms were in operation as of June 30, 2020, compared to 3,998 hotels and 292,716 hotel rooms as of March 31, 2020.
- Total revenues decreased 21.4% to RMB216.0 million (US$30.6 million) [1] for the second quarter and decreased 26.8% to RMB373.4 million (US$52.8 million) [1] for the first half of 2020.
- Net income decreased 26.3% to RMB93.7 million (US$13.3 million) [1] for the second quarter and decreased 69.5% to RMB79.6 million (US$11.3 million) [1] for the first half of 2020.
- Adjusted EBITDA (non-GAAP) decreased 47.2% to RMB91.4 million (US$12.9 million) [1] for the second quarter and decreased 54.7% to RMB138.9 million (US$19.7 million) [1] for the first half of 2020.
- Core net income (non-GAAP) decreased 40.2% to RMB74.6 million (US$10.6 million) [1] for the second quarter and decreased 56.8% to RMB93.7 million (US$13.3 million) [1] for the first half of 2020.
- Net income per ADS (basic and diluted) was RMB1.01 (US$0.14) [1] for the second quarter, and RMB0.90 (US$0.13) [1] for the first half of 2020.
- Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.72 (US$0.10) [1] for the second quarter, and RMB0.91 (US$0.13) [1] for the first half of 2020.
GreenTree Hospitality Group Ltd. (NYSE: GHG), a hospitality management group in China, last week announced its unaudited financial results for the second quarter ended June 30, 2020.
Second Quarter 2020 Operational Highlights
- As of June 30, 2020, the Company had 35 leased-and-operated ("L&O") hotels and 4,031 franchised-and-managed ("F&M") hotels in operation in 343 cities across China, compared to 30 L&O hotels and 2,925 F&M hotels in operation in 300 cities as of June 30, 2019. The geographic coverage increased by 14.3% year over year.
- During the quarter, the Company opened 111 hotels, a decrease of 23 comparing to 134 hotels in the second quarter of 2019. Among the hotels opened, 1 was in the luxury segment, 28 were in the mid-to-up-scale segment, 50 in the mid-scale segment, and 32 in the economy segment. Geographically speaking, 5 hotels were in Tier 1 cities [2], 34 in Tier 2 cities and the remaining 72 in Tier 3 and smaller cities in China.
The Company closed 43 hotels, 5 due to brand upgrades, and 20 due to their non-compliance with the Company's brand and operating standards. The remaining 18 were closed for property related issues. The Company added a net opening of 68 hotels to its portfolio.
- As of June 30, 2020, the Company had a pipeline of 1,087 hotels contracted for or under development, among which 54 hotels were in the luxury hotel segment, 215 in the mid-to-up-scale segment, 439 in the mid-scale segment, and 379 in the economy segment.
- The average daily room rate, or ADR, for all hotels in operation, was RMB142, a decrease of 17.4% year-over-year.
- The occupancy rate, or OCC for all hotels in operation was 63.4%, compared with 81.1% in the second quarter of 2019.
- The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB90, representing a 35.4% year-over-year decrease.
- As of June 30, 2020, the Company's loyalty program had more than 49 million individual members and over 1,560,000 corporate members, compared to approximately 46 million and over 1,520,000 corporate members as of March 31, 2020. The Company had approximately 93.7% of room nights sold directly.
| [1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB7.0651 on June 30, 2020 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/current/ |
| [2] Tier 1 Cities refers to Beijing, Shanghai, Shenzhen and Guangzhou; Tier 2 Cities refers to the 32 major cities, other than Tier 1 Cities, including provincial capitals, administrative capitals of autonomous regions, direct-controlled municipalities and other major cities designated as municipalities with independent planning by the State Council. |
"I am proud of the Q2 results we achieved, especially considering the difficult environment that we operated under as a result of COVID-19. Through it all, our business remained resilient and highly adaptable. We continued to serve and protect our guests, our sales recovered, and we returned to profitability," said Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree. "I know it was not easy for our staff and franchisees who worked tirelessly to guarantee the safety and health of our guests. I know it was a real challenge for anyone in the hospitality industry to overcome the headwinds from COVID-19" continued Mr. Xu.
"I am also proud of our staff and franchisees for what they delivered this quarter. We quickly adjusted our operations and marketing campaigns to meet evolving consumer preferences and weaker market conditions. We protected our margins thanks to our flexible cost structure and the measures we implemented over recent quarters and that we will continue to implement for the rest of 2020. As a result, our organic same-hotel RevPAR, excluding hotels under requisition, temporary closures, and impact from consolidated entities, deceased 22.2% in the second quarter to 112 RMB. Our overall performance was better than the average across the hospitality industry in China. Our occupancy rate has rebounded and exceeded 75% on average during the second half of July, exceeded 82% during the first two weeks of August, up substantially from 65% in the second half of May.
With the Chinese government's efforts to bring the spread of COVID-19 under control, domestic tourism and business is gradually bouncing back. On July 15, 2020, the Ministry of Culture and Tourism lifted restrictions on inter-provincial travel. The lifting of these restrictions has stimulated business travel and summer travel and helped the hospitality sector to deliver steady and improved performance. With assistance and support from the government and our business partners, together with our core strengths such as our large and loyal membership and strong operational capabilities, we are well positioned to deliver another year of outstanding service to our guests, strong performance to our franchisees, and sustainable growth to our shareholders."
