- Total revenues increased 23.6% to RMB266.9 million (US$39.3 million) [1] from RMB216.0 million in the second quarter.
- Income from operations increased 61.1% to RMB100.9 million (US$14.9 million) [1] from RMB62.7 million in the second quarter.
- Adjusted EBITDA (non-GAAP) increased 46.6% to RMB134.0 million (US$19.7 million) [1] from RMB91.4 million in the second quarter.
- Core net income (non-GAAP) increased 23.8% to RMB92.4 million (US$13.6 million) [1] from RMB74.6 million in the second quarter.
GreenTree Hospitality Group Ltd. (NYSE: GHG), a leading hospitality management group in China, yesterday announced its unaudited financial results for the third quarter ended September 30, 2020.
Operational Highlights
- A total of 4,195 hotels with 305,125 hotel rooms were in operation as of September 30, 2020, compared to 4,066 hotels and 296,307 hotel rooms as of June 30, 2020.
- As of September 30, 2020, the Company had 37 leased-and-operated ("L&O") hotels and 4,158 franchised-and-managed ("F&M") hotels in operation in 341 cities across China, compared to 30 L&O hotels and 3,072 F&M hotels in operation in 309 cities as of September 30, 2019. The geographic coverage increased by 10.4% year over year.
- During the quarter, the Company opened 162 hotels, a decrease of 19 comparing to 181 hotels in the third quarter of 2019. Among the hotels opened, 1 was in the luxury segment, 45 in the mid-to-up-scale segment, 80 in the mid-scale segment, and 36 in the economy segment. Geographically speaking, 6 hotels were in Tier 1 cities [1], 31 in Tier 2 cities and the remaining 125 in Tier 3 and smaller cities in China.
The Company closed 33 hotels, 3 due to brand upgrades, and 26 due to their non-compliance with the Company's brand and operating standards. The remaining 4 were closed for property related issues. The Company added a net opening of 129 hotels to its portfolio.
- As of September 30, 2020, the Company had a pipeline of 1,110 hotels contracted for or under development, among which 55 hotels were in the luxury hotel segment, 218 in the mid-to-up-scale segment, 455 in the mid-scale segment, and 382 in the economy segment.
- The average daily room rate, or ADR, for all hotels in operation, was RMB151, a decrease of 12.9% year-over-year, an increase of 6.5% compared with the second quarter.
- The occupancy rate, or OCC for all hotels in operation was 79.1%, compared with 85.9% in the third quarter of 2019, and compared with 63.4% in the second quarter of 2020.
- The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB120, representing a 19.8% year-over-year decrease, and a 32.9% sequential increase.
- As of September 30, 2020, the Company's loyalty program had more than 52 million individual members and approximately 1,610,000 corporate members, compared to approximately 49 million and over 1,560,000 corporate members as of June 30, 2020. The Company had approximately 92.5% of room nights sold directly.
"We are glad to see a meaningful improvement in the third quarter of 2020 in some of our key operating and financial metrics, as a result of a return to more normal economic activities and living conditions in mainland China," said Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree. "We continued to serve and protect guests, constantly adapting our operations and marketing campaigns to the evolving market conditions, and we increased income from operations, net income, and Adjusted EBITDA. Our margins continue to rise thanks to our flexible cost structure and the measures we have implemented since the outbreak of COVID-19," continued Mr. Xu.
"China has been walking a fine line in balancing pandemic control and economic recovery, with targeted measures introduced to help companies safely restart their businesses and people get back to their normal daily life. As COVID-19 came under control gradually since the second quarter, we saw a sustained recovery in domestic tourism and business. Riding on the recovery, we continued to optimize our brands, products and technology to capture domestic travel demand. As a result, our same-hotel RevPAR, excluding hotels being used for quarantine and temporary closures, decreased 16.3% in the third quarter to 125 RMB. For the third consecutive quarter in 2020, our overall performance was better than the average performance across the hospitality industry in China.
Thanks to the tireless work and dedication of our staff and franchisees, and the strong support of our loyal individual members and corporate members, the performance of our hotels continued to improve, with our occupancy rate approaching 85% during October Golden week, nearly the same as last year. In November, our occupancy rate rebounded to nearly the same level as last year, and RevPAR recovered to almost 95% of last year's level."
"Having gone through the challenges of the first nine months of 2020, we believe we can continue to execute our growth strategy and further enhance our partnership with our franchisees. We have accumulated extensive experience and are well prepared should the pandemic last much longer. We are confident in our ability to consistently achieve profitable growth and create long-term value for our shareholders."
Third Quarter of 2020 Financial Results
| Quarter Ended | |||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | |||
| RMB | RMB | US$ | |||
| Revenues | |||||
| Leased-and-operated hotels | 72,530,518 | 66,823,544 | 9,842,044 | ||
| Franchised-and-managed hotels | 219,606,332 | 200,044,031 | 29,463,302 | ||
| Total revenues | 292,136,850 | 266,867,575 | 39,305,346 | ||
| Nine Months Ended | |||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | |||
| RMB | RMB | US$ | |||
| Revenues | |||||
| Leased-and-operated hotels | 184,867,320 | 150,961,027 | 22,234,156 | ||
| Franchised-and-managed hotels | 617,493,389 | 489,292,503 | 72,064,997 | ||
| Total revenues | 802,360,709 | 640,253,530 | 94,299,153 | ||
Total revenues for the third quarter of 2020 were RMB266.9 million (US$39.3 million) [1], representing a 8.6% 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, as well as partial reduction and extension of sublease income recognition. Total revenues increased from 216.0 million RMB in the second quarter, a 23.6% sequential increase, which was mainly attributable to a RevPAR growth from 90 RMB to 120 RMB. Total revenues for the first nine months of 2020 were RMB640.3 million (US$94.3 million) [1], representing a 20.2% decrease.
