Q3 2023 GreenTree Hospitality Group Ltd Earnings Call
Thank you for standing by the Greentree Conference will begin momentarily. Please stay on the line. Thank you very much.
Speaker 1: Thank you for standing by. The Green Tree Conference will begin momentarily. Please stay on the line. Thank you very much.
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Speaker 2: You
Speaker 2: This.
Yes.
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Speaker 1: Hello, ladies and gentlemen, thank you for standing by for GreenTree's third quarter 2023 financial results release.
Hello, Ladies and gentlemen, thank you for standing by for Green Tree's third quarter 2023 financial results release.
Speaker 1: At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session.
This time, all participants are in listen only mode.
After managements prepared remarks, there will be a question and answer session.
Speaker 1: As a reminder, today's conference call is being recorded.
As a reminder, today's conference call is being recorded.
Speaker 1: I would now like to turn the meeting over to your host for today's call, Mr. René Van Giften of Christensen GreenTrees Investor Relations Firm. Please proceed, René.
I would now like to turn the meeting over to your host for today's call. Mr. Rene Van Gersten of Christiansen Green Tree's Investor Relations firm. Please proceed Rene.
Speaker 3: Thank you, M.J. Hello, everyone, and thank you for joining us.
Thank you Jade.
Hello, everyone and thank you for joining us.
Speaker 3: GreenTree's earnings release was distributed earlier today and is available on our IR website at ir.998.com, as well as on PR Newswire services.
Green trees earnings release was distributed yesterday and is available on our IR website.
Alright.
99, <unk> dot com.
That's why there's on PR newswire services.
Speaker 3: As a reminder, we also posted a PowerPoint presentation that accompanies our comments through the same IR website.
A reminder, we also posted a powerpoint presentation that accompanies our comments to the same website.
Speaker 3: On the call from GreenTree are Mr. Alex Xu, Chairman and Chief Executive Officer, Ms. Selina Yang, Chief Financial Officer, Ms. Megan Huang, Vice President of Sales and Marketing, and Ms. Ellen Zhao, Financial Director, stepping in for Mr. Bill Zhou, who is not available today.
On the call from Green three are Mr. Alex Xu Chairman and Chief Executive Officer.
Ms sending their young Chief financial Officer.
Ms Megan Huang Vice President of <unk>.
And marketing and.
And then Joe financial director stepping in call Mr. Billy Joel who is not available today.
Speaker 3: Mr. Xu will present the company's performance overview for the third quarter of 2023, followed by Ms. Wang and Ms. Zhao, who will discuss business operations, and then Ms. Yang and Ms. Zhao will discuss financials and guidance.
Mr. Hu would present, the company's performance overview for the third quarter 'twenty 'twenty Street.
Hello by Mr. Wang and Mr. Zhang who will discuss business operations, and then Miss young and MS. Zhao will discuss financials and guidance.
Speaker 3: They will be available to answer your questions during the Q&A session which follows.
They will be available to answer your questions during the Q&A session, which follows.
Before we begin I'd like to remind you that discomfort. When school contains forward looking statements within the meaning of section 21 E of the Securities Exchange Act of 1934.
Speaker 3: Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995.
Amended and as defined in the U S Private Securities Litigation Reform Act up 1995.
Speaker 3: These forward-looking statements can be identified by terminologies such as may, will, expect, anticipate, aims, future, intends, plans, believes, estimates, continue, target, is or are likely to, going forward, confident, outlook, and similar statements.
These forward looking statements can be identified by terminology such as May waiting expects anticipates aims future intends plans believes estimates continue target is or are likely to going forward confident.
Outlook and similar statements.
Speaker 3: Any statements that are not historical facts, including statements about the company and its industry, are forward-looking statements.
Any statements it unlocks historical facts, including statements about the company and its industry are forward looking statements.
Speaker 3: Such statements are based upon management's current expectation and current market and operating conditions, and relate to events that involve known and unknown risks, uncertainties, and other factors, all of which are difficult to predict, and many of which are beyond the company's control, which may cause the company's actual results.
Such statements are based upon management's current expectation and current market and operating conditions and relate to events that involve known and unknown risks uncertainties and other factors all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual.
Sounds.
Speaker 3: performance or achievements to differ materially from those in the forward-looking statement.
The fall months or achievements to differ materially from those in the forward looking statements.
Speaker 3: You should not place undue reliance on this forward-looking statement.
You should not place undue reliance on these forward looking statements.
Speaker 3: Further information regarding these and other risks, uncertainties, or factors is included in the company's filing with the U.S. Securities and Exchange Commission.
Further information regarding these and other risks uncertainties or factors is included in the company's filing with the U S Securities and Exchange Commission.
Speaker 3: All information provided, including the forward-looking statements made during this conference call, are current as of today's date.
All information provided including the forward looking statements made during discomfort of in store I. Currently are current as of today's date.
Speaker 3: The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except if required under applicable law.
The company does not undertake any obligation to update any forward looking statement as a result of new information future events or otherwise, except as required under applicable law.
Speaker 3: It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Alex Chou. Mr. Chou, please go ahead.
It is now my pleasure to introduce our chairman and Chief Executive Officer, Mr. Alex Xu Mr. Hu. Please go ahead.
Speaker 4: Thanks, Renee, and hello, everyone, and thank you for joining us today.
Thanks, Renee and Hello, everyone and thank you for joining us today.
We had a good third quarter with a strong recovery in our hotel business year over year.
Speaker 4: We had a good third quarter with a strong recovery in our hotel business year over year as tourism and business travel continued to rebound.
As a tourism and business travel continue to rebound.
Speaker 4: Rural power increased 30.5% year over year.
Revpar increased 31, 5% year over year.
