omniture

GreenTree Hospitality Group Ltd. Reports Third Quarter 2018 Financial Results

2018-11-19 19:11 459
  • A total of 2,558 hotels with 209,463 hotel rooms were in operation as of September 30, 2018, as compared to 2,434 hotels and 201,275 hotel rooms as of June 30, 2018.
  • Total revenues increased 21.6% year-over-year to RMB256.8 million (US$37.4 million) [1] for the third quarter of 2018. Total revenues increased 21.7% year-over-year to RMB695.1 million (US$101.2 million)[1] for the first nine months of 2018.
  • Adjusted EBITDA (non-GAAP) increased 24.2% year-over-year to RMB156.5 million (US$22.8 million) [1] for the third quarter of 2018. Adjusted EBITDA (non-GAAP) increased 24.6% year-over-year to RMB409.2 million (US$59.6 million) [1] for the first nine months of 2018.
  • Net income increased 36.3% year-over-year to RMB152.4 million (US$22.2 million)[1] for the third quarter of 2018. Net income increased 15.2% year-over-year to RMB339.8 million (US$49.5 million) [1] for the first nine months of 2018.
  • Core net income (non-GAAP) increased 30.3% year-over-year to RMB125.3 million (US$ 18.2 million) [1] for the third quarter of 2018. Core net income (non-GAAP) increased 27.6% year-over-year to RMB320.1 million (US$46.6 million) [1] for the first nine months of 2018.
  • Basic and diluted net income per ADS were RMB1.50 (US$0.22)[1] for the third quarter of 2018. Basic and diluted net income per ADS were RMB3.46 (US$0.50)[1] for the first nine months of 2018.
  • Basic and diluted core net income per ADS (non-GAAP) were RMB1.23 (US$0.18)[1] for the third quarter of 2018. Basic and diluted core net income per ADS (non-GAAP) were RMB3.26 (US$0.47) [1] for the first nine months of 2018.
  • As of September 30, 2018, the Company had a strong pipeline with a total of 504 hotels contracted for or under development. For the third quarter of 2018, the Company opened 145 F&M hotels and one L&O hotel, compared to 109 F&M hotels for the third quarter of 2017.
  • The Company reaffirmed guidance for growth in full year 2018 total revenues of 20-25% from 2017.

SHANGHAI, Nov. 19, 2018 /PRNewswire/ -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree", the "Company", "we", "us" and "our"), a leading franchised hotel operator in China, today announced its unaudited financial results for the third quarter ended September 30, 2018.

Third Quarter of 2018 Operational Highlights

  • As of September 30, 2018, GreenTree had 30 leased-and-operated ("L&O") hotels and 2,528 franchised-and-managed ("F&M") hotels in operation in 278 cities across China, compared to 26 L&O hotels and 2,408 F&M hotels in operation in 267 cities as of June 30, 2018.
  • The Company opened 145 F&M hotels and one L&O hotel, 73 in the mid-scale segment, 21 in the business to mid-to-up-scale segment and 52 in the economy segment. Of the hotels opened, 10 hotels were in Tier 1 cities[2], 28 in Tier 2 cities[3] and the remaining 108 hotels in other cities in China, while the Company closed a total of 22 F&M hotels in the quarter.
  • As of September 30, 2018, the Company had a strong pipeline with a total of 504 hotels contracted for or under development.
  • The average daily room rate, or ADR, for all hotels in operation, was RMB167 in the third quarter of 2018, an increase of 4.4% year-over-year.
  • The occupancy rate for all hotels in operation was 87.2% in the third quarter of 2018, a decrease of 0.2% year-over-year.
  • The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB146 in the third quarter of 2018, representing a 4.3% year-over-year increase.
  • As of September 30, 2018, the Company had approximately 26 million individual loyal members (of which approximately 20 million are paid members) and over 1,020,000 corporate members, compared to approximately 24 million (of which approximately 19 million are paid members) and over 930,000 respectively, as of June 30, 2018.
  • The Company sold approximately 94.9% of its room nights through its direct sales channels, including its individual loyal members and corporate members, while online travel agencies, or OTAs, only contributed approximately 5.1%.

"We remain committed to a steady and stable growth strategy as we explore the growing consumption trends in second and third tier cities and expand our geographical coverage across China, covering 278 cities at the end of September 2018, " commented Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree. "During the third quarter, we opened 146 new hotels and continued to grow our pipeline. We are on track to open more new hotels in the remaining part of this year. We also started to explore ways to grow our service apartment business recently. Finally, we remain interested in exploring appropriate value-enhancing acquisition opportunities to help strengthen our hotel platform and increase long-term shareholder value."