- Total revenues from leased-and-operated hotels for the third quarter of 2020 were RMB66.8 million (US$9.8 million) [1], representing a 7.9% year-over-year decrease. The decrease was primarily due to RevPAR decrease of 26.3%, and partial reduction and extension of sublease income recognition, and partially offset by the revenue contributed by 7 L&O hotels of the Urban Hotel Group ("Urban") which was acquired in November of 2019. Compared with the second quarter, total revenues from L&O hotels increased by 32.8%, mainly attributable to rising RevPAR and newly opened 3 L&O hotels. Total revenues from L&O hotels for the first nine months of 2020 were RMB151.0 million (US$22.2 million) [1], representing a 18.3% decrease.
- Total revenues from franchised-and-managed hotels for the third quarter of 2020 were RMB200.0 million (US$29.5 million) [1], representing a 8.9% year-over-year decrease. Initial franchise fees increased by 8.8% year-over-year, mainly attributable to the gross opening of 159 hotels. The 10.2% decrease from the third quarter of 2019 in recurring franchisee management fees and others was primarily due to RevPAR decrease of 19.6%. Compared with the second quarter, initial franchise fees increased by 24.8%, mainly attributable to more hotels opened; recurring franchisee management fees and others increased by 20.4%, mainly due to RevPAR sequential growth from 90RMB to 120 RMB. Total revenues from F&M hotels for the first nine months of 2020 were RMB489.3 million (US$72.1 million) [1], representing a 20.8% decrease.
| Quarter Ended | |||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | |||
| RMB | RMB | US$ | |||
| Initial franchise fee | 15,277,606 | 16,619,577 | 2,447,799 | ||
| Recurring franchise management fee and others | 204,328,726 | 183,424,454 | 27,015,503 | ||
| Revenues from franchised-and- managed hotels | 219,606,332 | 200,044,031 | 29,463,302 | ||
| Nine Months Ended | |||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | |||
| RMB | RMB | US$ | |||
| Initial franchise fee | 41,274,393 | 42,985,481 | 6,331,077 | ||
| Recurring franchise management fee and others | 576,218,996 | 446,307,022 | 65,733,920 | ||
| Revenues from franchised-and- managed hotels | 617,493,389 | 489,292,503 | 72,064,997 | ||
Total operating costs and expenses
| Quarter Ended | |||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | |||
| RMB | RMB | US$ | |||
| Operating costs and expenses | |||||
| Hotel operating costs | 87,277,200 | 108,025,295 | 15,910,406 | ||
| Selling and marketing expenses | 20,785,447 | 21,273,500 | 3,133,248 | ||
| General and administrative expenses | 39,891,061 | 44,782,915 | 6,595,811 | ||
| Other operating expenses | 53,736 | 434,792 | 64,038 | ||
| Total operating costs and expenses | 148,007,444 | 174,516,502 | 25,703,503 | ||
| Nine Months Ended | |||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | |||
| RMB | RMB | US$ | |||
| Operating costs and expenses | |||||
| Hotel operating costs | 246,216,861 | 292,705,145 | 43,110,808 | ||
| Selling and marketing expenses | 61,815,183 | 51,114,478 | 7,528,349 | ||
| General and administrative expenses | 105,391,932 | 121,672,457 | 17,920,417 | ||
| Other operating expenses | 161,710 | 1,633,064 | 240,524 | ||
| Total operating costs and expenses | 413,585,686 | 467,125,144 | 68,800,098 | ||
Hotel operating costs for the third quarter of 2020 were RMB108.0 million (US$15.9 million) [1], representing a 23.8% increase year-over-year. The increase was mainly attributable to higher rents, higher depreciation and amortization, and the consolidation of operation costs of Urban. In the third quarter, there were 3 L&O hotels newly opened and 5 L&O hotels under construction, which accounted for the main increase in hotel operating costs. Excluding L&O hotel operating costs, costs related to F&M hotels and others increased 0.8%, primarily due to the expansion of our business and F&M hotels. Comparing hotel operating costs with the second quarter, we observe a 13.8% sequential growth, mainly due to more L&O hotels coming into development. For the first nine months of 2020, hotel operating costs were RMB292.7 million (US$43.1 million) [1], representing a 18.9% increase.