Reaching as high as 110% outreach third quarter of 2019 levels in July and August.
Speaker 4: reaching as high as 110 percent of its third quarter of 2019 levels in July and August , with a surge in the number of tourists during the summer vacation.
With the surge in the number of tourist during the summer vacation.
Speaker 4: The pace of recovery of raw power slowed slightly in September , but remained stable.
The pace of recovery of raw PA slowed slightly in September, but the remainder stable.
Speaker 4: We will continue to implement our long-term strategic development plan.
We will continue to implement our long term strategic development plan focused on helping franchisees can maintain high quality service and operation.
Speaker 4: focus on helping franchisees to maintain high-quality service and operations.
Speaker 4: and expand our hotel network and the sales channel, provide a stable operating profitability, and maintain long-term stable growth.
And expand our hotel network and the sales channel provides a stable operating profitability and the Montana long term stable growth.
Please turn to slide five.
Speaker 4: Compared with the third quarter of 2022, hotel raw power was 156 RMB, up 30.5%.
Compared with the third quarter of 2022 hotel Revpar, what the 156 RMB.
Up 35%.
Speaker 4: and the restaurant ADS, that is average daily sales per store, was 6,548 RMB up 7.4%.
And the restaurant a D. S that is average daily sales per store was 6548 RMB up seven 4%.
Speaker 4: Total revenues were 460.9 million RMB, up 15.3%.
Total revenues were 461 9 million RMB up 15.3%.
The increase was partially due to the recovery in Revpar.
Speaker 4: The increase was partially due to the recovery in rare parts.
Speaker 4: the increase in the number of hotels and the increase in the ADS.
The increase in the number of hotels and the increase in the E D S.
Speaker 4: offset by the closure of 85 restaurants over the past 12 months.
All set by the closure of 85 restaurants over the past 12 months.
Income from operations increased to 137 8 million RMB with a margin of 29, 9%.
Speaker 4: income from operations increased to 137.8 million RMB with a margin of 29.9%.
Speaker 4: net income was 117.4 million RMB with a margin of 25.5%.
Net income was 117.4 million RMB with a margin of 25, 5%.
Speaker 4: Adjusted EBDA, that's non-GAAP , was 173.4 million RMB, that's up 215%, with a margin of 37.6%.
Adjusted EBIDTA, that's non-GAAP was $173 4 million RMB, that's up 215% with a margin of 37, 6%.
Speaker 4: core net income, that's non-GAAP , was 127.2 million RMB with a margin of 27.6%.
Core net income that's non-GAAP was $127 2 million RMB with a margin of 27, 6%.
Cash provided by operating activities was 154.8 million RMB.
Speaker 4: Cash provided by operating activities was 154.8 million RMB.
Speaker 4: Slide six shows detailed numbers for hotel, total revenues, income from operations, net incomes, and adjusted EBITDA. On slide seven, operating performance was great.
Slide six shows detailed numbers for our hotel total revenues income from operations net incomes and adjusted EBITDA.
Yeah.
On slide seven.
Operating performance was great.
Raw PAH, what 156 RMB.
Speaker 4: At the bottom of the slide, you can see the weekly raw power performance in the third quarter of 2023 compared with 2019.
At the bottom of the slide you can see the weekly Revpar performance in the third quarter of 2023 compared with 2019.
Speaker 4: Rural Park gradually recovered to more than 110 percent of its pre-pandemic levels in July and August , then slowed down gradually in early September .
Raw power gradually recovered to more than 110% outfits pre pandemic levels in July and August things slow down gradually in early September.
Speaker 4: during the mid-autumn festivals and the National Day.
During the mid Autumn festival and the National day.
Speaker 4: we ushered in a new round of development and growth.
We are sure that in a new round of development and growth.
Speaker 4: Slide eight shows the operating performance of restaurant with ADS continuing an upward trend and reaching the highest level in a long time. Now.
Slide eight shows the operating performance of restaurant with a D. S continue in an upward trend and the reach of the high school level in a long time.
Now starting with the slide 10.
Speaker 4: We will review our strategic execution across our business.
We will review our strategic execution across our businesses.
Speaker 4: In our hotel business, we further expanded in the mid to upscale segment and increased our penetration in tier three and the lower cities in South China.
In our hotel business, we further expanded in the mid to upscale segment and increased our penetration in tier three and the Lora cities in South China.
As you can see on slide 11, we continue to grow our mid to upscale segment with a 455 hotels that is 10.9% overall the total portfolio.
Speaker 4: As you can see on slide 11, we continue to grow our mid to upscale segment with 455 hotels. That is 10.9% of our total portfolio.
Speaker 4: at the end of the quarter, up from only 50 in 2017.
The end of the quarter up from only 15 in 2017.
While the mid scale segment remains the core of our hotel business with a 78%.
Speaker 4: while the mid-scale segment remains the core of our hotel business with 70.8 percent.
Speaker 4: we continue our expansion into the higher-end sector.
We continue our expansion into the higher end segments.
Speaker 4: the economy segment remained stable at 18.3 percent.
The economy segment that remains stable at 18, 3%.
Yeah.
Please turn to slide 12.
Over the past five years.
Speaker 4: Most of our new hotels have been in China striving tier three and the lower city.
Most of our new hotels have binion, China's thriving tier three and the lower cities.
Speaker 4: As we pursue greater penetration in tier 3 and the lower cities, 73.7% of hotels in our current pipelines are in such.
As we pursue greater penetration the interest rate and the lower cities 73, 7% of hotels in our current pipelines are in such.
Speaker 4: cities and we will further capitalize on the substantial opportunities in such locations.
Cities, and we will further capitalize on the substantial opportunities in such locations.