Second Quarter of 2020 Financial Results
| Quarter Ended | |||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | |||
| RMB | RMB | US$ | |||
| Revenues | |||||
| Leased-and-operated hotels | 60,510,976 | 50,337,339 | 7,124,788 | ||
| Franchised-and-managed hotels | 214,419,775 | 165,652,625 | 23,446,607 | ||
| Total revenues | 274,930,751 | 215,989,964 | 30,571,395 | ||
| Six Months Ended | |||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | |||
| RMB | RMB | US$ | |||
| Revenues | |||||
| Leased-and-operated hotels | 112,336,802 | 84,137,483 | 11,908,888 | ||
| Franchised-and-managed hotels | 397,887,057 | 289,248,472 | 40,940,464 | ||
| Total revenues | 510,223,859 | 373,385,955 | 52,849,352 | ||
Total revenues for the second quarter of 2020 were RMB216.0 million (US$30.6 million) [1], representing a 21.4% year-over-year decrease. The decrease was primarily due to the impact of COVID-19, which resulted in declined RevPAR of L&O hotels and F&M hotels, renovation of 5 L&O hotels, delay in new hotel openings, as well as partial reduction and extension of sublease income recognition. Total revenues for the first half of 2020 were RMB373.4 million (US$52.8 million) [1], representing a 26.8% decrease.
- Total revenues from leased-and-operated hotels for the second quarter of 2020 were RMB50.3 million (US$7.1 million) [1], representing a 16.8% year-over-year decrease. The decrease was primarily due to RevPAR decrease of 47.1%, renovation of 5 L&O hotels, and partial reduction and extension of sublease income recognition, and partially offset by the revenue contributed by 6 L&O hotels of the Urban Hotel Group ("Urban"). Total revenues from L&O hotels for the first half of 2020 were RMB84.1 million (US$11.9 million) [1], representing a 25.1% decrease.
- Total revenues from franchised-and-managed hotels for the second quarter of 2020 were RMB165.7 million (US$23.4 million) [1], representing a 22.7% year-over-year decrease. Initial franchise fees increased by 0.5% year-over-year, mainly attributable to the gross opening of 111 hotels and contribution from historical amortization under ASC606, which was adopted since the first quarter of 2019. The 24.3% decrease from the second quarter of 2019 in recurring franchisee management fees and others was primarily due to the delay in new hotel openings and RevPAR decrease of 35.2%. Total revenues from F&M hotels for the first half of 2020 were RMB289.2 million (US$40.9 million) [1], representing a 27.3% decrease.
| Quarter Ended | |||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | |||
| RMB | RMB | US$ | |||
| Initial franchise fee | 13,243,838 | 13,313,072 | 1,884,343 | ||
| Recurring franchise management fee and others | 201,175,937 | 152,339,553 | 21,562,264 | ||
| Revenues from franchised-and- managed hotels | 214,419,775 | 165,652,625 | 23,446,607 | ||
| Six Months Ended | |||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | |||
| RMB | RMB | US$ | |||
| Initial franchise fee | 25,996,787 | 26,365,904 | 3,731,851 | ||
| Recurring franchise management fee and others | 371,890,270 | 262,882,568 | 37,208,613 | ||
| Revenues from franchised-and- managed hotels | 397,887,057 | 289,248,472 | 40,940,464 | ||
Total operating costs and expenses
| Quarter Ended | |||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | |||
| RMB | RMB | US$ | |||
| Operating costs and expenses | |||||
| Hotel operating costs | 78,939,817 | 94,916,577 | 13,434,570 | ||
| Selling and marketing expenses | 16,353,634 | 11,999,656 | 1,698,441 | ||
| General and administrative expenses | 39,768,385 | 48,143,971 | 6,814,337 | ||
| Other operating expenses | 65,350 | 41,123 | 5,820 | ||
| Total operating costs and expenses | 135,127,186 | 155,101,327 | 21,953,168 | ||
| Six Months Ended | |||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | |||
| RMB | RMB | US$ | |||
| Operating costs and expenses | |||||
| Hotel operating costs | 158,939,661 | 184,679,850 | 26,139,736 | ||
| Selling and marketing expenses | 41,029,736 | 29,840,978 | 4,223,716 | ||
| General and administrative expenses | 65,500,871 | 76,889,542 | 10,883,008 | ||
| Other operating expenses | 107,974 | 1,198,272 | 169,605 | ||
| Total operating costs and expenses | 265,578,242 | 292,608,642 | 41,416,065 | ||
Hotel operating costs for the second quarter of 2020 were RMB94.9 million (US$13.4 million) [1], representing a 20.2% increase year-over-year. The increase was mainly attributable to higher rents, higher depreciation and amortization, and the consolidation of operation costs of Argyle Hotel Management Group (Australia) Pty Ltd ("Argyle") and Urban. Argyle's costs increased compared to one year ago, primarily due to rents for 2 L&O hotels in development. Excluding the impact from acquired entities, hotel operating costs for this quarter decreased 6.2%, which was primarily due to a decrease in salaries of hotel staffs and regional general managers, and decreases in utilities, consumable, food and beverage, which resulted from the declined occupancy rate. For the first half of 2020, hotel operating costs were RMB184.7 million (US$26.1 million) [1], representing a 16.2% increase.