| Quarter Ended | |||||
| September 30, | September 30, | September 30, | |||
| 2019 | 2020 | 2020 | |||
| RMB | RMB | US$ | |||
| Rental | 17,679,757 | 27,189,274 | 4,004,547 | ||
| Utilities | 4,231,308 | 3,666,479 | 540,014 | ||
| Personnel cost | 10,918,296 | 11,732,599 | 1,728,025 | ||
| Depreciation and amortization | 5,627,887 | 14,946,857 | 2,201,434 | ||
| Consumable, food and beverage | 7,760,883 | 7,937,167 | 1,169,018 | ||
| Costs of general managers of franchised-and-managed hotels | 27,616,095 | 24,241,736 | 3,570,422 | ||
| Other costs of franchised-and-managed hotels | 8,400,931 | 7,873,516 | 1,159,644 | ||
| Others | 5,042,043 | 10,437,667 | 1,537,302 | ||
| Hotel Operating Costs | 87,277,200 | 108,025,295 | 15,910,406 | ||
| Nine Months Ended | |||||
| September 30, | September 30, | September 30, | |||
| 2019 | 2020 | 2020 | |||
| RMB | RMB | US$ | |||
| Rental | 57,327,190 | 90,098,256 | 13,270,039 | ||
| Utilities | 15,277,291 | 11,258,969 | 1,658,267 | ||
| Personnel cost | 28,207,871 | 31,296,079 | 4,609,414 | ||
| Depreciation and amortization | 19,326,123 | 36,873,883 | 5,430,936 | ||
| Consumable, food and beverage | 21,529,959 | 23,477,610 | 3,457,878 | ||
| Costs of general managers of franchised-and-managed hotels | 73,106,207 | 65,575,838 | 9,658,277 | ||
| Other costs of franchised-and-managed hotels | 21,393,731 | 17,853,103 | 2,629,478 | ||
| Others | 10,048,489 | 16,271,407 | 2,396,519 | ||
| Hotel Operating Costs | 246,216,861 | 292,705,145 | 43,110,808 | ||
Selling and marketing expenses for the third quarter of 2020 were RMB21.3 million (US$3.1 million) [1], representing a 2.3% year-over-year increase. The increase was mainly attributable to the Company's first attempt to cooperate with Internet social platforms which became prevalent because of COVID-19. Excluding the above-mentioned advertising fees, selling and marketing expenses in this quarter decreased 40.4% year over year, and increased 3.3% quarter over quarter. For the first nine months of 2020, selling and marketing expenses were RMB 51.1 million (US$7.5 million) [1], representing a 17.3% decrease.
General and administrative expenses for the third quarter of 2020 were RMB44.8 million (US$6.6 million) [1], representing a 12.3% year-over-year increase. The increase was primarily attributable to higher depreciation and amortization for our property and equipment, increased investment in Research and Development, higher consulting fees, and the consolidation of expenses from Argyle Hotel Management Group (Australia) Pty Ltd ("Argyle") and Urban. Compared with the second quarter, G&A expenses decreased by 7.0%. General and administrative expenses for the first nine months of 2020 were RMB121.7 million (US$17.9 million) [1], representing a 15.4% year-over-year increase.
Gross profit for the third quarter of 2020 was RMB158.8 million (US$23.4 million) [1], representing a year-over-year decrease of 22.5%. Gross margin was 59.5%, compared to 70.1% a year ago. The decrease was primarily due the impact of COVID-19. Compared with the second quarter, gross profit increased by 31.2%, and gross margin increased from 56.1% to 59.5%. Gross profit for the first nine months of 2020 was RMB347.5 million (US$51.2 million) [1], representing a 37.5% year-over-year decrease.
Income from operations for the third quarter of 2020 totaled RMB100.9 million (US$14.9 million) [1], representing a year-over-year decrease of 33.9%. 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 37.8%, compared to 52.2% a year ago. Compared with the second quarter, income from operations increased by 61.1%, and operating margin increased from 29.0% to 37.8%, mainly attributable to revenue increase. Income from operations for the first nine months of 2020 totaled RMB200.8 million (US$29.6 million) [1], representing a year-over-year decrease of 50.5%.
Adjusted EBITDA (non-GAAP) for the third quarter of 2020 was RMB134.0 million (US$19.7 million) [1], representing a year-over-year decrease of 24.3%. Adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 50.2%, compared to 60.6% a year ago. Compared with the second quarter, adjusted EBITDA increased by 46.6%, and adjusted EBITDA margin increased from 42.3% to 50.2%. Adjusted EBITDA (non-GAAP) for the first nine months of 2020 was RMB272.9 million (US$40.2 million) [1], representing a year-over-year decrease of 43.6%.
Net income for the third quarter of 2020 was RMB85.6 million (US$12.6 million) [1], representing a year-over-year decrease of 16.2%. Net margin was 32.1%, compared to 35.0% a year ago. The year-over-year decrease was primarily due to revenue decrease partially offset by gains from investments in equity securities. Compared with the second quarter, net income decreased by 8.6%, and net margin decreased from 43.4% to 32.1%, mainly due to decline in gains from investment in equity securities since the second quarter. Net income for the first nine months of 2020 was RMB165.2 million (US$24.3 million) [1], representing a year-over-year decrease of 54.5%.
Core net income (non-GAAP) for the third quarter of 2020 was RMB92.4 million (US$13.6 million) [1], representing a year-over-year decrease of 31.5%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 34.6%, compared to 46.2% one year ago. Compared with the second quarter, core net income increased by 23.8%. Core net income (non-GAAP) for the first nine months of 2020 was RMB194.8 million (US$28.7 million) [1], representing a year-over-year decrease of 44.8%.
Earnings per ADS (basic and diluted) for the third quarter of 2020 was RMB0.81 (US$0.12) [1], down from earnings per ADS of RMB1.01 one year ago, down from RMB1.01 in the second quarter of 2020, mainly due to the decline in gains from investment in equity securities since the second quarter. Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.90 (US$0.13) [1], down from RMB1.32 a year ago, up from RMB0.72 of the second quarter of 2020. Earnings per ADS (basic and diluted) for the first nine months of 2020 was RMB1.71 (US$0.25) [1] down from RMB3.60 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.89 (US$0.28) [1] for the first nine months of 2020, decreased from RMB3.46 of 2019.