On slide 13.
Speaker 4: we continued to focus on increasing profitability in our restaurant business.
We continued to focus on increasing profitability in our restaurant business.
Speaker 4: We closed unprofitable stores, increased the proportion of franchised and managed restaurants, and expanded the number of street stores.
We closed unprofitable stores increased the proportion of franchise, an amendment to the restaurants and expanded the number of street stores.
On slide 14.
Speaker 4: During the third quarter of 2023, we closed 10 restaurants in areas of decreasing economic activities, helping improving the profitability.
During the third quarter of 'twenty to 'twenty, three we closed 10 restaurants in areas of decreasing economic activities.
Helping improving the profitability.
Okay.
On slide 15.
Speaker 4: You can see the growth in the proportion of our franchised and managed restaurants since the acquisition of Danyang Dumplings and Bellagio during the first quarter of 2023.
You can see the growth in the proportion of our franchise and the mandate the restaurants since the acquisition of Danya and dumplings and Bilal Gilles you went the first quarter of 2023.
Speaker 4: We opened six F&M restaurants in the third quarter of 2023.
We opened the six <unk> restaurants in the third quarter of 2023.
Slide 16 shows the restaurants breakdowns by location.
Speaker 4: Slide 16 shows the restaurant breakdowns by location.
Speaker 4: Most of our restaurants are currently in shopping malls. However, we believe there is a substantial potential for street stores, and we intend to grow this segment.
Most of our restaurants are currently in shopping malls. However, we believe there is a substantial potential for street stores under we intent to grow this segment.
Speaker 4: Now, let me turn the call over to Megan under Alan Zhao. Megan. Thank you, Alex.
Now, let me turn the call over to Megan and Alan Joe.
Okay.
Thank you Alex.
Speaker 5: Please turn to slide 18 to start reviewing the operating and financial highlights.
Please turn to slide 18 to start revealing the operating and financial highlights.
Speaker 5: Slide 18 shows the trend in our quarterly operating performance. In the third quarter of 2023, red power for our LO hotels increased to 212 RMB.
Slide 18 shows the trend in our quarterly operating supplement and a third quartile 2023 red powerful our al all hotels increased to 212 RMB revpar.
Speaker 5: Repa for our FM hotels increased to 155 RMB.
Revpar for our F N hotels increased to 155 RMB.
Speaker 5: ADR for our LO hotels increased to 268 RMB and ADR for our FM hotels increased to 190 RMB.
ADR for our hotels increased to 268, RMB and ADR for our FM hotels increased to 190 RMB.
Speaker 5: Occupancy at our L.O. hotels increased to 79 percent and occupancy at our F.M. hotels increased to 81.3 percent.
Occupancy at our L. O hotels increased to 17, 9% and occupancy at our FM hotels increased to 81, 3%.
Speaker 5: Slide 19 highlights the growth in our membership programs, which accounted for most of our direct sales.
Slide 19 highlights the growth in our membership programs, which accounted for most of our direct sales.
Speaker 5: Individual memberships grew to $88 million, up from $77 million a year ago. And corporate membership grew to $2.02 million, up from $1.92 million a year ago.
Individual membership grew to 88 million up from 77 million a year ago, and a corporate membership career to 2.02 million up from 1.92 million a year ago.
Speaker 5: Now, please turn to slide 20. In the restaurant business, the number of individual members grew to 2.67 million, up 1.6% year-over-year. ABS increased 7.4% to 6,548 RMB in the third quarter of 2023, compared to one year before.
Now please turn to slide 20 is the restaurant isn't the number of individual members grew to 2.67 million up 1.6% year over year.
<unk> increased seven point of 4% to 6548 RMB in the third quarter of 2023 compared to one year before.
Speaker 5: With that, I will pass the call over to our CFO , Selina Yang.
With that I will pass the call over to our CFO Selina Yang.
Speaker 5: Thank you, Alan. First, I will review our hotel business.
Thank you Alan first I will review our hotel business.
Speaker 6: Please turn to slide 21. In the third quarter, total hotel revenues increased by 40.4% year-over-year to 339.1 million RMB. The increase was primarily due to the recovery in RAPA and the increase in the number of hotels.
Please turn to slide 21.
In the third quarter total how to revenues increased to 44% year over year to 309.1 million RMB.
The increase was primary due to the recovery in Revpar and an increase in a number of hotels.
Total hotel revenues increased to nine 2% to 339 1 million RMB compared to second quarter of 2023.
Speaker 6: Total hotel revenues increased 9.2% to 339.1 million RMB compared to the second quarter of 2023.
Speaker 6: Total revenues from FM hotels were 186 million RMB, up 20.8% year-over-year, while total revenues from LO hotels increased 83.1% to 151.8 million RMB.
Total revenues for F. N hotels, we're at 186 media Army aperture.
At the 28% year over year.
Why or how.
Revenues for all hotels increased to 83, 1% to 151.8 million.
Speaker 6: On slide 22, total hotel operating costs and expenses decreased 14.7% year-over-year to 212.4 million RMB.
On slide 22.
Total hotel operating costs and expenses decreased 14, 7% year over year to 200 Powerpoint for media.
Speaker 6: and total hotel booking costs and expenses decreased 0.5% compared to the second quarter.
And the total hotel operating costs and expenses decreased the 0.5% compared to the second quarter.
Speaker 6: Total costs and expenses are composed of hotel operating costs, selling and marketing expenses, general and administrative expenses.
Total cost and Sandy I composed off hotel operating costs Fannie.
Selling and marketing expenses.
<unk> and administrative expenses.
Speaker 6: Operating costs were 159.9 million RMB, increased 12.1% year-over-year.