Third Quarter of 2018 Financial Results



Quarter Ended


September 30, 2017

September 30, 2018

September 30, 2018


RMB

RMB

USD

Revenues




Leased-and-operated hotels

47,930,487

57,384,611

8,355,360

Franchised-and-managed hotels

149,391,851

179,722,463

26,168,093

Membership fees

13,799,619

19,718,205

2,871,026

Total revenues

211,121,957

256,825,279

37,394,479

First nine months of 2018 Financial Results



Nine months Ended


September 30, 2017

September 30, 2018

September 30, 2018


RMB

RMB

USD

Revenues




Leased-and-operated hotels

136,757,301

151,300,547

22,029,783

Franchised-and-managed hotels

395,890,485

489,101,041

71,214,479

Membership fees

38,686,758

54,721,402

7,967,589

Total revenues

571,334,544

695,122,990

101,211,851

Total revenues for the third quarter of 2018 were RMB256.8 million (US$37.4 million)[1], representing a 21.6% increase over third quarter 2017. Total revenues for the first nine months of 2018 were RMB695.1 million (US$101.2 million)[1], representing a 21.7% increase over first nine months of 2017. The year-over-year increase in the third quarter of 2018 was primarily attributable to the 123 F&M hotels net addition to our network, the addition of a new L&O hotel and the conversion of three F&M to L&O hotels during this quarter, improved RevPAR for both F&M and L&O hotels as well as membership growth; and was partially offset by the renovation of six L&O hotels during this quarter and the conversion of one L&O to an F&M hotel after the second quarter of 2017.

  • Total revenues from leased-and-operated hotels for the third quarter of 2018 were RMB57.4 million (US$8.4 million)[1], representing a 19.7% year-over-year increase. Total revenues from leased-and-operated hotels for the first nine months of 2018 were RMB151.3 million (US$22.0 million)[1], representing a 10.6% year-over-year increase. The year-over-year increase in the third quarter of 2018 was primarily attributable to RevPAR growth of 4.8%, moderate sublease revenue growth, the addition of a new L&O hotel and the conversion of three F&M to L&O hotels during this quarter; and was partially offset by the renovation of six L&O hotels during this quarter and the conversion of one L&O to F&M hotel after the second quarter of 2017.
  • Total revenues from franchised-and-managed hotels for the third quarter of 2018 were RMB179.7 million (US$26.2 million)[1], representing a 20.3% year-over-year increase. Total revenues from franchised-and-managed hotels for the first nine months of 2018 were RMB489.1 million (US$71.2 million) [1], representing a 23.5% year-over-year increase. Initial franchise fees increased 10.0% year-over-year in the third quarter of 2018, primarily due to the gross opening of 145 hotels in the third quarter of 2018 as compared to 109 hotels opened in the third quarter of 2017, as well as a temporary waiver of initial franchisee fees for Shell hotels, which opened during the third quarter of 2018. The 21.6% year-over-year increase in recurring franchisee management fees in the third quarter of 2018 was primarily due to RevPAR growth of 4.3% as well as growth in central reservation system ("CRS") usage fees, annual IT and marketing fees and hotel manager fees, which in turn resulted from the increased number of hotels and hotel rooms in operation. 

Quarter Ended


September 30, 2017

 September 30, 2018

September 30, 2018


RMB

RMB

USD

 Initial franchise fee

16,390,047

18,035,149

2,625,968

 Recurring franchise management fee

133,001,804

161,687,314

23,542,125

 Revenues from franchised-and-managed hotels

149,391,851

179,722,463

26,168,093

 


Nine months Ended


September 30, 2017

September 30, 2018

September 30, 2018


RMB

RMB

USD

 Initial franchise fee

37,441,256

47,289,811

6,885,529

 Recurring franchise management fee

358,449,229

441,811,230

64,328,950

 Revenues from franchised-and-managed hotels

395,890,485

489,101,041

71,214,479





Total operating costs and expenses


Quarter Ended


September 30, 2017

September 30, 2018

September 30, 2018


RMB

RMB

USD

Operating costs and expenses




Hotel operating costs

59,839,669

76,099,402

11,080,286

Selling and marketing expenses

10,280,954

11,319,534

1,648,156

General and administrative expenses

21,337,109

24,229,964

3,527,951

Other operating expenses

140,447

99,935

14,551

Total operating costs and expenses

91,598,179

111,748,835

16,270,944




Nine months Ended


September 30, 2017

September 30, 2018

September 30, 2018


RMB

RMB

USD

Operating costs and expenses




Hotel operating costs

174,600,016

206,844,187

30,117,092

Selling and marketing expenses

29,336,600

34,223,888

4,983,094

General and administrative expenses

57,918,345

69,781,751

10,160,417

Other operating expenses

1,288,613

278,527

40,554

Total operating costs and expenses

263,143,574

311,128,353

45,301,157

Hotel operating costs for the third quarter of 2018 were RMB76.1 million (US$11.1 million)[1], representing a 27.2% year-over-year increase. Hotel operating costs for the first nine months of 2018 were RMB206.8 million (US$30.1 million)[1], representing an 18.5% year-over-year increase. The year-over-year increase in the third quarter of 2018 were mainly attributable to the increased number of general managers in our hotel network and other costs associated with the expansion of our F&M hotels, and higher rental costs, utilities and personnel costs associated with the four new L&O hotels; and was partially offset by reduced rental costs, depreciation and amortization and operating costs related to the conversion of one L&O hotel.