Cash flow. Operating cash inflow for the third quarter of 2020 was RMB175.4 million (US$25.8 million) [1] as a result of the recovery from COVID-19 and improved operating performance. Investing cash outflow for the third quarter of 2020 was RMB54.9 million (US$8.1 million) [1], which was primarily attributable to loans to franchisees, and investment in property and equipment. The investing cash outflow was partially offset by repayment from franchisees, as well as proceeds from short-term investments. Financing cash outflow was RMB4.1 million (US$0.6 million). Operating cash inflow for the first nine months of 2020 was RMB176.8 million (US$26.0 million) [1]. Investing cash inflow for the first nine months of 2020 was RMB53.8 million (US$7.9 million) [1]. Financing cash inflow for the first nine months of 2020 was RMB17.7 million (US$2.6 million) [1].
Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposit. As of September 30, 2020, the Company had total cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposits of RMB1,815.4 million (US$267.4 million) [1], compared to RMB1,714.0 million as of June 30, 2020. The increase from the second quarter was primarily attributable to cash inflow from operating activities, changes in fair value of equity securities and dividends from equity securities, and offset by loans to franchisees, investment in the decoration of L&O hotels, and cash outflow for balance fees for acquisitions.
COVID-19 Update
With effective control measures implemented by the Chinese government. Recently, China showed strong signs of economic rebound as the government introduced various policies to encourage domestic consumption. During the October Golden week, the number of domestic tourists rebounded to 637 million reaching 79 percent of last year's level and generating 466.6 billion RMB in revenue reaching 69.9 percent of last year's level, according to statistics from China's Ministry of Culture and Tourism. These figures pointed to a considerable improvement compared to the three-day Dragon Boat Festival vacation period this June, when there were 48.81 million tourists, accounting for 50.9% of last year's level.
With all these efforts the performance of our hotels continued to improve, with our occupancy rate approaching 85% during the October Golden week, nearly the same as last year. In November, our occupancy rate rebounded to nearly the same level as last year, and RevPAR recovered to almost 95% of last year's level.
Guidance
So far in 2020, our operations are in line with our previous forecast. Assuming the pandemic remains under control in China in Q4, the Company expects a decline in total revenues of 12%-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.
| GreenTree Hospitality Group Ltd. | |||||
| Unaudited Condensed Consolidated Balance Sheets | |||||
| December 31, | September 30, | September 30, | |||
| 2019 | 2020 | 2020 | |||
| RMB | RMB | US$ | |||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 319,847,701 | 567,434,639 | 83,574,090 | ||
| Short-term investment | 437,279,026 | 205,186,988 | 30,220,777 | ||
| Investments in equity securities | 207,007,926 | 181,974,105 | 26,801,889 | ||
| Accounts receivable, net of allowance | 99,701,226 | 121,005,102 | 17,822,125 | ||
| Amounts due from related parties | 31,739,731 | 29,114,524 | 4,288,106 | ||
| Prepaid rent | 18,794,665 | 8,230,135 | 1,212,168 | ||
| Inventories | 2,537,717 | 4,064,736 | 598,671 | ||
| Other current assets | 66,004,017 | 62,839,705 | 9,255,288 | ||
| Loans receivable, net | 82,312,201 | 181,054,867 | 26,666,500 | ||
| Total current assets | 1,265,224,210 | 1,360,904,801 | 200,439,614 | ||
| Non-current assets: | |||||
| Restricted cash | 22,312,522 | 22,169,900 | 3,265,273 | ||
| Long-term time deposits | 560,000,000 | 570,000,000 | 83,951,926 | ||
| Loan receivable, net | 121,563,742 | 163,841,761 | 24,131,283 | ||
| Property and equipment, net | 614,936,505 | 641,366,729 | 94,463,110 | ||
| Intangible assets, net | 496,280,316 | 492,028,655 | 72,467,989 | ||
| Goodwill | 100,078,236 | 100,231,487 | 14,762,503 | ||
| Long-term investments | 398,637,701 | 410,512,592 | 60,461,970 | ||
| Other assets | 76,957,992 | 56,102,628 | 8,263,023 | ||
| Deferred tax assets | 160,488,193 | 170,466,037 | 25,106,934 | ||
| TOTAL ASSETS | 3,816,479,417 | 3,987,624,590 | 587,313,625 | ||
| LIABILITIES AND EQUITY | |||||
| Current liabilities: | |||||
| Short-term bank loans | 60,000,000 | 60,000,000 | 8,837,045 | ||
| Accounts payable | 15,296,042 | 22,783,708 | 3,355,678 | ||
| Advance from customers | 40,105,627 | 32,007,939 | 4,714,260 | ||
| Amounts due to related parties | 3,518,031 | 1,991,598 | 293,331 | ||