Operating costs were 159 9 million RMB increased TERP point to 1% year over year.
Speaker 6: The increase was mainly due to the higher personnel cost.
The increase was mainly due to higher personnel cost.
Speaker 6: higher consumables and higher utilities at business rebounding.
Higher consumer birth.
And higher utilities as business rebounded.
Speaker 6: as well as higher depreciation and amortization with increase in assets.
As well as higher depreciation and amortization with increase in assets.
Speaker 6: partially offset by deconsolidation of agar and urban.
Partially offset by the deconsolidation of alcohol and urban.
Operating costs increased by six 5% to 159 points 9 million RMB compared to the second quarter of this year.
Speaker 6: Operating costs increased 6.5% to 159.9 million RMB compared to the second quarter of this year.
Speaker 6: Selling and marketing expenses were 14.3 million RMB, a year-over-year increase of 24.9 percent.
Selling and marketing expenses were $14 3 million RMB or year over year increase of 24, 9%.
Speaker 6: The increase was mainly attributable to higher sales channel commissions and higher sales salary.
The increase was mainly attributable to higher service channel commissions and higher tariffs that salaries.
Speaker 6: Salient marketing expenses increased 3.7% compared to second quarter of this year.
Got any marketing expenses increased three 7% compared to second quarter of this year.
General and administrative expenses were 26 7 million RMB down 50.9% comparable with the same quarter of last year.
Speaker 6: General administrative expenses were 26.7 million RMB, down 50.9% compared with same quarter of last quarter.
The decrease was mainly due to lower that that lower staff related expenses and lower consulting fees.
Speaker 6: The decrease was mainly due to lower bad debts, lower staff-related expenses, and lower consulting fees.
Speaker 6: General administrative expenses decreased 40% compared to the second quarter of this year.
General and administrative expenses decreased 40% to compared to the second quarter of this year.
Turning to slide 23.
Speaker 6: Income from hotel operations increased from $1.3 million to $127.5 million year-over-year.
Income from hotel preacher increased from $1 3 million to $127 5 million year over year.
Speaker 6: Net income of hotels turned positive year-over-year at 108.5 million RMB.
Net income of hotels turn positive year over year at $108 5 million RMB.
Adjusted EBITDA increased 221.1% to 164 point Street me a heartbeat.
Speaker 6: Adjusted data increased 221.1% to 164.3 million.
Speaker 6: and core net income increased from 5.4 million to 118.1 million RMB year-over-year.
And core net income increased from $5 4 million to 118.1 million RMB year over year.
Speaker 6: Next, let me turn this call over to Alan, the financial director.
Next let me turn this call to over to Alan So if a national direct it.
Please turn to slide 24 in the third quarter of 2023 total restaurants revenues.
Speaker 5: Please turn to slide 24. In the third quarter of 2023, total restaurant revenues were 121.8 million RMB. You can also see the revenue breakdown for FM restaurants and LO restaurants.
102 to one point to 18 Elia R&D.
I also see that revenue breakdown well, it's M a restaurant and L. O that's gone.
On slide 25.
Speaker 5: Total operating costs and the expenses decrease.
Total operating costs and expenses decreased.
Speaker 5: 29.6% year-over-year to 111.8 million RMB and decreased 2.6% sequentially.
29 point of 6% year over year to 111 point 18 media I'm B and decreased 2.6% sequentially.
Speaker 5: You can also observe the downtrends in materials costs, personal costs, and rent. Turning to slide 26, income from restaurant operations.
You can also what was the net dung chance in materials costs personnel costs and the rents.
Turning to slide 26.
Income from our restaurant operation.
Well, it's at 10.3 E D I b.
Speaker 5: Net income was 8.8 million RMB.
Net income was 8.8 million RMB.
Speaker 5: Adjusted EBITDA increased 134.4 to 9.1 million RMB year-over-year.
Adjusted EBITDA increased 134 point to 429.1 media I mean year over year.
Speaker 5: CoreNet income was 9.1 million RMB.
Net income was nine point to one media arm b.
Next is Lima, please introduces that profitability of our group.
Speaker 5: Next, Selina, please introduce the profitability of our group. Please, turn to the slide.
Please turn to slide 27.
Speaker 6: Group net income per ADS, basic and diluted, was 1.15 million RMB.
Group net income per basic and diluted was one point 15 me RMB.
Speaker 6: Grouped core net income per ADS, basic and diluted, non-GAAP was 1.25 RMB. Let's now take a look.
Core net income per basic and diluted non-GAAP was one point in 'twenty, one 'twenty five RMB.
Let's now take a look at slide 28.
Speaker 6: As of September 30, 2023, the company had total cash and cash equivalents, restricted cash, short-term investments, investments in equity securities, and time deposits of 1,331.4 million RMB.
As of September 32023, the company had total cash and cash equivalents.
Cash short term investments investments equity securities and time deposit of <unk>.
$1331 4 million RMB.
Speaker 6: compared to 1,440.1 million RMB as of June 30, 2023.
Compared to 1440 point Y media arm B as of June 32023.
Speaker 6: The decrease was primarily due to repayment of bank loans and the investment of property.
The decrease was primary due to repayment of bank loans and investment property.
Speaker 6: partially offset by cash from operating activities and repayment from franchisees.
Partially offset by cash from operating activities and the repayment from a franchisee.
Yeah.
Speaker 6: On slide 29, based on our performance in the first nine months of this year, we revised our full year 2023 guidance for the total revenues of our organic hotels upwards.
On slide 29 based on our performance in the first nine months of this year Wagering why is our full year 2023 guidance for the total RAF news of our organic hotels our ports.
Speaker 6: We now expect them to grow 36% to 38% year over year.