Quarter Ended


September 30, 2017

September 30, 2018

September 30, 2018


RMB

RMB

USD

Rental

15,297,799

19,958,416

2,906,001

Utilities

4,447,308

5,376,412

782,821

Personnel cost

7,120,232

10,221,598

1,488,293

Depreciation and amortization

5,676,717

5,752,902

837,639

Consumable, food and beverage

3,876,273

5,039,899

733,823

Costs of general managers of franchised-and-operated hotels

13,683,435

19,132,342

2,785,722

Other costs of franchised-and-operated hotels

6,289,568

7,687,857

1,119,373

Others

3,448,337

2,929,976

426,614

Hotel Operating Costs

59,839,669

76,099,402

11,080,286

 


Nine months Ended


September 30, 2017

September 30, 2018

September 30, 2018


RMB

RMB

USD

Rental

45,814,573

55,250,840

8,044,677

Utilities

13,236,956

15,591,749

2,270,202

Personnel cost

20,350,660

25,391,187

3,697,028

Depreciation and amortization

17,419,804

14,287,708

2,080,330

Consumable, food and beverage

9,424,743

14,079,286

2,049,983

Costs of general managers of franchised-and-operated hotels

40,361,514

50,447,624

7,345,315

Other costs of franchised-and-operated hotels

17,839,079

21,855,821

3,182,269

Others

10,152,687

9,939,972

1,447,288

Hotel Operating Costs

174,600,016

206,844,187

30,117,092


Selling and marketing expenses for the third quarter of 2018 were RMB11.3 million (US$1.6 million)[1], compared to RMB10.3 million in the third quarter of 2017. Selling and marketing expenses for the first nine months of 2018 were RMB34.2 million (US$5.0 million)[1], compared to RMB29.3 million in the first nine months of 2017. The year-over-year increase of 10.1% in the third quarter of 2018 was mainly attributable to model room construction, exhibition and other advertising and promotion expenses related to our three new business to mid-to-upscale brands, increased personnel, compensation and other costs (i.e. travel expenses) of business development personnel, as a result of the increased opening of hotels.

General and administrative expenses for the third quarter of 2018 were RMB24.2 million (US$3.5 million)[1], compared to RMB21.3 million in the third quarter of 2017. General and administrative expenses for the first nine months of 2018 were RMB69.8 million (US$10.2 million)[1], compared to RMB57.9 million in the first nine months of 2017. The year-over-year increase of 13.6% in the third quarter of 2018 was primarily attributable to increased share-based compensation expenses.

Gross profit for the third quarter of 2018 was RMB180.7 million (US$26.3 million)[1], representing a year-over-year increase of 19.5%. Gross margin in the third quarter was 70.4%, compared to 71.7% a year ago. Gross profit for the first nine months of 2018 was RMB488.3 million (US$71.1 million)[1], representing a year-over-year increase of 23.1%.

Income from operations for the third quarter of 2018 was RMB146.9 million (US$21.4 million)[1], representing a year-over-year increase of 14.3%. Operating margin in the third quarter declined to 57.2%, compared to 60.9% a year ago. Income from operations for the first nine months of 2018 was RMB411.9 million (US$60.0 million)[1], representing a year-over-year increase of 27.8%.

Adjusted EBITDA (non-GAAP) for the third quarter of 2018 was RMB156.5 million (US$22.8 million)[1], a year-over-year increase of 24.2%. The adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 60.9% in the third quarter of 2018, compared to 59.6% in the third quarter of 2017. Adjusted EBITDA (non-GAAP) for the first nine months of 2018 was RMB409.2 million (US$59.6 million)[1], a year-over-year increase of 24.6%.

Net income for the third quarter of 2018 was RMB152.4 million (US$22.2 million)[1], representing a year-over-year increase of 36.3%. Net margin in the third quarter was 59.3%, compared to 52.9% a year ago. Net income for the first nine months of 2018 was RMB339.8 million (US$49.5 million)[1], a year-over-year increase of 15.2%. Core net income (non-GAAP) for the third quarter of 2018 was RMB125.3 million (US$18.2 million)[1], representing a 30.3% year-over-year increase. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 48.8% in the third quarter of 2018, compared to 45.5% in the third quarter of 2017. Core net income (non-GAAP) for the first nine months of 2018 was RMB320.1 million (US$46.6 million)[1], representing a 27.6% year-over-year increase.