| Quarter Ended | |||||
| June 30, | June 30, | June 30, | |||
| 2019 | 2020 | 2020 | |||
| RMB | RMB | US$ | |||
| Rental | 19,039,168 | 35,806,000 | 5,068,010 | ||
| Utilities | 4,891,420 | 3,172,300 | 449,010 | ||
| Personnel cost | 8,495,301 | 9,332,835 | 1,320,977 | ||
| Depreciation and amortization | 7,174,031 | 10,588,191 | 1,498,661 | ||
| Consumable, food and beverage | 6,931,925 | 6,789,575 | 961,002 | ||
| Costs of general managers of franchised-and- managed hotels |
23,045,469 |
20,691,454 |
2,928,685 | ||
| Other costs of franchised-and-managed hotels | 7,306,217 | 5,476,527 | 775,152 | ||
| Others | 2,056,286 | 3,059,695 | 433,073 | ||
| Hotel Operating Costs | 78,939,817 | 94,916,577 | 13,434,570 | ||
| Six Months Ended | |||||
| June 30, | June 30, | June 30, | |||
| 2019 | 2020 | 2020 | |||
| RMB | RMB | US$ | |||
| Rental | 39,647,433 | 62,908,982 | 8,904,188 | ||
| Utilities | 11,045,983 | 7,592,490 | 1,074,647 | ||
| Personnel cost | 17,289,575 | 19,563,480 | 2,769,031 | ||
| Depreciation and amortization | 13,698,236 | 21,927,026 | 3,103,569 | ||
| Consumable, food and beverage | 13,769,076 | 15,540,443 | 2,199,607 | ||
| Costs of general managers of franchised-and- managed hotels |
45,490,112 |
41,334,102 |
5,850,462 | ||
| Other costs of franchised-and-managed hotels | 12,992,800 | 9,979,587 | 1,412,519 | ||
| Others | 5,006,446 | 5,833,740 | 825,713 | ||
| Hotel Operating Costs | 158,939,661 | 184,679,850 | 26,139,736 | ||
Selling and marketing expenses for the second quarter of 2020 were RMB12.0 million (US$1.7 million) [1], representing a 26.6% year-over-year decrease. The decrease was mainly attributable to sustainable reductions in costs for advertising and meals. Excluding Argyle's and Urban's expenses, selling and marketing expenses in this quarter decreased 37.6%. For the first half of 2020, selling and marketing expenses were RMB29.8 million (US$4.2 million) [1], representing a 27.3% decrease.
General and administrative expenses for the second quarter of 2020 were RMB48.1 million (US$6.8 million) [1], representing a 21.1% year-over-year increase. The increase was primarily attributable to higher depreciation and amortization for our property and equipment, increased consulting fees, and the consolidation of expenses from Argyle and Urban. Additionally, a one-time bad debt regarding to account receivable due to COVID-19 was accrued. Excluding the impact from acquired entities and accrued bad debts, G&A expenses decreased by 21.6%. General and administrative expenses for the first half of 2020 were RMB76.9 million (US$10.9 million) [1], representing a 17.4% year-over-year increase.
Gross profit for the second quarter of 2020 was RMB121.1 million (US$17.1 million) [1], representing a year-over-year decrease of 38.2%. Gross margin was 56.1%, compared to 71.3% a year ago. The decrease was primarily due the impact of COVID-19. Gross profit for the first half of 2020 was RMB188.7 million (US$26.7 million) [1], representing a 46.3% year-over-year decrease.
Income from operations for the second quarter of 2020 totaled RMB62.7 million (US$8.9 million) [1], representing a year-over-year decrease of 55.7%. The decrease was mainly due to decreased revenues resulting from lower RevPAR, delays in new hotel openings, and certain extension of sublease income recognition. Operating margin, defined as income from operations as percentage of total revenues, was 29.0%, compared to 51.4% a year ago. Income from operations for the first half of 2020 totaled RMB99.9 million (US$14.1 million) [1], representing a year-over-year decrease of 60.6%.
Adjusted EBITDA (non-GAAP) for the second quarter of 2020 was RMB91.4 million (US$12.9 million) [1], representing a year-over-year decrease of 47.2%. Adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 42.3%, compared to 63.0% a year ago. Adjusted EBITDA (non-GAAP) for the first half of 2020 was RMB138.9 million (US$19.7 million) [1], representing a year-over-year decrease of 54.7%.
Net income for the second quarter of 2020 was RMB93.7 million (US$13.3 million) [1], representing a year-over-year decrease of 26.3%. Net margin was 43.4%, compared to 46.2% a year ago. The year-over-year decrease was primarily due to revenue decrease partially offset by gains from investments in equity securities. Net income for the first half of 2020 was RMB79.6 million (US$11.3 million) [1], representing a year-over-year decrease of 69.5%.
Core net income (non-GAAP) for the second quarter of 2020 was RMB74.6 million (US$10.6 million) [1], representing a year-over-year decrease of 40.2%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 34.6%, compared to 45.4% one year ago. Core net income (non-GAAP) for the first half of 2020 was RMB93.7 million (US$13.3 million) [1], representing a year-over-year decrease of 56.8%.
Earnings per ADS (basic and diluted) for the second quarter of 2020 was RMB1.01 (US$0.14) [1], down from earnings per ADS of RMB1.26 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.72 (US$0.10) [1], down from RMB1.23 a year ago. Earnings per ADS (basic and diluted) for the first half of 2020 was RMB0.90 (US$0.13) [1] up from RMB2.59 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.91 (US$0.13) [1] for the first half of 2020, decreased from RMB2.11 of 2019.
Cash flow. Operating cash inflow for the second quarter of 2020 was RMB58.3 million (US$8.2 million) [1] as a result of recovery from COVID-19 and improved operating performance. Investing cash outflow for the second quarter of 2020 was RMB46.2 million (US$6.5 million) [1], which was primarily attributable to short-term investments, investment in property, and loans to franchisees. The investing cash outflow was also partially offset by repayment of advances for investments, as well as repayment from franchisees. Financing cash inflow was RMB3.0 million (US$0.4 million). Operating cash inflow for the first half of 2020 was RMB9.9 million (US$1.4 million) [1]. Investing cash inflow for the first half of 2020 was RMB108.8 million (US$15.4 million) [1]. Financing cash inflow for the first half of 2020 was RMB13.4 million (US$1.9 million) [1].
Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposit. As of June 30, 2020, the Company had a total balance of cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposits of RMB1,714.0 million (US$242.6 million) [1], as compared to RMB1,613.9 million as of March 31, 2020. The increase from Q1 was primarily attributable to cash inflow from operating activities, changes in fair value of equity securities, proceeds from disposal of investments, and offset by loans to franchisees and investment on upgrade decoration.
COVID-19 Update
With the Chinese government's efforts to bring the spread of COVID-19 under control, domestic tourism and business is gradually bouncing back. According to the STR data, the occupancy rate of hotels in China has been improving steadily during the second quarter and reached 63.1% during the last week of July, up substantially from the low of 8.4% during the week of February 9, 2020. Although new COVID-19 cases were reported in Beijing and Dalian in the middle of June, the outbreak quickly came under control thanks to local governments' effective measures and an adequate supply of nucleic acid detection test kits. With the economic environment improving, business traveling gradually returned to normal starting late June.
On July 15, 2020, The Ministry of Culture and Tourism announced that the restrictions on cross provincial travel would be lifted. The lifting of these restrictions will stimulate business travel and summer travel and help the hospitality sector to deliver steady and improved performance. With all the endeavor and assistance from the government and our business partners, most franchisees have now resumed business operations. Our occupancy rate has rebounded and exceeded 75% on average in the second half of July, exceeded 82% during the first two weeks of August, up substantially from 65% in the second half of May.
Guidance
Due to the impact of COVID-19, the Company expects a decline in total revenues in the third quarter of 2020 of 8%-13% year-over-year, and a decline in total revenues of 10%-15% for the full year 2020, compared to 2019.
The guidance set forth above reflects the Company's current and preliminary views based on our recovery speed and may not be indicative of the final financial results for future interim periods and the full year.
About GreenTree Hospitality Group Ltd.
GreenTree Hospitality Group Ltd. (NYSE: GHG) is a leading hospitality management group in China. As of June 30, 2020, GreenTree had a total number of 4,066 hotels. In 2019, GreenTree ranked among the Top 12 worldwide in terms of number of hotels in "World's Largest Hotel Companies: HOTELS' 325", published by HOTELS magazine, and was as well the fourth largest hospitality company in China in 2019 based on the statistics issued by the China Hospitality Association.
| GreenTree Hospitality Group Ltd. | |||||
| Unaudited Condensed Consolidated Balance Sheets | |||||
| December 31, | June 30, | June 30, | |||
| 2019 | 2020 | 2020 | |||
| RMB | RMB | US$ | |||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 319,847,701 | 452,608,736 | 64,062,609 | ||
| Short-term investment | 437,279,026 | 191,176,808 | 27,059,321 | ||
| Investments in equity securities | 207,007,926 | 173,261,027 | 24,523,507 | ||
| Accounts receivable, net of allowance | 99,701,226 | 120,470,392 | 17,051,477 | ||
| Amounts due from related parties | 31,739,731 | 29,439,855 | 4,166,941 | ||
| Prepaid rent | 18,794,665 | 8,872,415 | 1,255,809 | ||
| Inventories | 2,537,717 | 2,790,179 | 394,924 | ||
| Other current assets | 66,004,017 | 44,818,677 | 6,343,672 | ||
| Loans receivable, net | 82,312,201 | 145,035,382 | 20,528,425 | ||
| Total current assets | 1,265,224,210 | 1,168,473,471 | 165,386,685 | ||
| Non-current assets: | |||||
| Restricted cash | 22,312,522 | 22,169,900 | 3,137,946 | ||
| Long-term time deposits | 560,000,000 | 590,000,000 | 83,509,080 | ||
| Loan receivable, net | 121,563,742 | 172,337,304 | 24,392,762 | ||
| Property and equipment, net | 614,936,505 | 631,423,774 | 89,372,235 | ||
| Intangible assets, net | 496,280,316 | 493,363,778 | 69,831,110 | ||
| Goodwill | 100,078,236 | 100,231,487 | 14,186,846 | ||
| Long-term investments | 398,637,701 | 422,585,859 | 59,813,146 | ||
| Other assets | 76,957,992 | 50,332,514 | 7,124,105 | ||
| Deferred tax assets | 160,488,193 | 168,657,703 | 23,871,949 | ||
| TOTAL ASSETS | 3,816,479,417 | 3,819,575,790 | 540,625,864 | ||
| LIABILITIES AND EQUITY | |||||
| Current liabilities: | |||||