We now expect them to grow, but it's 6% to 38% year over year.
Speaker 6: We expect total combined revenues from our restaurant and organic hotel business.
We expect total combined revenues from our restaurants and organic hotel business for.
Speaker 6: for the full year of 2023 to grow 17% to 19% over the 2022 levels, reflecting the impact of the closure of restaurants.
For the full year of 2023 to grow 17% to 19% over the 2022 levels, reflecting the impact of the coastal of restaurants.
Finally, a word about our share repurchase program.
Speaker 6: Finally, a word about our shared repurchase program.
Speaker 6: In October this year, the company repurchased 554,158 of its ADS from a single investor at price of US$4.40 per ADS.
In October this year the company repurchased five.
550 54.
<unk> thousand 158 of E. A D S. Brown I think going back to a price of U S. Dollar swap point 48, yes.
Speaker 6: for a total consideration of U.S. dollars to
For a total consideration of U S dollars to.
Speaker 6: of $2,438,295.20 in a private negotiated transaction.
Hum.
To me its 2 million 400, 438295, Bryan 'twenty in a private negotiated transaction.
Speaker 6: The repurchase was made under the expenses of the company's share repurchase program for a total of US dollars 10 million authorized by its Board of Directors for two years on October 13, 2021.
The repurchase was made under that I could ask policies of the company's share repurchase program for a total of USD 10 million authorized by its board of directors for two years on October 13 2023.
Speaker 6: This concludes our prepared remarks. Operator, we are now ready to begin the Q&A session.
This concludes our prepared remarks.
We are now ready to begin the Q&A session.
Great. Thank you very much we will now begin the question and answer session.
Speaker 1: Great, thank you very much. We will now begin the question and answer session.
Speaker 1: To ask a question, you may press star and one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keypad.
I ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the key.
Speaker 1: To withdraw your question, please press star then 2.
To withdraw your question. Please press Star then two.
Speaker 1: At this time, we will pause momentarily to assemble our roster.
At this time, we will pause momentarily to assemble our roster.
Okay.
Today's first question comes from Dan <unk> with Morgan Stanley. Please go ahead.
Speaker 1: Today's first question comes from Dan Chee with Morgan Stanley . Please go ahead.
Speaker 7: Hi, good morning. Thank you for the presentation, Alex, and management. It's good to hear from you again. I have two questions. Maybe let me present my first question. My first question is about Red Park Outlook.
Hi, good morning.
Thank you for presentation, Alex and the management is good to hear from you again.
I have two questions maybe let me. Please hand my first question. My question. My first question is about our Revpar outlook.
Speaker 7: From slide 7, I observed that since the beginning of, since mid-autumn festival, there was a very linear decline in terms of the REF part as a percentage to 2019.
From slide seven I observed that since the beginning all seem to be Aten Festival.
That was a very good evening or decline in terms of the revpar as a percentage to 2019 and I think by beginning of November.
Speaker 7: And I think by beginning of November , it went to around 95%, which was back to, I think, April level.
When she nights around 95% of which are with respect to I think April levels. I'm. Just wondering is this a big.
Speaker 7: I'm just wondering, is this what was happening in the beginning of November , was it due to low season or weakness of business?
What was happening in the beginning of November was it due to our low season, all witnessed off business, what just due to timing calendar.
Speaker 7: Was it due to timing, calendar, differences?
Friends says and what are what is the management's outlook for.
Speaker 7: and what is the management's outlook for
The remaining of the fourth quarter, and possibly possibly if you can any outlook for 'twenty 'twenty. Four. Please. Thank you that was my first question.
Okay. Thank you Dan. Thank you for your question.
Speaker 6: Okay. Thank you, Dan. Thank you for your question. For the first question about the red pot comparison for the national holiday, actually this year we have 88 days for the national holiday, and for the year of 2019 we have 70.
For the first a question about Revpar comparison for the National holiday actually this year, we have a T. H eight data for the national holiday and for the year of 2019, we have a seven page so far the well when we compare to weight the revpar, whereas the year of 2019 O.
Speaker 6: So, when we compared with the RAPA with the year of 2019, we compared the very beginning of the holiday to the last day, and also compared the third of the holiday to the last day.
We are compared to the first of the merit since the very beginning of the holiday T or the last day and also compared to the same speranza thought to this.
Third helped our holiday periods. They lost a day so when we compare the third base. That's at the third day of the holiday period, and we find our revpar increased by 20% over the year of 2019, but if we compare the whole periods have been since the first of data.
Speaker 6: So when we compare the third base, the third date of the holiday to the end, we find our RAPR increased by 20% over the year of 2019. But if we compare the whole period, that means from the first date to the end, we find the increase over 2019 is about 7%.
And we find that the increase over 2019 will we Ah Ah Ah Ah is a is about 7%.
Yeah.
Speaker 7: Thank you, Selina. How about for November ? Early November , it seems that it has weakened a little bit to below 100% for the weekly data. Do you think that was a one-off or was there any calendar event also going on just like Golden Week?
Thank you Celine.
How about a fall November early November Ah Ah. It seems that he has weakened a little bit she below 100% D. D. 40 weekly data do you think that was a one off or was there any calendar.
Also going on just like Golden week.
Okay, Okay, and then Hum I'm more worried about your first your question. So the Revpar for the October a comparator with the 19.
Is that 5% decreased compared with the 2019, okay. So for the next two for the second second question, Oh, why I hope you're ready for the National holiday the increase there is less than 10%.
Because the we observed the first Oh they off this year and that is a less than that done that since then that first day of the 2019.
Okay.
Thank you.
When you add onto a common stand to.
To the Salinas comments.
After the national holidays, we typically experience a slowdown period.
And then.