| Salary and welfare payable | 42,650,527 | 52,459,503 | 7,726,450 | ||
| Deferred rent | 5,179,664 | 1,454,458 | 214,218 | ||
| Deferred revenue | 231,925,272 | 239,482,475 | 35,271,956 | ||
| Accrued expenses and other current liabilities | 302,448,361 | 310,355,001 | 45,710,351 | ||
| Income tax payable | 93,909,177 | 63,387,103 | 9,335,911 | ||
| Total current liabilities | 795,032,701 | 783,921,785 | 115,459,200 | ||
| Deferred rent | 17,821,686 | 26,330,439 | 3,878,055 | ||
| Deferred revenue | 410,807,248 | 370,646,075 | 54,590,267 | ||
| Other long-term liabilities | 118,112,511 | 136,266,485 | 20,069,884 | ||
| Deferred tax liabilities | 195,303,547 | 206,682,669 | 30,441,067 | ||
| Unrecognized tax benefits | 261,641,717 | 275,349,655 | 40,554,621 | ||
| TOTAL LIABILITIES | 1,798,719,410 | 1,799,197,108 | 264,993,094 | ||
| Shareholders' equity: | |||||
| Class A ordinary shares | 219,526,699 | 222,587,070 | 32,783,531 | ||
| Class B ordinary shares | 115,534,210 | 115,534,210 | 17,016,349 | ||
| Additional paid-in capital | 1,152,108,217 | 1,149,280,404 | 169,270,709 | ||
| Retained earnings | 308,698,533 | 484,484,710 | 71,356,886 | ||
| Accumulated other comprehensive income | 65,300,854 | 64,250,172 | 9,463,028 | ||
| Total GreenTree Hospitality Group Ltd. shareholders' equity | 1,861,168,513 | 2,036,136,566 | 299,890,503 | ||
| Non-controlling interests | 156,591,494 | 152,290,916 | 22,430,028 | ||
| Total shareholders' equity | 2,017,760,007 | 2,188,427,482 | 322,320,531 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 3,816,479,417 | 3,987,624,590 | 587,313,625 | ||
| GreenTree Hospitality Group Ltd. | |||||||||||
| Unaudited Condensed Consolidated Statements of Comprehensive Income | |||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2020 | ||||||
| RMB | RMB | US$ | RMB | RMB | US$ | ||||||
| Revenues | |||||||||||
| Leased-and-operated hotels | 72,530,518 | 66,823,544 | 9,842,044 | 184,867,320 | 150,961,027 | 22,234,156 | |||||
| Franchised-and-managed hotels | 219,606,332 | 200,044,031 | 29,463,302 | 617,493,389 | 489,292,503 | 72,064,997 | |||||
| Total revenues | 292,136,850 | 266,867,575 | 39,305,346 | 802,360,709 | 640,253,530 | 94,299,153 | |||||
| Operating costs and expenses | |||||||||||
| Hotel operating costs | (87,277,200) | (108,025,295) | (15,910,406) | (246,216,861) | (292,705,145) | (43,110,808) | |||||
| Selling and marketing expenses | (20,785,447) | (21,273,500) | (3,133,248) | (61,815,183) | (51,114,478) | (7,528,349) | |||||
| General and administrative expenses | (39,891,061) | (44,782,915) | (6,595,811) | (105,391,932) | (121,672,457) | (17,920,417) | |||||
| Other operating expenses | (53,736) | (434,792) | (64,038) | (161,710) | (1,633,064) | (240,524) | |||||
| Total operating costs and expenses | (148,007,444) | (174,516,502) | (25,703,503) | (413,585,686) | (467,125,144) | (68,800,098) | |||||
| Other operating income | 8,449,390 | 8,577,445 | 1,263,321 | 16,995,685 | 27,671,358 | 4,075,551 | |||||
| Income from operations | 152,578,796 | 100,928,518 | 14,865,164 | 405,770,708 | 200,799,744 | 29,574,606 | |||||
| Interest income and other, net | 18,055,095 | 23,140,692 | 3,408,256 | 52,283,638 | 47,861,876 | 7,049,293 | |||||
| Interest expense | (735,927) | (203,604) | (29,988) | (2,121,402) | (2,941,850) | (433,288) | |||||
| (Losses)/gains from investment in equity securities | (21,796,444) | 2,905,553 | 427,942 | 54,040,607 | (9,734,782) | (1,433,778) | |||||
| Other income, net | - | 517,981 | 76,290 | 2,690,742 | 517,981 | 76,290 | |||||
| Income before income taxes | 148,101,520 | 127,289,140 | 18,747,664 | 512,664,293 | 236,502,969 | 34,833,123 | |||||
| Income tax expense | (46,994,932) | (41,821,938) | (6,159,706) | (150,211,254) | (72,398,501) | (10,663,147) | |||||
| Income before share of gains in equity investees | 101,106,588 | 85,467,202 | 12,587,958 | 362,453,039 | 164,104,468 | 24,169,976 | |||||
| Share of gains in equity investees, net of tax | 1,067,166 | 170,211 | 25,070 | 779,369 | 1,118,542 | 164,743 | |||||
| Net income | 102,173,754 | 85,637,413 | 12,613,028 | 363,232,408 | 165,223,010 | 24,334,719 | |||||
| Net losses/(gains) attributable to non- controlling interests | 939,576 | (2,347,248) | (345,713) | 3,271,890 | 10,563,167 | 1,555,787 | |||||
| Net income attributable to ordinary shareholders | 103,113,330 | 83,290,165 | 12,267,315 | 366,504,298 | 175,786,177 | 25,890,506 | |||||
| Net earnings per share | |||||||||||
| Class A ordinary share-basic and diluted | 1.01 | 0.81 | 0.12 | 3.60 | 1.71 | 0.25 | |||||
| Class B ordinary share-basic and diluted | 1.01 | 0.81 | 0.12 | 3.60 | 1.71 | 0.25 | |||||