| Short-term bank loans | 60,000,000 | 70,000,000 | 9,907,857 | ||
| Accounts payable | 15,296,042 | 18,185,038 | 2,573,925 | ||
| Advance from customers | 40,105,627 | 32,347,707 | 4,578,521 | ||
| Amounts due to related parties | 3,518,031 | 1,469,730 | 208,027 | ||
| Salary and welfare payable | 42,650,527 | 44,054,228 | 6,235,471 | ||
| Deferred rent | 5,179,664 | 6,265,589 | 886,837 | ||
| Deferred revenue | 231,925,272 | 224,959,453 | 31,840,944 | ||
| Accrued expenses and other current liabilities | 302,448,361 | 276,933,394 | 39,197,378 | ||
| Income tax payable | 93,909,177 | 47,490,213 | 6,721,802 | ||
| Total current liabilities | 795,032,701 | 721,705,352 | 102,150,762 | ||
| Deferred rent | 17,821,686 | 20,887,160 | 2,956,386 | ||
| Deferred revenue | 410,807,248 | 378,729,312 | 53,605,655 | ||
| Other long-term liabilities | 118,112,511 | 135,731,808 | 19,211,590 | ||
| Deferred tax liabilities | 195,303,547 | 199,317,796 | 28,211,603 | ||
| Unrecognized tax benefits | 261,641,717 | 258,431,806 | 36,578,648 | ||
| TOTAL LIABILITIES | 1,798,719,410 | 1,714,803,234 | 242,714,644 | ||
| Shareholders' equity: | |||||
| Class A ordinary shares | 219,526,699 | 222,587,070 | 31,505,155 | ||
| Class B ordinary shares | 115,534,210 | 115,534,210 | 16,352,806 | ||
| Additional paid-in capital | 1,152,108,217 | 1,149,280,404 | 162,670,083 | ||
| Retained earnings | 308,698,533 | 401,194,544 | 56,785,402 | ||
| Accumulated other comprehensive income | 65,300,854 | 69,116,862 | 9,782,857 | ||
| Total GreenTree Hospitality Group Ltd. shareholders' equity | 1,861,168,513 | 1,957,713,090 | 277,096,303 | ||
| Non-controlling interests | 156,591,494 | 147,059,466 | 20,814,917 | ||
| Total shareholders' equity | 2,017,760,007 | 2,104,772,556 | 297,911,220 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 3,816,479,417 | 3,819,575,790 | 540,625,864 | ||
| GreenTree Hospitality Group Ltd. | |||||||||||
| Unaudited Condensed Consolidated Statements of Comprehensive Income | |||||||||||
| Quarter Ended | Six Months Ended | ||||||||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2020 | ||||||
| RMB | RMB | US$ | RMB | RMB | US$ | ||||||
| Revenues | |||||||||||
| Leased-and-operated hotels | 60,510,976 | 50,337,339 | 7,124,788 | 112,336,802 | 84,137,483 | 11,908,888 | |||||
| Franchised-and-managed hotels | 214,419,775 | 165,652,625 | 23,446,607 | 397,887,057 | 289,248,472 | 40,940,464 | |||||
| Total revenues | 274,930,751 | 215,989,964 | 30,571,395 | 510,223,859 | 373,385,955 | 52,849,352 | |||||
| Operating costs and expenses | |||||||||||
| Hotel operating costs | (78,939,817) | (94,916,577) | (13,434,570) | (158,939,661) | (184,679,850) | (26,139,736) | |||||
| Selling and marketing expenses | (16,353,634) | (11,999,656) | (1,698,441) | (41,029,736) | (29,840,978) | (4,223,716) | |||||
| General and administrative expenses | (39,768,385) | (48,143,971) | (6,814,337) | (65,500,871) | (76,889,542) | (10,883,008) | |||||
| Other operating expenses | (65,350) | (41,123) | (5,820) | (107,974) | (1,198,272) | (169,605) | |||||
| Total operating costs and expenses | (135,127,186) | (155,101,327) | (21,953,168) | (265,578,242) | (292,608,642) | (41,416,065) | |||||
| Other operating income | 1,639,842 | 1,762,982 | 249,534 | 8,546,295 | 19,093,913 | 2,702,568 | |||||
| Income from operations | 141,443,407 | 62,651,619 | 8,867,761 | 253,191,912 | 99,871,226 | 14,135,855 | |||||
| Interest income and other, net | 17,759,532 | 14,107,924 | 1,996,847 | 34,228,543 | 24,721,184 | 3,499,056 | |||||
| Interest expense | (700,350) | (1,727,991) | (244,581) | (1,385,475) | (2,738,246) | (387,574) | |||||
| Gains/(losses) from investment in equity securities | 15,902,581 | 42,534,583 | 6,020,379 | 75,837,051 | (12,640,335) | (1,789,123) | |||||
| Other income, net | 1,860,961 | - | - | 2,690,742 | - | - | |||||
| Income before income taxes | 176,266,131 | 117,566,135 | 16,640,406 | 364,562,773 | 109,213,829 | 15,458,214 | |||||
| Income tax expense | (49,050,930) | (24,399,003) | (3,453,454) | (103,216,322) | (30,576,563) | (4,327,831) | |||||
| Income before share of (losses)/gains in equity investees | 127,215,201 | 93,167,132 | 13,186,952 | 261,346,451 | 78,637,266 | 11,130,383 | |||||
| Share of (losses)/gains in equity investees, net of tax | (114,566) | 553,487 | 78,341 | (287,797) | 948,331 | 134,227 | |||||
| Net income | 127,100,635 | 93,720,619 | 13,265,293 | 261,058,654 | 79,585,597 | 11,264,610 | |||||