The business travelers and walk will resume.
Before the end of the year, but on the November we do see a slightly downward trend on the.
Raw PA.
Traditionally our business model has it been more resilient than they are downward the opera the challenges of the fluctuation of the hotel market. So we we we will observe and to see what that before the.
The year and weather.
Whether there is going to be a major shift in upward trend, but at this moment. Our November trend, we do see a slightly you know below that 2019 levels. So that that is our projection at this moment, because we have a relatively higher.
Occupancy to begin with so we may be able to adjust.
And our you know that the pricing structure and to offset this downward pressure, okay. So with regard into the 'twenty to 'twenty four.
We believe the economic.
Recovery will continue but may be you know I'm, a little bit uncertain, we do not know but might be uncertain. So our business model in the past that then you have a you know we have observed and dealt with the two.
The deal with FIS future changes. So we will you know will report.
And the next quarter, what we observed for the earlier part of next year. Thank you.
Thank you so much Alex and I'm certainly not for your detailed explanation. My my last question is regarding your share repurchase program, Australia, because phase our transaction.
And can you share a little bit more often.
All details all rationale on this transaction in October.
No that the Oh trading ball in our daily trading volume and liquidity has been relatively lower compared to our peers. So I'm. Just wondering is this a one off transaction or just one time or does.
Does the company actively seeking.
From investors to do share repurchase.
And in the Sabadell transaction and is there any concern.
Concern on our liquidity from the management perspective, Thank you so much.
Yeah.
Read the required than the a purchase of this privately negotiated transactions.
Since it is not an open market transaction. So it has not impacted the daily volume.
Volume of our hotels.
Of hotel you know a D. S. A C. We have a relatively lower volume because the number of flow through shares a percentage I think says a much smaller.
And besides I think that dollar shares is also a concentrated there.
We are making efforts to increase trying to you know.
The structure, so that we may be able to help to increase the volume of the shares.
And that's as far as the.
This transaction the board I believe.
This is a private investor.
Block sales would benefit the entire you know shareholders.
So that's.
All I can share with you.
Thank you so much Alex.
That's all my questions. Thank you.
Thank you.
A reminder to ask a question you May press Star then one.
And again to ask a question Thats Star one.
The next question comes from Bruce <unk> with UBS. Please go ahead.
Added extensively now for taking my question so.
I actually have two questions and personal lines regarding new hotel openings. So could you please share with.
About to your hotel opening plans for 2024, and your long term hotel operation target.
And the second question is do you own the Revpar so.
Actually we have observed very strong leisure travel demand in the summer travel season, and also the national vehicle two weeks, so, but some investors were worried that it may be a one off pent up demand after the China, China is reopening so do you worried that this.
Leisure travel demand could be assisting both next year and or what's your revpar assumption for 2024, and the Q1 next year. Thank you.
Okay.
Thank you for the question.
Maybe I can ask the first question.
Actually for this year Oh, we have a shared the number of signed contracts that last time that he is the 600 <unk> tears and <unk> This year and hope for like we're likely to open more than 400 hotels this year and for the next year are we plan.
We plan to site.
Two sides of it you know say six more than 650 that is about 650 to 600 700, a T O terrorists.
In the year of 2024, and we are likely to open 450 to 470 hotels into next year.
And that means that about a 10% increase of Bcl 215, Kris off this year.
Okay.
So with regard to the rural PA.
Projection.
Hum.
As we discussed earlier the remaining of the fourth quarter of 2023 we believe.
The pressure is there and the raw par comparable with the 20th 19, you know we.
We're trying to make them.
Stable at reach the same level.
We do not.
C.
A significant increase of that will be the same as the third quarter like cut during the summer vacation.
Because that is driven by.
Alicia tour tourists tourism.
And regarding the Nextera because our hotels are primarily priced at the most affordable value driven and we do not believe that the our system system wide raw power will be impacted that much.
There will be you know I think our steel continued demand.
The leisure tourism sector, you know the segment.
Especially on the affordable segment due to that large.
Portion and a larger percentage increase in the retirees and that they are you know the demand for the leisure travelers and also we believe there will be gradually recovery of economic activities result in more business travels.
But we certainly do not see the leisure travel as well that would be as strong as the last summer.
So our in our own assumptions are there the same store the same hotel.
Raw PA and our goal is to maintain the same and our system wide raw price increase would be upward because we'll continue to open more.
Mid to upscale.
Segment hotels, and that's right now around 11% will continue to increase that.
That percentage in the Meanwhile, well will you know system wise, we'll close them down sort of 10.
The Ah <unk>.
Lease expired hotels, and so because of the.
The weight of the change that we'll see the system raw PA system wide, where I'll, probably continue to an upward increasing trend for the 2024.
Yeah.
Okay. Thank you Denise and thank you Alex.
Thank you and again to ask a question Thats Star one.
Okay.
The next question comes from Simon Cheung with Goldman Sachs. Please go ahead.
Mr. Jamie Your line is open Hello Simon.
I'm sorry.
Can you hear me.
Hi, I'm sorry.
So I was just referring to I have two questions. One is just on the.
Holy Cow opening numbers that Selena voice or sharing I cannot be statues that 650 or 680, and then there were another 450 and 471 this growth and the other one is that there's one next year. This year and perhaps you know maybe just more broadly given that you have given a guidance for specifically the hotel as well.
Yeah.
Our restaurant to us that much overlap with ECR, perhaps you can give us.
So your assumption for fourth quarter.
I'll wrap up are you expecting what's helpful Hotel and then similarly for restaurant.
First question and then a second question.
When I look at your cost, particularly on a sequential basis, that's quite a bit of a cough shaping our coach restaurant and hotel pieces can I and then on Bulks up that Joe Hotel EBITDA margin back to what 47 and 48%.