| Net earnings per ADS | |||||||||||
| Class A ordinary share-basic and diluted | 1.01 | 0.81 | 0.12 | 3.60 | 1.71 | 0.25 | |||||
| Class B ordinary share-basic and diluted | 1.01 | 0.81 | 0.12 | 3.60 | 1.71 | 0.25 | |||||
| Weighted average shares outstanding | |||||||||||
| Class A ordinary share-basic and diluted | 67,416,046 | 68,286,954 | 68,286,954 | 67,183,025 | 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 income, net of tax | |||||||||||
| Foreign currency translation adjustments | 19,606,912 | (11,616,690) | (1,710,954) | 15,824,409 | (7,800,682) | (1,148,916) | |||||
| Unrecognized gain on an available-for- sale investment | - | 6,750,000 | 994,168 | - | 6,750,000 | 994,168 | |||||
| Comprehensive income, net of tax | 121,780,666 | 80,770,723 | 11,896,242 | 379,056,817 | 164,172,328 | 24,179,971 | |||||
| Comprehensive (losses)/income attributable to non-controlling interests | 939,576 | (2,347,248) |
(345,713) | 3,271,890 | 10,563,167 | 1,555,786 | |||||
| Comprehensive income attributable to ordinary shareholders | 122,720,242 | 78,423,475 | 11,550,529 | 382,328,707 | 174,735,495 | 25,735,757 | |||||
| GreenTree Hospitality Group Ltd. | |||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2020 | ||||||
| RMB | RMB | US$ | RMB | RMB | US$ | ||||||
| Operating activities: | |||||||||||
| Net income | 102,173,754 | 85,637,413 | 12,613,028 | 363,232,408 | 165,223,010 | 24,334,719 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 11,069,474 | 18,063,004 | 2,660,393 | 26,890,288 | 50,068,849 | 7,374,344 | |||||
| Share of gains in equity method investments | (757,717) | (170,211) |
(25,070) | (469,920) | (1,118,542) | (164,743) | |||||
| Gains from disposal of a long-term investment | (309,449) | - | - | (309,449) | - | - | |||||
| Interest income | (4,248,415) | (2,217,211) | (326,560) | (14,662,224) | (7,059,071) | (1,039,689) | |||||
| Bad debt expense | 10,663,023 | 4,123,789 | 607,368 | 5,663,910 | 22,052,714 | 3,248,014 | |||||
| Losses/(gains) from investment in equity securities | 21,796,444 | (2,905,553) | (427,942) | (54,040,607) | 9,734,782 | 1,433,778 | |||||
| Foreign exchange losses/(gains) | 614,390 | (51,687) | (7,613) | 85,951 | (261,556) | (38,523) | |||||
| Share-based compensation | 7,522,984 | - | - | 18,632,776 | 232,558 | 34,252 | |||||
| Income tax expenses related to dividend distribution or retained profits | 4,140,689 | 6,486,874 | 955,413 | 11,940,633 | 14,576,403 | 2,146,872 | |||||
| Contingent consideration included in other current liabilities and other assets | - | 2,046,066 | 301,353 | - | 2,046,066 | 301,353 | |||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (6,591,451) | (4,658,499) | (686,123) | (30,460,379) | (43,356,590) | (6,385,736) | |||||
| Prepaid rent | (2,070,338) | 642,280 | 94,599 | (1,358,757) | 10,564,530 | 1,555,988 | |||||
| Inventories | (55,490) | (1,274,556) | (187,722) | 1,113,304 | (1,511,933) | (222,684) | |||||
| Amounts due from related parties | (1,974,899) | 8,625,331 | 1,270,374 | (1,996,450) | 10,135,528 | 1,492,802 | |||||
| Other current assets | 4,784,543 | (18,021,028) | (2,654,211) | 4,970,725 | (3,193,950) | (470,418) | |||||
| Other assets | 4,267,763 | (8,142,812) | (1,199,306) | (7,875,091) | (17,157,334) | (2,527,002) | |||||
| Accounts payable | 1,332,798 | 4,598,670 | 677,311 | 3,302,907 | 7,487,666 | 1,102,814 | |||||
| Amounts due to related parties | (76,817) | 521,868 | 76,863 | 755,531 | (1,526,433) | (224,819) | |||||
| Salary and welfare payable | (471,404) | 8,405,275 | 1,237,963 | (5,521,054) | 9,778,026 | 1,440,148 | |||||
| Deferred revenue | 5,676,928 | 6,439,785 | 948,478 | 10,502,629 | (32,603,970) | (4,802,046) | |||||
| Advance from customers | 3,127,446 | (339,768) | (50,042) | 849,222 | (8,097,688) | (1,192,661) | |||||
| Accrued expenses and other current liabilities | 3,050,771 | 36,865,011 | 5,429,629 | 31,312,003 | 16,760,864 | 2,468,608 | |||||
| Income tax payable | 11,452,280 | 15,896,890 | 2,341,359 | (15,880,832) | (30,522,077) | (4,495,416) | |||||
| Unrecognized tax benefits | 7,662,789 | 16,917,849 | 2,491,730 | 36,577,122 | 13,707,938 | 2,018,961 | |||||
| Deferred rent | (681,471) | 632,148 | 93,106 | (2,532,739) | 4,783,547 | 704,541 | |||||
| Other long-term liabilities | 8,456,070 | 424,893 | 62,580 | 12,049,539 | 1,603,859 | 236,223 | |||||
| Deferred taxes | (2,297,390) | (3,180,335) | (468,413) | 2,700,045 | (15,548,950) | (2,290,113) | |||||
| Net cash provided by operating activities | 188,257,305 | 175,365,486 | 25,828,545 | 395,471,491 | 176,798,246 | 26,039,567 | |||||
| Investing activities: | |||||||||||