Basic and diluted earnings per ADS for the third quarter of 2018 was RMB1.50 (US$0.22)[1], representing a 23.0% year-over-year increase. Basic and diluted earnings per ADS was RMB3.46 (US$0.50)[1] for the first nine months of 2018, representing a 7.1% year-over-year increase. Basic and diluted core net income per ADS (non-GAAP) were RMB1.23 (US$0.18)[1] for the third quarter of 2018, representing a 17.1% year-over-year increase. Basic and diluted core net income per ADS (non-GAAP) were RMB3.26 (US$0.47)[1] for the first nine months of 2018, representing a 18.5% year-over-year increase.

Cash flow. Operating cash inflow for the third quarter of 2018 was RMB202.9million (US$29.5 million)[1], due primarily to improved operating performance across our hotel portfolio. Operating cash inflow for the first nine months of 2018 was RMB402.3 million (US$58.6 million)[1]. Investing cash outflow for the third quarter of 2018 was RMB158.0 million (US$23.0 million)[1], which was attributable primarily to RMB23.2 million in capital expenditure and RMB134.8 million in other investments, mainly including short-term investments and loans to franchisees and third parties. Investing cash outflow for the first nine months of 2018 was RMB335.2 million (US$48.8 million)[1]. Financing cash outflow for the third quarter of 2018 was nil while net financing cash inflow for the first nine months of 2018 was RMB604.6 million (US$88.0 million)[1].

Cash and cash equivalents, restricted cash, Short-term investments and securities. As of September 30, 2018, the Company had a total balance of cash and cash equivalents, restricted cash, short term investments and securities of RMB1,996.3 million (US$290.7 million)[1], as compared to RMB1,898.8 million as of June 30, 2018, primarily due to net operating cash inflow, offset by fixed asset and other investments.

Guidance
For the full year 2018, the Company reaffirms total revenue growth guidance of 20-25% from 2017.

The guidance set forth above reflects the Company's current and preliminary view based on our estimates, may not be indicative of our financial results for future interim periods and the full year ended December 31, 2018 and is subject to change.

Conference Call

GreenTree's management will hold an earnings conference call at 8:00 AM U.S. Eastern Time on November 19, 2018 (9:00 PM Beijing/Hong Kong Time on November 19, 2018).

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

International           

1-412-902-4272

China

4001-201203

US

1-888-346-8982

Hong Kong

800-905945 or 852-3018-4992

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 November 26, 2018.

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:

10125987

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 trading 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 franchised hotel operator in China. As of December 31, 2017, GreenTree had the highest proportion of franchised-and-managed hotels among the top four economy to mid-scale hotel networks in China. In 2017, GreenTree was the fourth largest economy to mid-scale hotel group in China in terms of number of hotel rooms according to the China Hospitality Association. The Company 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, the consistent quality of its services, signature hotel designs, broad geographic coverage and convenient locations. GreenTree has positioned its brands to appeal to value- and quality-conscious business and leisure travelers.

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.

Notes:

[1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.8680 on September 28, 2018 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20181001.

[2] "Tier 1 cities" refers to the term used by the National Bureau of Statistics of China and refer to Beijing, Shanghai, Shenzhen and Guangzhou.

[3] "Tier 2 cities" refers to the 32 major cities, other than Tier 1 cities, as categorized by the National Bureau of Statistics of China, 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.

[4] Wumian Hotel's English trademark is currently being registered.

-- Financial Tables and Operational Data Follow --

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets



December 31,

September 30, 

September 30, 

2017

2018

2018


RMB

RMB

USD

ASSETS




Current assets:




Cash and cash equivalents

161,963,665

839,157,006

122,183,606

Short-term investment

781,850,000

894,400,083

130,227,152

Trading securities

307,754,960

259,758,591

37,821,577

Accounts receivable, net of allowance for doubtful accounts

53,882,894

65,660,503

9,560,353

Amounts due from related parties 

3,248,692

251,999

36,692

Prepaid rent 

4,292,472

4,141,616

603,031

Inventories 

2,355,154

1,434,132

208,814

Other current assets 

127,269,801

66,495,332

9,681,905

Loans receivable, net

6,600,000

196,608,587

28,626,760

Deferred tax assets

36,207,884

28,222,162

4,109,226

Total current assets

1,485,425,522

2,356,130,011

343,059,116





Non-current assets:




Amounts due from a related party

2,600,000

-

-

Restricted cash

3,000,000

3,000,000

436,808

Loan receivable, net

-

26,900,000

3,916,715

Property and equipment, net 

96,669,251

221,951,940

32,316,823

Intangible assets, net

3,727,383

16,100,662

2,344,301

Goodwill

2,959,183

4,314,981

628,273

Long-term investments

122,508,832

119,571,686

17,409,972

Other assets

5,741,301

11,741,301

1,709,568

Deferred tax assets

33,351,457

34,618,065

5,040,487

 TOTAL ASSETS

1,755,982,929

2,794,328,646

406,862,063





LIABILITIES AND EQUITY




Current liabilities:




Accounts payable 

7,293,341

8,788,268

1,279,596

Advance from customers 

33,662,363

36,302,861

5,285,798

Amounts due to related parties 

473,018

1,102,375

160,509

Salary and welfare payable 

44,577,683

39,656,469

5,774,093

Deferred rent 

2,916,205

4,355,231

634,134

Deferred revenue 

109,101,986

142,546,431

20,755,159

Accrued expenses and other current liabilities 

293,741,951

268,468,295

39,089,734

Income tax payable 

103,830,578

95,764,800

13,943,623

Dividends payable

39,691,103

-

-

Deferred tax liabilities 

27,745,951

17,380,672

2,530,674

Total current liabilities

663,034,179

614,365,402

89,453,320





Deferred rent 

23,050,635

26,446,537

3,850,690

Deferred revenue 

144,258,584

163,575,878

23,817,105

Other long-term liabilities 

73,937,277

91,796,257

13,365,792

Deferred tax liabilities 

5,797,260

7,073,087

1,029,861

Unrecognized tax benefits 

113,299,633

157,713,855

22,963,578

 Total liabilities

1,023,377,568

1,060,971,016

154,480,346





Shareholders' equity:




Class A ordinary shares 

160,189,926

217,421,867

31,657,232

Class B ordinary shares 

140,696,841

115,534,210

16,822,104

Additional paid-in capital

212,309,734

994,486,411

144,800,001

Retained earnings

223,134,889

402,465,307

58,600,074

Accumulated other comprehensive loss

(4,086,149)

(2,444,241)

(355,888)

Total GreenTree Hospitality Group Ltd. shareholders' equity

732,245,241

1,727,463,554

251,523,523





Non-controlling interests

360,120

5,894,076

858,194

Total shareholders' equity

732,605,361

1,733,357,630

252,381,717





TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

1,755,982,929

2,794,328,646

406,862,063

 

GreenTree Hospitality Group Ltd.
Unaudited Condensed Consolidated Statements of Comprehensive Income



Quarter Ended


Nine Months Ended


September 30, 2017

September 30, 2018

September 30, 2018


September   30, 2017

September 30, 2018

September 30, 2018


RMB

RMB

USD


RMB

RMB

USD

Revenues








Leased-and-operated hotels

47,930,487

57,384,611

8,355,360


136,757,301

151,300,547

22,029,783

Franchised-and-managed hotels

149,391,851

179,722,463

26,168,093


395,890,485

489,101,041

71,214,479

Membership fees

13,799,619

19,718,205

2,871,026


38,686,758

54,721,402

7,967,589

Total revenues

211,121,957

256,825,279

37,394,479


571,334,544

695,122,990

101,211,851









Operating costs and expenses








Hotel operating costs

(59,839,669)

(76,099,402)

(11,080,286)


(174,600,016)

(206,844,187)

(30,117,092)

Selling and marketing expenses

(10,280,954)

(11,319,534)

(1,648,156)


(29,336,600)

(34,223,888)

(4,983,094)

General and administrative expenses

(21,337,109)

(24,229,964)

(3,527,951)


(57,918,345)

(69,781,751)

(10,160,417)

Other operating expenses

(140,447)

(99,935)

(14,551)


(1,288,613)

(278,527)

(40,554)

Total operating costs and expenses

(91,598,179)

(111,748,835)

(16,270,944)


(263,143,574)

(311,128,353)

(45,301,157)









Other operating income

9,070,947

1,865,788

271,664


14,137,923

27,933,277

4,067,163

Income from operations

128,594,725

146,942,232

21,395,199


322,328,893

411,927,914

59,977,857









Interest income and other, net 

7,552,058

14,991,069

2,182,742


20,222,932

31,114,962

4,530,425

Interest expense

(666,665)

-

-


(927,959)

-

-

Gains (losses) from trading securities

13,008,183

3,091,278

450,099


48,975,568

(27,945,284)

(4,068,911)

Other (income) expense, net

(376,223)

36,723,048

5,346,978


(446,041)

36,723,048

5,346,978

Income before income taxes

148,112,078

201,747,627

29,375,018


390,153,393

451,820,640

65,786,349









Income tax expense

(35,694,806)

(49,511,158)

(7,208,963)


(94,026,429)

(111,085,777)

(16,174,400)