Back to 50%.
Just wanted to get a sense of how youre thinking about it.
Scope effect.
For you to have the balloting, all potential put out of pocket expense or anybody. Thank you.
Right.
Thanks, Aman I'll answer the first question regarding the margin I'll leave that to Celina.
So Simon that the the 652 680 I believe that's what.
We shared with you is that set the signing up of hotels.
They are 450 to four 480, and so we have a in Toronto.
Projection that severe Ah Clos you know the opening.
Of the hotels.
So that's the number.
I want to clarify.
With you.
Regarding the M. A C are the next.
Quarter as raw PA and we just reiterated that are things that are we.
Continue to.
Project and the Canadians will work hard to achieve at least the same level of that of 2019.
And so that's how this fourth quarter of 2000 22023.
Okay. So with the regarding the margin I'll leave that to Selina.
Selina.
Okay. Thank you Simon.
Yeah.
If you are and I read I wrote down two questions for you. The first the winds up out of the hotel.
Did that the restaurant margin why is batch it why was Bachelor than before because they are in this quarter are the restaurants and net income of the restaurant and was nearly a 10 million RMB because that's much better than before I think for several reasons. The first one.
So it is not for this isn't 90 key region and Nate as the recovery of the industry.
Performance of the restaurants was back at them before setting a reason for poor Danielle are we close to 85.
Profitable how are stars.
Uh Huh overheads are past the trough Montes, yeah, and so and as the profitability of the Reman your hotels was much better than before.
The sudden reason these that are we tends to oh the franchise the model Oh, they have already begun change a franchise model Oh. He began to open more straight stars and so you said that the capex at the very beginning they admit it.
Beginning to match demand and sort of the ability of our friends at Oh, It was much better than before.
And for legal and we can see that trying to put the liquidity trend or what's always stable. So that's why in the third quarter. We also are looking for they're looking for and it also make money. Okay. So are you a second question is about the fourth quarter, yes after entering all.
Turbo right, yes, we can find.
Fine, yes to a possibility of a with a little down worse than the third quarter, Yeah, However, oh for Danielle Brent.
As we are I guess the explained because of the model of a franchise model has began to be adopted so we can't I expected the probability of dying on branch in the fourth quarter as well, although <unk> sales were at that I mean, that's news decreased match a yoga S. P.
Okay.
The future.
Margin Salman that we projected that the war.
<unk> was slightly it will continue to improve.
Improve that margin.
We hope that the previous margin would generate at the we'll achieve that and well maintain that level.
With the.
With the increase of our brand the quality.
Overall in terms of products and services will continue to do a I think.
They are a better job in that area.
Secondly, due to the market. The competition, we also lowered some of our fees 12 franchisees such as M. <unk>.
Reservation fees, such as at the supporting fish and other areas.
And tariff for them.
Top level.
Well, we'll see.
A are you.
You know a slight impact, which will also impact our margin, but we'll continue to improve stay in Toronto project productivity and efficiency and also using the system.
And improves our management efficiency so to.
Go back to achieve the optimum.
Margin.
With that I'm sorry.
Our goal so.
We have.
Observed.
We still need that.
I think considering the uncertainty and we have to work really hard to to achieve that.
Yeah.
Oh, Thanks, Arnica and that's about it so.
Can I just double check a.
One more follow up question I guess and then the fact that you think that you have been growing your people franchisee.
In order to get more sign up as well.
What you're saying.
So without you and now I'm expecting a step up on ongoing new hotels signed up as a function of casino form all constructive I felt that you know the market.
And mom and that's actually been very conductive to signing up.
But yet she did you say that loyalty or something.
How how competitive you scared the market rate.
More broadly.
Yeah.
They are we are not talking about the sign up fees that they signed up for new hotels.
We're considering the supporting off of our existing franchisees are.
By lowering certain ongoing like our central reservation fees.
Under various fees because.
A number of our franchisee restaurants, they still have a fair amount.
Off of obligations are accumulated from the past three years.
So another word that they not only have the obligations the rents the salaries and that they are.
You know they are you currently incurring you need these payments. They also have to go.
Go back.
To deal with the liabilities like most of the hotel in the restaurants business accumulated from the past three years so ads.
No we have shared with you.
The strengths and also the key value system of the Greentree is to help our franchisees to achieve their profitability.
So we feel.
It is steel urgent forests to help them.
And to increase their own profitability of bile by you know adjusting.
Oh fog ongoing while continuing to maintain our healthy.
Profit margin.
And we see a sign up initial application fees I think that in the market overall, there is a downward trend.
In that area, so and that is that gave them. So I think the.
Is going to.
Is going to be.
A very very both but the market has full of opportunities in this hotel segment as well as their thorough also that.
More brand and the companies are competing in this area. So.
That is the that is current.
Our own assessment Simon.
Sorry can I just to clarify so you think that you lowered their fees that lethal restaurants, I pick up with the restaurant normally or in.
General, where I thought you'd see difficulty where they saw the cowen restaurants trying to react to loyalty across the board and how does it.
No.
No. This is a we only talk here about the.
Hotel sax that I see for the central reservation.
Central reservation fees for the restaurants actually it is more the market is more dynamic.
And fluent in a way.
Because you're traditionally.
A lot of our restaurants for instance, like Cattaneo dumplings are located in the supermarket anchored the local shopping malls.
And the traffic to those of supermarket the malls.
Down significantly.
So the consumer.
Our behavior ashamed Chad in that area. So as a result, we.
We are rebalancing the mixed.
So by focusing on opening in a more steady stable traffic area more streets from Stora Street stores.
And while you know that the closing.