| Net loss attributable to non-controlling interests | 1,376,781 | 10,621,047 | 1,503,311 | 2,332,314 | 12,910,415 | 1,827,351 | |||||
| Net income attributable to ordinary shareholders | 128,477,416 | 104,341,666 | 14,768,604 | 263,390,968 | 92,496,012 | 13,091,961 | |||||
| Net earnings per share | |||||||||||
| Class A ordinary share-basic and diluted | 1.26 | 1.01 | 0.14 | 2.59 | 0.90 | 0.13 | |||||
| Class B ordinary share-basic and diluted | 1.26 | 1.01 | 0.14 | 2.59 | 0.90 | 0.13 | |||||
| Net earnings per ADS | |||||||||||
| Class A ordinary share-basic and diluted | 1.26 | 1.01 | 0.14 | 2.59 | 0.90 | 0.13 | |||||
| Class B ordinary share-basic and diluted | 1.26 | 1.01 | 0.14 | 2.59 | 0.90 | 0.13 | |||||
| Weighted average shares outstanding | |||||||||||
| Class A ordinary share-basic and diluted | 67,113,004 | 68,286,954 | 68,286,954 | 67,064,583 | 68,286,954 | 68,286,954 | |||||
| Class B ordinary share-basic and diluted | 34,762,909 | 34,762,909 | 34,762,909 | 34,762,909 | 34,762,909 | 34,762,909 | |||||
| Other comprehensive (loss)/income, net of tax | |||||||||||
| Foreign currency translation adjustments | 11,020,015 | (1,181,225) | (167,192) | (3,782,503) | 3,816,008 | 540,121 | |||||
| Comprehensive income/(loss), net of tax | 138,120,650 | 92,539,394 | 13,098,101 | 257,276,151 | 83,401,605 | 11,804,731 | |||||
| Comprehensive loss attributable to non-controlling interests | 1,376,781 | 10,621,047 | 1,503,312 | 2,332,314 | 12,910,415 | 1,827,351 | |||||
|
Comprehensive income/(loss) attributable to ordinary shareholders | 139,497,431 | 103,160,441 | 14,601,413 | 259,608,465 | 96,312,020 | 13,632,082 | |||||
| GreenTree Hospitality Group Ltd. | |||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||
| Quarter Ended | Six Months Ended | ||||||||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2020 | ||||||
| RMB | RMB | US$ | RMB | RMB | US$ | ||||||
| Operating activities: | |||||||||||
| Net income | 127,100,635 | 93,720,619 | 13,265,293 | 261,058,654 | 79,585,597 | 11,264,610 | |||||
| Adjustments to reconcile net income to net cash provided by operating a ctivities: | |||||||||||
| Depreciation and amortization | 8,150,042 | 16,339,200 | 2,312,664 | 15,820,814 | 32,005,845 | 4,530,133 | |||||
| Share of losses/(gains) in equity method investments | 114,566 | (553,487) | (78,341) | 287,797 | (948,331) | (134,228) | |||||
| Interest income | (2,452,171) | (2,097,419) | (296,870) | (10,413,809) | (4,841,860) | (685,321) | |||||
| Bad debt expense | (5,890,482) | 12,009,289 | 1,699,805 | (4,999,113) | 17,928,925 | 2,537,675 | |||||
| (Gains)/losses from investments in equity securities | (15,902,581) | (42,534,582) | (6,020,379) | (75,837,051) | 12,640,335 | 1,789,123 | |||||
| Foreign exchange gains | (324,322) | (1,367,301) | (193,529) | (528,439) | (209,869) | (29,705) | |||||
| Share-based compensation | 6,260,341 | - | - | 11,109,792 | 232,558 | 32,916 | |||||
| Income tax expenses related to dividend distribution or retained profits | 3,955,452 | 4,089,529 | 578,835 | 7,799,944 | 8,089,529 | 1,144,999 | |||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (5,850,767) | (44,819,542) | (6,343,794) | (23,868,928) | (38,698,091) | (5,477,359) | |||||
| Prepaid rent | - | 5,586,585 | 790,730 | 711,581 | 9,922,250 | 1,404,403 | |||||
| Inventories | (280,089) | 156,836 | 22,199 | 1,168,794 | (237,377) | (33,599) | |||||
| Amounts due from related parties | (25,151) | 715,354 | 101,252 | (21,551) | 1,510,197 | 213,755 | |||||
| Other current assets | (7,010,607) | (5,488,452) | (776,840) | 186,182 | 14,827,078 | 2,098,637 | |||||
| Other assets | (7,453,225) | (3,332,215) | (471,646) | (12,142,854) | (9,014,522) | (1,275,923) | |||||
| Accounts payable | (2,228,556) | 1,602,850 | 226,869 | 1,970,109 | 2,888,996 | 408,911 | |||||
| Amounts due to related parties | 899,112 | (30,278) | (4,286) | 832,348 | (2,048,301) | (289,918) | |||||
| Salary and welfare payable | 2,313,943 | 3,390,002 | 479,824 | (5,049,650) | 1,372,751 | 194,300 | |||||
| Deferred revenue | 9,218,777 | (8,125,238) | (1,150,053) | 4,825,701 | (39,043,755) | (5,526,285) | |||||
| Advance from customers | (607,442) | (5,183,719) | (733,708) | (2,278,224) | (7,757,920) | (1,098,062) | |||||
| Accrued expenses and other current liabilities | 2,668,564 | 76,631,257 | 10,846,450 | 28,261,232 | (28,104,147) | (3,977,884) | |||||
| Income tax payable | (51,216,175) | (30,267,700) | (4,284,115) | (27,333,112) | (46,418,967) | (6,570,178) | |||||
