omniture

GreenTree Hospitality Group Ltd. Reports Second Quarter 2020 Financial Results

2020-08-14 08:20 5709
  • 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.

SHANGHAI, Aug. 14, 2020 /PRNewswire/ -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree", the "Company", "we", "us" and "our"), a leading hospitality management group in China, today 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.

Conference Call

GreenTree's management will hold an earnings conference call at 9:00 PM U.S. Eastern Time on August 13, 2020 (9:00 AM Beijing/Hong Kong Time on August 14, 2020).

Dial-in numbers for the live conference call are as follows:

International 

1-412-902-4272 

Mainland China

4001-201-203 

US 

1-888-346-8982 

Hong Kong 

800-905-945 or 852-3018-4992 

Singapore

800-120-6157 

Participants should ask to join the GreenTree call, please dial in approximately 10 minutes before the scheduled time of the call.

A telephone replay of the call will be available after the conclusion of the conference call until August 20, 2020.

Dial-in numbers for the replay are as follows:

International Dial-in 

1-412-317-0088

U.S. Toll Free 

1-877-344-7529

Canada Toll Free

855-669-9658

Passcode:

10146314

Additionally, a live and archived webcast of this conference call will be available at http://ir.998.com.

Use of Non-GAAP Financial Measures

We believe that Adjusted EBITDA and core net income, as we present it, is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions, income taxes and certain non-core and non-recurring items in our financial statements.

The presentation of Adjusted EBITDA and core net income should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business.

The use of Adjusted EBITDA and core net income has certain limitations because it does not reflect all items of income and expenses that affect our operations. Items excluded from Adjusted EBITDA and core net income are significant components in understanding and assessing our operating and financial performance. Depreciation and amortization expense for various long-term assets, income tax and share-based compensation have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, Adjusted EBITDA and core net income does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest expense/income, gains/losses from investments in equity securities, income tax expenses, share-based compensation, share of loss in equity investees, government subsidies and other relevant items both in our reconciliations to the corresponding U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

The term Adjusted EBITDA and core net income is not defined under U.S. GAAP, and Adjusted EBITDA and core net income is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider this data in isolation or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our Adjusted EBITDA and core net income may not be comparable to Adjusted EBITDA and core net income or similarly titled measures utilized by other companies since such other companies may not calculate Adjusted EBITDA and core net income in the same manner as we do.

Reconciliations of the Company's non-GAAP financial measures, including Adjusted EBITDA and core net income, to the consolidated statement of operations information are included at the end of this press release.

About GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company") (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 has built a strong suite of brands including its flagship "GreenTree Inns" brand as a result of its long-standing dedication to the hospitality industry in China and consistent quality of its services, signature hotel designs, broad geographic coverage and convenient locations. GreenTree has further expanded its brand portfolio into mid-to-up-scale and luxury segments through a series of strategic investments. By offering diverse brands, through its strong membership base, expansive booking network, superior system management with moderate charges, and fully supported by its operating departments including Decoration, Engineering, Purchasing, Operation, IT and Finance, GreenTree aims to keep closer relationships with all of its clients and partners by providing a brand portfolio that features comfort, style and value.

For more information on GreenTree, please visit http://ir.998.com

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995.  In some cases, these forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," "confident," "future," or other similar expressions. GreenTree may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about or based on GreenTree's current beliefs, expectations, assumptions, estimates and projections about us and our industry, are forward-looking statements that involve known and unknown factors, risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such factors and risks include, but not limited to the following: GreenTree's goals and growth strategies; its future business development, financial condition and results of operations; trends in the hospitality industry in China and globally; competition in our industry; fluctuations in general economic and business conditions in China and other regions where we operate; the regulatory environment in which we and our franchisees operate; and assumptions underlying or related to any of the foregoing. You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided, including the forward-looking statements made, in this press release are current as of the date of the press release. Except as required by law, GreenTree undertakes no obligation to update any such information or forward-looking statements to reflect events or circumstances after the date on which the information is provided or statements are made, or to reflect the occurrence of unanticipated events.


---Financial Tables and Operational Data Follow---

 

 

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.

For more information, please contact:

GreenTree

Ms. Selina Yang
Phone: +86-21-3617-4886 ext. 7999
E-mail: ir@998.com

Mr. Nicky Zheng
Phone: +86-21-3617-4886 ext. 6708
E-mail: ir@998.com  

Christensen

In Shanghai
Ms. Constance Zhang
Phone: +86-138-1645-1798
E-mail: czhang@christensenIR.com

In Hong Kong 
Ms. Karen Hui 
Phone: +852-9266-4140 
E-mail: khui@christensenIR.com

In US 
Ms. Linda Bergkamp 
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com

Cision View original content:http://www.prnewswire.com/news-releases/greentree-hospitality-group-ltd-reports-second-quarter-2020-financial-results-301112293.html

Source: GreenTree Hospitality Group Ltd.
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