Closing down those that things are primarily the reason in.
In the last 12 months, we closed the a T M.
Slowed down traffic areas, our restaurants, but.
But we think that that ways.
The repositioning of the restaurant locations increased the food quality.
The offer of both of our brands.
We will continue to achieve the profitability I think that's the very very important in their rent in the restaurant.
The sector and then you know tried to take advantage of the new market opportunities.
To provide a coffee and a value driven tasty food for our.
Cause customers.
Understood. Thanks, a lot onyx thanks for the thorough answer.
Thank you.
As a reminder to ask a question you May Press Star then one.
Yes.
Again, Thats star one to ask a question.
Okay.
The next question is from Myanmar with <unk> capital. Please go ahead.
Hello management.
Firstly congratulations on the.
Excellent performance in the third quarter.
Could you give me a separate update on the recovery of the hotel and the rest around the business in the South Dakota.
Thank you.
Yeah.
Okay. Thank you for class change Mr Ma.
Yeah.
Actually in the third quarter, yes, we can find.
Our revenue has increased.
Bye.
<unk> 41 per cent.
But yeah were you speaking for the hotel business.
And for a restaurant business. The total revenues decreased by 13% year over year, that's because the cultural Oh 80, 485, a lethal printed our stores over the past half yet.
For the same store speaking and the third quarter.
The second quarters, our average daily sales per store increased 5% compounded with the Yelp 2019, yeah. So for the EBITDA margin, yes, we can find for the hotel business are actually EBITDA EBIT margin has to be coverage.
About 40% has he has reached 248%.
And therefore, the total that means that E, including the hotel and restaurant are that the total margin EBITDA margin has increased more than 13% has reached a two third piece so to 746.
6% yeah.
Also and there is a negative impact from the.
Profit from the negative profitability of our leased operated how counts because you know we have opened more than 20 hotels here in the COVID-19, and the most of these our niece operated hotels tend.
And active to passive that profitability. It seems this quarter yeah do.
Do you today in negative impact to Oh, So lithoprint operated hotels to our EBITDA margin that the impact was about a 625% a two hour EBIT margins that means if our lease operating hotels continues to recovery, a 10 and chip hochtief.
Our blended EBITDA margin, we are likely to increase the odds of 625%.
So that's what we observed for the third quarter performance.
Okay. Thank you.
Seeing no further questions. This concludes our question and answer session I would like to turn the call back to Selina Yang for closing remarks.
Yep.
Before they operator that there is a.
The earlier question regarding I have looked at the a question regarding the liquidity I think I forgot to answer that question for Dan.
Dan So we only discussed about a privately negotiated a block sales in this stock repurchase.
Regarding the liquidity.
We have also there is the share price.
We have implemented that at the board of director have implement data share purchase repurchase program.
Because we think the share price is undervalued and due to various factors.
Number one.
After we became publicly traded companies we made.
A few.
The merger and acquisitions and due to the various factors, especially during to the Pandemics. Some of the business are not performing or were not performing up to the standard so trigger into various.
Resolution dispute resolutions and which also interrupted the sum of our quarterly reports.
And so and also.
And you can assume that some of the management are you know that.
The attention on the time I think those are pretty pretty much all resolved that so in the new.
So we will continue to our Montana are more frequent and dialogues with all your masters and the two and also.
To share our.
Our plan and the growth and the business operations more frequently with the various you know investors.
Secondly that that will continue to improve our core efficiencies.
And to improve the.
You know the system wide standard for our hotels and the restaurants in terms of for basically the products and service consistent consistent quality improvement.
The wave of consistent growth.
The consistent profitability is we believe the performance and all and also our.
Basically the company's liquidity.
We'll demonstrate the value of our companies.
And the third that will continue to you know explore ways to benefit our shareholders by deploying our current cash.
Cash positions by either by resuming the routine dividend.
The share repurchase repurchase or the continued investment in new opportunities.
And we learned that.
Accumulated a lot of experience in this area.
And so we have also demonstrated that we're able to make most of our units.
Performing Shiva and or some of the challenging conditions.
So.
The last point I want to make is that the largest shareholders and above 90%.
For the off of it off the Dht's is hauled by GTI.
Our private they held the company's GPI has many.
Shareholders isn't it. So we'll also trying to change the structure and so Dave our shareholders are.
The direct access to the shares.
Some of the.
Of the G G O th Gs.
To further increase the liquidity.
And then lastly, and if that.
When the opportunity comes.
We may also considering follow up.
Offering of the.
Shares and two.
Further increase again the liquidity. So overall our board of directors have discussed that in many ways.
In the next few years and.
To increase the profitability of the company and to increase the share you know that the liquidity and we hope that the share price eventually will reflect the true value of the company.
We're pretty confident in the next two or three.
Three years or so.
With our many many are new.
Standardized.
Branded hotels in the strategically located the areas and in our fast growing you know the second or third tier cities.
Was unleashed to new potentials of the company.
So that is hum.
The answer I would like to address bands. The first question regarding the liquidity, which I forgot earlier.
Thank you.
Four of them, reaching all those cool great questions and thank you for all of you for your support and continued you know that guidance and continued advice to the company okay.
With that I'll pass the cause I pass the microphone to Selina.
Thank you.
Again.
Green tree.
We thank you for your interest in Green tree and your participation in today's call. If you require any further information or haven't pegged to visit.
Oh, Yeah, I think on behalf of our entire Greentree management team. We thank you for your interest in Green tree and your participation in today's call.
If you require any further information or have plans to reach to us paint feel free to contact us here.
This concludes.
Today's call. Thank you.
Thank you all.
The conference has now concluded.
Thank you for your participation you may now disconnect your lines.
Okay.
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