|作者：||Angela HAN LEE,Ryan YU|
|摘要：||Report title:China Lodging (HTHT US) - 2Q17 beat, strong RevPAR plus expansion. U/G BUY
Analyst:Angela HAN LEE,Ryan YU
■ 2Q17 EBITDA of RMB719mn (+26% YoY, +93% QoQ) beat our/ market est. by 14%/33%. Excluding Crystal Orange’s RMB119/35mn net revenue/EBITDA, the results remained above our/market est.
■ We lifted FY17E/18E EBITDA by 17%/22% and core NP by 19%/25% on strong RevPAR and Crystal Orange acquisition. Given stable cashflow and increasing contribution from manachising business, we changed our valuation methodology to P/E from EV/EBITDA
■ Industry pioneer with cash-cow manachising business, rising operating efficiency and intrinsic value through acquisitions. TP raised to US$123.60 at 26x FY18E P/E, 1-SD higher than 5-year avg
Impressive RevPAR with 14% YoY growth
2Q17 net revenue grew 18% YoY, or 13% excluding 1-month contribution from Crystal Orange (RMB119mn), still higher than mgmt’s previous guidance of 10-12%. Steep RevPAR hike was driven by both ADR (+8% YoY) and occupancy rate (+5ppts YoY). EBITDA grew 26% YoY to RMB719mn, including RMB35mn contribution from Crystal Orange. Core net profit surged 22% YoY with stable margin YoY.
FY17E top-line guided 23-26% YoY vs 20% consensus
1) HTHT guided 30-34% YoY growth in 3Q17E net revenue, with full-year guidance raised to 23-26% (from 10-14%) on strong RevPAR and Crystal Orange’s contribution. 3Q17 QTD RevPAR growth was said to be “not lower than 2Q17”, implying big upside on consensus. 2) Mgmt lifted expansion guidance to 500-550 opening (from 450-500) and closing 140-160 hotels in FY17E. For Crystal Orange, mgmt. plans to add 35-40/50+ new hotels in 2H17E/FY18E, while its RevPAR will further increase after joining HTHT’s platform (12% YoY in Jun).
Strong hotel portfolio but valuation rich
HTHT currently trades at 22x FY18E P/E, which we believe is attractive given 74%/45%/27% core NP growth in FY17E/18E/19E. Our core NP implies 28%/38% upside from consensus numbers, and we believe the market is still not capturing its improving operating efficiency through the economies of scale and manachising business. Upgrade to BUY.