Income before share of loss in equity investees

112,417,272

152,236,469

22,166,055


 

296,126,964

 

340,734,863

 

49,611,949









Share of (losses) gains in equity investees, net of tax

(637,240)

141,666

20,627


 

(1,150,687)

 

(948,358)

 

(138,084)

Net income

111,780,032

152,378,135

22,186,682


294,976,277

339,786,505

49,473,865

Net loss attributable to non-controlling interests

12,655

358,464

52,193


47,904

384,831

56,032

Net income attributable to ordinary shareholders

111,792,687

152,736,599

22,238,875


 

295,024,181

 

340,171,336

 

49,529,897









Net earnings per share








Class A ordinary share-basic and diluted

1.22

1.50

0.22


3.23

3.46

0.50

Class B ordinary share-basic and diluted

1.22

1.50

0.22


3.23

3.46

0.50









Net earnings per ADS








Class A ordinary share-basic and diluted

1.22

1.50

0.22


3.23

3.46

0.50

Class B ordinary share-basic and diluted

1.22

1.50

0.22


3.23

3.46

0.50









Weighted average shares outstanding








Class A ordinary share-basic and diluted

48,635,252

66,789,299

66,789,299


48,635,252

61,536,613

61,536,613

Class B ordinary share-basic and diluted

42,716,957

34,762,909

34,762,909


42,716,957

36,802,409

36,802,409









Other comprehensive income, net of tax








Foreign currency translation adjustments

(512,909)

(2,685,649)

(391,038)


(2,492,683)

(1,641,908)

(239,066)

Comprehensive income, net of tax

111,267,123

149,692,486

21,795,644


292,483,594

338,144,597

49,234,799









Comprehensive loss attributable to non-controlling interests

12,655

358,464

52,193


47,904

384,831

56,033

Comprehensive income attributable to ordinary shareholders

111,279,778

150,050,950

21,847,837


292,531,498

338,529,428

49,290,832

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows  





Quarter Ended


Nine Months Ended




September 30,


September 30,


September 30,


September 30,

September 30,

September 30,




2017


2018


2018


2017

2018

2018




RMB


RMB


USD


RMB

RMB

USD













Operation activities:












Net income


111,780,032


152,378,135


22,186,682


294,976,277

339,786,505

49,473,865














Adjustments to reconcile net income to net cash
provided by operating activities:










Depreciation and amortization


6,266,013


7,453,263


1,085,216


18,940,093

17,405,012

2,534,218


Share of loss (gain) in equity method investments


637,240


(141,666)


(20,627)


1,150,687

948,358

138,084


Gains from disposal of a long-term investment


-


(36,723,048)


(5,346,978)


-

(36,723,048)

(5,346,978)


Interest income


(3,050,000)


(14,991,069)


(2,182,742)


(9,150,000)

(19,928,935)

(2,901,709)


Interest expense


666,665


-


-


927,959

-

-


Bad debt expense


784,648


623,470


90,779


1,939,171

1,322,173

192,512


(Gains) losses from trading securities


(13,008,183)


(3,091,278)


(450,099)


(48,975,568)

27,945,284

4,068,911


Loss on disposal of property and equipment


-


-


-


157,506

-

-


Foreign exchange loss (gain)


415,990


(4,904,076)


(714,047)


(882,266)

(5,518,929)

(803,571)


Share-based compensation


-


3,821,789


556,463


-

7,568,558

1,102,003














Changes in operating assets and liabilities:












Restricted cash


-


-


-


7,200,000

-

-


Accounts receivable


6,591,491


7,038,795


1,024,868


(19,653,723)

(12,429,842)

(1,809,820)


Prepaid rent


3,116,843


19,552


2,847


9,715,840

150,856

21,965


Inventories


(113,463)


265,681


38,684


(102,239)

1,227,103

178,670


Amounts due from related parties


3,923,740


148,694


21,650


7,359,458

1,670,817

243,276


Other current assets


(1,967,677)


(693,699)


(101,005)


(3,786,736)

(27,059,650)

(3,939,961)


Other assets


-


-


-


1,728,263

-

-


Accounts payable


1,113,255


(68,022)


(9,904)


3,228,697

269,186

39,194


Amounts due to related parties


258,363


148,655


21,645


2,796,777

629,357

91,636


Salary and welfare payable


2,907,810


(3,379,410)


(492,052)


2,229,131

(5,030,701)

(732,484)


Deferred revenue


23,131,108


16,195,785


2,358,152


37,798,634

52,761,739

7,682,257


Advance from customers


8,273,576


3,111,537


453,048


20,049,623

2,640,498

384,464


Accrued expenses and other current liabilities


15,517,019


24,458,339


3,561,203


31,050,187

(2,756,027)

(401,285)