| Unrecognized tax benefits | 22,867,582 | (17,495,140) | (2,476,276) | 28,914,333 | (3,209,911) | (454,333) | |||||
| Deferred rent | (1,558,697) | (910,363) | (128,854) | (1,851,268) | 4,151,399 | 587,592 | |||||
| Other long-term liabilities | 2,545,743 | 4,624,768 | 654,593 | 3,593,469 | 17,619,297 | 2,493,850 | |||||
| Deferred taxes | (272,719) | 1,599,014 | 226,327 | 4,997,435 | (12,368,615) | (1,750,664) | |||||
| Net cash provided by (used in) operating activities | 85,021,773 | 58,259,867 | 8,246,150 | 207,214,186 | 9,873,091 | 1,397,445 | |||||
| Investing activities: | |||||||||||
| Purchases of property and equipment | (4,451,361) | (18,550,705) | (2,625,682) | (13,511,310) | (41,628,937) | (5,892,194) | |||||
| Purchases of intangible assets | - | (9,075) | (1,284) | - | (9,075) | (1,284) | |||||
| Proceeds from disposal of property and equipment | 1,000,000 | 11,125 | 1,575 | 1,300,000 | 11,125 | 1,575 | |||||
| Acquisitions, net of cash received | (234,660,607) | (1,255,807) | (177,748) | (244,660,607) | (1,255,807) | (177,748) | |||||
| Advances for acquisitions | (47,866,700) | - | - | (47,866,700) | - | - | |||||
| Repayment of advances for investments | - | 35,440,000 | 5,016,206 | - | 35,440,000 | 5,016,206 | |||||
| Purchases of short-term investments | (28,283,130) | (46,420,027) | (6,570,328) | (210,512,312) | (147,690,027) | (20,904,167) | |||||
| Proceeds from short-term investments | 40,774,393 | 3,567,419 | 504,935 | 756,830,368 | 398,634,105 | 56,422,995 | |||||
| Increase of long-term time deposits | (20,000,000) | - | - | (460,000,000) | (30,000,000) | (4,246,224) | |||||
| Purchases of investments in equity securities | (22,060,000) | - | - | (24,036,351) | - | - | |||||
| Purchases of long term investments | - | - | - | (249,464,401) | - | - | |||||
| Proceeds from disposal of equity securities | 36,617,830 | - | - | 145,221,744 | - | - | |||||
| Dividends received from investment in equity securities | - | 2,540,418 | 359,573 | - | 2,540,418 | 359,573 | |||||
| Proceeds from disposal of equity method investments | - | 6,380,000 | 903,030 | - | 6,380,000 | 903,030 | |||||
| Loan to related parties | (106,979,750) | (19,850,000) | (2,809,585) | (116,979,750) | (185,366,500) | (26,236,925) | |||||
| Repayment from a related party | 116,979,750 | 20,639,679 | 2,921,357 | 116,979,750 | 186,156,179 | 26,348,697 | |||||
| Loan to third parties | (135,835,219) | (1,200,000) | (169,849) | (151,775,219) | (3,200,000) | (452,931) | |||||
| Repayment of loan from third parties |
121,280,219 |
- |
- |
121,280,219 |
- |
- | |||||
| Loan to franchisees | (13,460,000) | (47,721,778) | (6,754,580) | (31,590,000) | (146,451,778) | (20,728,903) | |||||
| Repayment from a franchisee | 1,973,956 | 20,199,572 | 2,859,064 | 7,267,353 | 35,215,035 | 4,984,365 | |||||
| Net cash (used in) provided by investing activities | (294,970,619) | (46,229,179) | (6,543,316) | (401,517,216) | 108,774,738 | 15,396,065 | |||||
| Financing activities: | |||||||||||
| Distribution to the shareholders | - | - | - | (208,025,814) | - | - | |||||
| Proceeds from short-term borrowings | - | - | - | - | 10,000,000 | 1,415,408 | |||||
| Capital contribution from non-controlling interest holders | - | 2,978,387 | 421,563 | 10,390,000 | 3,378,387 | 478,180 | |||||
| Net cash (used in) provided by financing activities | - | 2,978,387 | 421,563 | (197,635,814) | 13,378,387 | 1,893,588 | |||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | 3,249,707 | 1,167,214 | 165,208 | (8,440,253) | 592,196 | 83,820 | |||||
| Net (decrease) increase in cash and cash equivalents and restricted cash | (206,699,139) | 16,176,289 | 2,289,605 | (400,379,097) | 132,618,412 | 18,770,918 | |||||
| Cash and cash equivalents and restricted cash at the beginning of the period | 1,073,645,827 | 458,602,346 | 64,910,949 | 1,267,325,785 | 342,160,223 | 48,429,636 | |||||
| Cash and cash equivalents and restricted cash at the end of the period | 866,946,688 | 474,778,635 | 67,200,554 | 866,946,688 | 474,778,635 | 67,200,554 | |||||
| GreenTree Hospitality Group Ltd. | |||||||||||
| Unaudited Reconciliation of GAAP and Non-GAAP Results | |||||||||||
| Quarter Ended | Six Months Ended | ||||||||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2020 | ||||||
| RMB | RMB | US$ | RMB | RMB | US$ | ||||||
| Net income | 127,100,635 | 93,720,619 | 13,265,293 | 261,058,654 | 79,585,597 | 11,264,610 | |||||
| Deduct: | |||||||||||