| Purchases of property and equipment | (33,707,518) | (26,948,009) | (3,969,013) | (47,218,828) | (68,576,946) | (10,100,293) | |||||
| Purchases of intangible assets | - | - | - | - | (9,075) | (1,337) | |||||
| Proceeds from disposal of property and equipment | - | 60,262 | 8,876 | 1,300,000 | 71,387 | 10,514 | |||||
| Acquisitions, net of cash received | (4,318,317) | (6,660,000) | (980,912) | (248,978,924) | (7,915,807) | (1,165,872) | |||||
| Advances for acquisitions | (11,244,749) | - | - | (59,111,449) | - | - | |||||
| Repayment of advances for acquisitions | - | 872,700 | 128,535 | - | 36,312,700 | 5,348,283 | |||||
| Purchases of short-term investments | (405,305,933) | (610,180) | (89,870) | (617,825,906) | (148,300,207) | (21,842,260) | |||||
| Proceeds from short-term investments | 4,248,415 | 8,817,211 | 1,298,635 | 761,078,783 | 407,451,316 | 60,011,093 | |||||
| Increase of long-term time deposits | (40,000,000) | - | - | (500,000,000) | (30,000,000) | (4,418,522) | |||||
| Purchases of investments in equity securities | (65,086,928) | - | - | (89,123,279) | - | - | |||||
| Purchases of long term investments | - | - | - | (247,456,740) | - | - | |||||
| Proceeds from disposal of equity securities | 76,361,856 | 263,768 | 38,849 | 221,583,600 | 263,768 | 38,849 | |||||
| Dividends received from investment in equity securities | - | 5,081,888 | 748,481 | - | 7,622,306 | 1,122,644 | |||||
| Proceeds from disposal of equity method investments | - | - | - | - | 6,380,000 | 939,672 | |||||
| Loan to a related party |
(220,536,455) | (119,400,000) | (17,585,719) | (337,516,205) | (304,766,500) | (44,887,254) | |||||
| Repayment from a related party |
220,300,000 | 111,100,000 | 16,363,261 | 337,279,750 | 297,256,179 | 43,781,103 | |||||
| Loan to third parties | (104,000,000) | (3,800,000) | (559,680) | (255,775,219) | (7,000,000) | (1,030,987) | |||||
| Repayment of loan from third parties | - | - | - | 121,280,219 | - | - | |||||
| Loan to franchisees | (34,861,152) | (59,310,002) | (8,735,419) | (66,451,152) | (205,761,780) | (30,305,435) | |||||
| Repayment from franchisees | 3,187,806 | 35,586,060 | 5,241,260 | 10,455,159 | 70,801,095 | 10,427,874 | |||||
| Net cash (used in)/provided by investing activities | (614,962,975) | (54,946,302) | (8,092,716) | (1,016,480,191) | 53,828,436 | 7,928,072 | |||||
| Financing activities: | |||||||||||
| Distribution to the shareholders | - | - | - | (208,025,814) | - | - | |||||
| Proceeds from short-term borrowings | - | 2,997,225 | 441,444 | - | 21,437,555 | 3,157,411 | |||||
| Repayment of short-term borrowings | - | (10,000,000) | (1,472,841) | - | (10,000,000) | (1,472,841) | |||||
| Capital contribution from noncontrolling interest holders | 2,370,000 | 2,884,202 | 424,797 | 12,760,000 | 6,262,589 | 922,380 | |||||
| Net cash provided by/(used in) financing activities | 2,370,000 | (4,118,573) | (606,600) | (195,265,814) | 17,700,144 | 2,606,950 | |||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | 8,375,549 | (1,474,708) | (217,201) | (64,704) | (882,510) | (129,980) | |||||
| Net (decrease) increase in cash and cash equivalents and restricted cash | (415,960,121) | 114,825,903 | 16,912,028 | (816,339,218) | 247,444,316 | 36,444,609 | |||||
| Cash and cash equivalents and restricted cash at the beginning of the period | 866,946,688 | 474,778,636 | 69,927,335 | 1,267,325,785 | 342,160,223 | 50,394,754 | |||||
| Cash and cash equivalents and restricted cash at the end of the period | 450,986,567 | 589,604,539 | 86,839,363 | 450,986,567 | 589,604,539 | 86,839,363 | |||||
| GreenTree Hospitality Group Ltd. | |||||||||||
| Unaudited Reconciliation of GAAP and Non-GAAP Results | |||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2020 | ||||||
| RMB | RMB | US$ | RMB | RMB | US$ | ||||||
| Net income | 102,173,754 | 85,637,413 | 12,613,028 | 363,232,408 | 165,223,010 | 24,334,719 | |||||
| Deduct: | |||||||||||
| Other operating income | 8,449,390 | 8,577,445 | 1,263,321 | 16,995,685 | 27,671,358 | 4,075,551 | |||||
| Gains from investment in equity securities | - | 2,905,553 | 427,942 | 54,040,607 | 45,440,136 | 6,692,609 | |||||
| Share of gain in equity investees, net of tax | 1,067,166 | 170,211 |
25,070 | 779,369 | 1,118,542 | 164,743 | |||||
| Other income, net | - | 517,981 | 76,290 | 2,690,742 | 517,981 | 76,290 | |||||
| Add: | |||||||||||
| Other operating expenses | 53,736 | 434,792 | 64,038 | 161,710 | 1,633,064 | 240,524 | |||||
| Income tax expense | 46,994,932 | 41,821,938 | 6,159,706 | 150,211,254 | 72,398,501 | 10,663,147 | |||||
| Interest expense | 735,927 | 203,604 | 29,988 | 2,121,402 | 2,941,850 | 433,288 | |||||