Income tax payable


25,374,238


31,644,131


4,607,474


(1,819,136)

(4,895,783)

(712,840)


Unrecognized tax benefits


(12,941,734)


(2,526,933)


(367,929)


1,802,524

44,414,222

6,466,835


Deferred rent


(8,268,696)


6,878,075


1,001,467


(19,160,087)

4,834,928

703,979


Other long-term liabilities


3,435,645


8,384,000


1,220,734


3,262,752

17,858,980

2,600,317


Deferred taxes


(1,198,750)


6,836,404


995,400


4,591,666

(4,784,588)

(696,649)


Net cash provided by operating
activities


173,645,173


202,887,104


29,540,929


347,375,490

 

402,306,073

 

58,576,889













Investing activities:












Purchases of property and equipment


 

(5,877,080)


 

(1,547,609)


 

(225,336)


(12,987,482)

 

(114,555,864)

 

(16,679,653)


Purchases of intangible assets


(15,386)


(1,950,000)


(283,925)


(15,386)

(2,850,000)

(414,968)


Increase in long-term investments


(100,701,474)


-


-


(100,701,474)

-

-


Acquisitions, net of cash received


-


(13,698,384)


(1,994,523)


-

(13,698,384)

(1,994,523)


Proceeds from disposal of a long-term investment


-


89,182,803


12,985,265


-

89,182,803

12,985,265


Prepayments for investments


-


(6,000,000)


(873,617)


-

(6,000,000)

(873,617)


Purchases of short-term investments


-


(92,693,808)


(13,496,478)


-

(884,360,449)

(128,765,354)


Proceeds from short-term investments


-


50,701,216


7,382,239


-

795,935,220

115,890,393


Proceeds from disposal of property and equipment


300,000


-


-


1,900,000

-

-


Purchases of trading securities


(2,943,000)


(40,879)


(5,952)


(39,972,398)

(4,836,717)

(704,240)


Proceeds from disposal of trading securities


7,355,677


6,015,829


875,922


38,752,543

24,887,802

3,623,734


Loan to related parties


-


-


-


(1,000,000)

-

-


Loan to third parties


-


(156,819,164)


(22,833,309)


-

(166,819,164)

(24,289,337)


Loan to franchisees


-


(35,629,423)


(5,187,744)


(6,600,000)

(63,429,423)

(9,235,501)


Repayment from franchisees


-


4,489,937


653,747


-

11,329,937

1,649,671


Net cash (used in) provided by
investing activities


(101,881,263)


(157,989,482)


(23,003,711)


(120,624,197)

 

(335,214,239)

 

(48,808,130)













Financing activities:












Distribution to the shareholders


-


-


-


(9,651,158)

(200,532,021)

(29,198,023)


Income tax paid related to the above distribution


-


-


-


-

(3,000,000)

(436,808)


Proceeds from short-term borrowings


-


-


-


60,000,000

-

-


Changes in restricted cash


(36,850,000)


-


-


(821,850,000)

-

-


Proceeds from IPO, net of capitalized expenses


-


-


-


-

833,202,245

121,316,576


Payment for initial public offering costs


-


-


-


-

(25,087,646)

(3,652,831)


Net cash provided by (used in)
financing activities


(36,850,000)


-


-


(771,501,158)

 

604,582,578

 

88,028,914


Effect of exchange rate changes on cash and cash equivalents

(928,899)


4,904,076


714,049


(1,610,415)

5,518,929

803,571














Net increase (decrease) in cash and
cash equivalents


33,985,011


49,801,698


7,251,267


(546,360,280)

 

677,193,341

 

98,601,244


Cash and cash equivalents at the beginning of the period


316,437,644


789,355,308


114,932,339


896,782,935

161,963,665

23,582,362


Cash and cash equivalents at the
end of the period


350,422,655


839,157,006


122,183,606


350,422,655

 

839,157,006

 

122,183,606














Supplemental disclosure of cash
flow information:












Income taxes paid


(24,732,129)


(13,557,556)


(1,974,018)


(89,757,519)

(76,351,926)

(11,117,054)


Interest paid


(666,665)


-


-


(927,959)

-

-














Supplemental schedule of non-cash
investing and financing activities












Acquisition of investment through
conversion of loan


-


(8,225,876)


(1,197,711)


-

(8,225,876)

(1,197,711)













 

GreenTree Hospitality Group Ltd.
Unaudited Reconciliation of GAAP and Non-GAAP Results







Quarter Ended


Nine Months Ended


September 30, 
2017

September 30, 
2018

September 30, 
2018


September 30,

2017

September 30,

2018

September 30,

2018


RMB

RMB

USD


RMB

RMB

USD









 Net income 

111,780,032

152,378,135

22,186,682


294,976,277

339,786,505

49,473,865









 Deduct:








 Other operating income

9,070,947

1,865,788

271,664


14,137,923

27,933,277

4,067,163

 Interest income and other, net

7,552,058

14,991,069

2,182,742


20,222,932

31,114,962

4,530,425

 Gains from trading securities

13,008,183

3,091,278

450,099


48,975,568

-

-

Share of gain in equity investees, net of tax

-

141,666

20,627


-

-

-

Other income, net

-

36,723,048

5,346,978


-

36,723,048

5,346,978









 Add:








  Other operating expenses

140,447

99,935

14,551


1,288,613

278,527

40,554

  Income tax expense

35,694,806

49,511,158

7,208,963


94,026,429

111,085,777

16,174,400

  Share of loss in equity investees, net of tax

637,240

-

-


1,150,687

948,358

138,084

  Interest expense

666,665

-

-


927,959

-

-

  Share-based compensation

-

3,821,789

556,463


-

7,568,558

1,102,003

 Depreciation and amortization

6,266,013

7,453,263

1,085,216


18,940,093

17,405,012

2,534,218

 Losses from trading securities

-

-

-


-

27,945,284

4,068,911

 Other expense, net

376,223

-

-


446,041

-

-









 Adjusted EBITDA (Non-GAAP)

125,930,238

156,451,431

22,779,765


328,419,676

409,246,734

59,587,469










Quarter Ended


Nine Months Ended


September 30,
2017

September 30,
2018

September 30,
2018


September 30,
2017

September 30,
2018

September 30,
2018


RMB

RMB

USD


RMB

RMB

USD

Net income

111,780,032

152,378,135

22,186,682


 

294,976,277

 

339,786,505

 

49,473,865









Deduct:








          Government subsidies (net of 25% tax)

6,172,500

1,049,804

152,854


7,665,746

11,362,580

1,654,423

          Gains from trading securities (net of 25% tax)

9,756,137

2,318,459

337,574


36,731,676

-

-

          Reimbursement related to the ADS program

-

-

-


-

9,271,648

1,349,978

          Other income, net (net of 25% tax)

-

27,542,286

4,010,234


-

27,542,286

4,010,234

Add:








          Share-based compensation

-

3,821,789

556,463


-

7,568,558

1,102,003

          Losses from trading securities (net of 25% tax)

-

-

-


-

20,958,962

3,051,683

          Other expense (net of 25% tax)

282,167

-

-


334,531

-

-

Core net income (Non-GAAP)

96,133,562

125,289,375

18,242,483


250,913,386

320,137,511

46,612,916

Core net income per ADS (Non-GAAP)








Class A ordinary share-basic and diluted

1.05

1.23

0.18


2.75

3.26

0.47

Class B ordinary share-basic and diluted

1.05

1.23

0.18


2.75

3.26

0.47

 

Operational Data


As of September 30, 2017

As of September 30,2 018

Total hotels in operation:

2,119

2,558

  Leased and owned hotels

27

30

  Franchised hotels

2,092

2,528

Total hotel rooms in operation

178,535

209,463

  Leased and owned hotels

3,396

3,857

  Franchised hotels

175,139

205,606

Number of cities

244

278


Quarter Ended


September 30, 2017

September 30, 2018

Occupancy rate (as a percentage)



  Leased and owned hotels

76.9%

72.6%

  Franchised hotels

87.7%

87.5%

  Blended

87.4%

87.2%

Average daily room rate  (in RMB)



  Leased and owned hotels

189

210

  Franchised hotels

159

166

  Blended

160

167

RevPAR  (in RMB)



  Leased and owned hotels

145

152

  Franchised hotels

139

145

  Blended

140

146

 


Number of Hotels in Operation

Number of Hotel Rooms in Operation


As of September 30, 2017


As of September 30, 2018

As of September 30, 2017


As of September 30, 2018

Economy hotels

201


358

11,307


19,160

Vatica 

92


117

6,822


8,698

Shell

109


241

4,485


10,462

Mid-scale

1,878


2,119

162,490


181,434

GreenTree Inn

1,655


1,824

144,639


158,174

GT Alliance

223


294

17,851


23,199

Wumian Hotel[4]

-


1

-


61

Business to Mid-to-up-scale

40


81

4,738


8,869

GreenTree Eastern

40


74

4,738


8,270

Gme

-


2

-


170

Gya

-


1

-


70

VX

-


4

-


359

Total

2,119


2,558

178,535


209,463

[4]. Wumian Hotel's English trademark is currently being registered.

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
E-mail: lbergkamp@ChristensenIR.com

Cision View original content:http://www.prnewswire.com/news-releases/greentree-hospitality-group-ltd-reports-third-quarter-2018-financial-results-300752756.html

Source: GreenTree Hospitality Group Ltd.
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