| Other operating income | 1,639,842 | 1,762,982 | 249,534 | 8,546,295 | 19,093,913 | 2,702,568 | |||||
| Gains from investment in equity securities | 15,902,581 | 42,534,583 | 6,020,379 | 75,837,051 | 42,534,583 | 6,020,379 | |||||
| Share of gain in equity investees, net of tax | - | 553,487 | 78,341 | - | 948,331 | 134,228 | |||||
| Other income, net | 1,860,961 | - | - | 2,690,742 | - | - | |||||
| Add: | |||||||||||
| Other operating expenses | 65,350 | 41,123 | 5,820 | 107,974 | 1,198,272 | 169,604 | |||||
| Income tax expense | 49,050,930 | 24,399,003 | 3,453,455 | 103,216,322 | 30,576,563 | 4,327,832 | |||||
| Share of loss in equity investees, net of tax | 114,566 | - | - | 287,797 | - | - | |||||
| Interest expense | 700,350 | 1,727,991 | 244,581 | 1,385,475 | 2,738,246 | 387,574 | |||||
| Share-based compensation | 7,326,131 | - | - | 12,175,582 | 232,558 | 32,916 | |||||
| Depreciation and amortization | 8,150,042 | 16,339,200 | 2,312,663 | 15,820,814 | 32,005,845 | 4,530,133 | |||||
| Losses from investment in equity securities | - | - | - | - | 55,174,918 | 7,809,503 | |||||
| Adjusted EBITDA (Non-GAAP) | 173,104,620 | 91,376,884 | 12,933,558 | 306,978,530 | 138,935,172 | 19,664,997 | |||||
| Quarter Ended | Six Months Ended | ||||||||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2020 | ||||||
| RMB | RMB | US$ | RMB | RMB | US$ | ||||||
| Net income | 127,100,635 | 93,720,619 | 13,265,293 | 261,058,654 | 79,585,597 | 11,264,610 | |||||
| Deduct: | |||||||||||
| Government subsidies (net of 25% tax) | 233,981 | 779,513 | 110,332 | 5,048,981 | 13,212,085 | 1,870,049 | |||||
| Gains from investment in equity securities (net of 25% tax) | 11,926,936 | 31,900,937 | 4,515,285 | 56,877,788 | 31,900,937 | 4,515,285 | |||||
| Other income (net of 25% tax) | 1,395,721 | - | - | 2,018,057 | - | - | |||||
| Add: | |||||||||||
| Share-based compensation | 7,326,131 | - | - | 12,175,582 | 232,558 | 32,916 | |||||
| Losses from investments in equity securities | - | - | - | - | 41,381,189 | 5,857,127 | |||||
| One-time provision of bad debt | - | 9,501,082 | 1,344,791 | - | 9,501,082 | 1,344,791 | |||||
| Income tax expenses related to dividend distribution | 3,955,452 | 4,089,529 | 578,835 | 7,799,944 | 8,089,529 | 1,144,999 | |||||
| Core net income(Non-GAAP) | 124,825,580 | 74,630,780 | 10,563,302 | 217,089,354 | 93,676,933 | 13,259,109 | |||||
| Core net income per ADS (Non-GAAP) | |||||||||||
| Class A ordinary share-basic and diluted | 1.23 | 0.72 | 0.10 | 2.11 | 0.91 | 0.13 | |||||
| Class B ordinary share-basic and diluted | 1.23 | 0.72 | 0.10 | 2.11 | 0.91 | 0.13 | |||||
Operational Data
| As of June 30, 2019 | As of June 30, 2020 | |
| Total hotels in operation: | 2,955 | 4,066 |
| Leased-and-owned hotels | 30 | 35 |
| Franchised hotels | 2,925 | 4,031 |
| Total hotel rooms in operation | 236,557 | 296,307 |
| Leased-and-owned hotels | 3,803 | 4,359 |
| Franchised hotels | 232,754 | 291,948 |
| Number of cities | 300 | 343 |
| Quarter Ended | ||
| As of June 30, 2019 | As of June 30, 2020 | |
| Occupancy rate (as a percentage) | ||
| Leased-and-owned hotels | 70.5% | 46.5% |
| Franchised hotels | 81.3% | 63.7% |
| Blended | 81.1% | 63.4% |
| Average daily rate (in RMB) | ||
| Leased-and-owned hotels | 216 | 173 |
| Franchised hotels | 171 | 142 |
| Blended | 172 | 142 |
| RevPAR (in RMB) | ||
| Leased-and-owned hotels | 152 | 80 |
| Franchised hotels | 139 | 90 |
| Blended | 139 | 90 |
| Number of Hotels in Operation | Number of Hotel Rooms in Operation | |||
| As of June 30, 2019 | As of June 30, 2020 | As of June 30, 2019 | As of June 30, 2020 | |
| Luxury | 19 | 21 | 4,017 | 4,388 |
| Argyle | 19 | 21 | 4,017 | 4,388 |
| Mid-to-up-scale | 152 | 296 | 15,357 | 26,682 |
| GreenTree Eastern | 96 | 118 | 10,200 | 12,509 |
| Deepsleep Hotel | 1 | 2 | 62 | 161 |
| Gem | 18 | 32 | 1,669 | 2,896 |
| Gya | 11 | 28 | 918 | 2,348 |
| Vx | 17 | 28 | 1,397 | 2,260 |
| Ausotel | 9 | 11 | 1,111 | 1,521 |
| Urban Garden and others* | / | 77 | / | 4,987 |
| Mid-scale | 2,348 | 2,610 | 198,176 | 212,674 |
| GreenTree Inn | 1,931 | 2,047 | 166,183 | 173,519 |
| GT Alliance | 295 | 316 | 22,994 | 24,176 |
| GreenTree Apartment | 3 | 10 | 180 | 488 |
| Vatica | 119 | 124 | 8,819 | 9,026 |
| City 118 Selected and others* | / | 113 | / | 5,465 |
| Economy hotels | 436 | 1,139 | 19,007 | 52,563 |
| Shell | 436 | 574 | 19,007 | 25,017 |
| City 118 and others* | / | 565 | / | 27,546 |
| Total | 2,955 | 4,066 | 236,557 | 296,307 |
* Others include other brands in each segment of Urban.