| Share-based compensation | 7,643,465 | - | - | 19,819,047 | 232,558 | 34,252 | |||||
| Depreciation and amortization | 7,172,700 | 18,063,004 | 2,660,393 | 22,993,514 | 50,068,849 | 7,374,344 | |||||
| Losses from investment in equity securities | 21,796,444 | - | - | - | 55,174,918 | 8,126,387 | |||||
| Adjusted EBITDA (Non-GAAP) | 177,054,402 | 133,989,561 | 19,734,530 | 484,032,932 | 272,924,733 | 40,197,468 | |||||
| Quarter Ended | Nine Months Ended | ||||||||||
| September 30, 2019 | September 30, 2020 | September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2020 | ||||||
| RMB | RMB | US$ | RMB | RMB | US$ | ||||||
| Net income | 102,173,754 | 85,637,413 | 12,613,028 | 363,232,408 | 165,223,010 | 24,334,719 | |||||
| Deduct: | |||||||||||
| Government subsidies (net of 25% tax) | - | 1,005,153 | 148,043 | 5,048,981 | 14,217,238 | 2,093,973 | |||||
| Gains from investment in equity securities (net of 25% tax) | - | 2,179,165 | 320,956 | 40,530,455 | 34,080,102 | 5,019,457 | |||||
| Other income (net of 25% tax) | - | 388,486 | 57,218 | 2,018,057 | 388,486 | 57,218 | |||||
| Add: | |||||||||||
| Share-based compensation | 7,643,465 | - | - | 19,819,047 | 232,558 | 34,252 | |||||
| Losses from investments in equity securities (net of 25% tax) | 16,347,333 | - | - | - | 50,081,189 | 7,376,162 | |||||
| One-off selling expense(net of 25% tax) | 4,306,969 | - | - | 4,306,969 | - | - | |||||
| One-time fees and expense | 210,000 | 3,839,368 | 565,478 | 1,153,650 | 3,839,368 | 565,478 | |||||
| One-time provision of bad debt | - | - | - | - | 9,501,082 | 1,399,358 | |||||
| Income tax expenses related to dividend distribution | 4,140,689 | 6,486,874 | 955,413 | 11,940,633 | 14,576,403 | 2,146,872 | |||||
| Core net income(Non-GAAP) | 134,822,210 | 92,390,851 | 13,607,702 | 352,855,214 | 194,767,784 | 28,688,193 | |||||
| Core net income per ADS (Non-GAAP) | |||||||||||
| Class A ordinary share-basic and diluted | 1.32 | 0.90 | 0.13 | 3.46 | 1.89 | 0.28 | |||||
| Class B ordinary share-basic and diluted | 1.32 | 0.90 | 0.13 | 3.46 | 1.89 | 0.28 | |||||
Operational Data
| As of September 30, 2019 | As of September 30, 2020 | |
| Total hotels in operation: | 3,102 | 4,195 |
| Leased-and-owned hotels | 30 | 37 |
| Franchised hotels | 3,072 | 4,158 |
| Total hotel rooms in operation | 245,705 | 305,125 |
| Leased-and-owned hotels | 3,724 | 4,620 |
| Franchised hotels | 241,981 | 300,505 |
| Number of cities | 309 | 341 |
| Quarter Ended | ||
| As of September 30, 2019 | As of September 30, 2020 | |
| Occupancy rate (as a percentage) | ||
| Leased-and-owned hotels | 73.1% | 70.6% |
| Franchised hotels | 86.1% | 79.3% |
| Blended | 85.9% | 79.1% |
| Average daily rate (in RMB) | ||
| Leased-and-owned hotels | 224 | 171 |
| Franchised hotels | 173 | 151 |
| Blended | 174 | 151 |
| RevPAR (in RMB) | ||
| Leased-and-owned hotels | 164 | 121 |
| Franchised hotels | 149 | 120 |
| Blended | 149 | 120 |
| Number of Hotels in Operation | Number of Hotel Rooms in Operation | |||
| As of September 30, 2019 | As of September 30, 2020 | As of September 30, 2019 | As of September 30, 2020 | |
| Luxury | 21 | 20 | 4,739 | 4,042 |
| Argyle | 21 | 20 | 4,739 | 4,042 |
| Mid-to-up-scale | 171 | 337 | 17,147 | 30,303 |
| GreenTree Eastern | 100 | 137 | 10,691 | 14,305 |
| Deepsleep Hotel (????) | 2 | 3 | 161 | 221 |
| Gem | 22 | 33 | 2,002 | 3,016 |
| Gya | 18 | 39 | 1,566 | 3,340 |
| Vx | 19 | 32 | 1,544 | 2,563 |
| Ausotel | 10 | 12 | 1,183 | 1,561 |
| Urban Garden and others* | / | 81 | / | 5,297 |
| Mid-scale | 2,412 | 2,684 | 202,235 | 217,922 |
| GreenTree Inn | 1,986 | 2,113 | 169,889 | 178,179 |
| GT Alliance | 297 | 321 | 22,951 | 24,560 |
| GreenTree Apartment | 7 | 13 | 373 | 862 |
| Vatica | 122 | 123 | 9,022 | 8,925 |
| City 118 Selected and others* | / | 114 | / | 5,396 |
| Economy hotels | 498 | 1,154 | 21,584 | 52,858 |
| Shell | 498 | 593 | 21,584 | 25,791 |
| City 118 and others* | / | 561 | / | 27,067 |
| Total | 3,102 | 4,195 | 245,705 | 305,125 |
* Others include other brands in each segment of Urban.
For more information, please contact:
GreenTree
Ms. Selina Yang
Phone: +86-21-3617-4886 ext. 7999
E-mail:
Mr. Nicky Zheng
Phone: +86-21-3617-4886 ext. 6708
E-mail:
Christensen
In Shanghai
Ms. Constance Zhang
Phone: +86-138-1645-1798
E-mail:
In Hong Kong
Ms. Karen Hui
Phone: +852-9266-4140
E-mail:
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email:
| 1 The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.7896 on September 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/h10/20201005/ |
| 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. |
SOURCE GreenTree Hospitality Group Ltd.