GreenTree Hospitality Group (GHG) Q1 2024 earnings summary

Executive summary

• Q1 2024 total revenues declined 7.1% year-over-year to CNY/RMB 352.2 million, with hotel revenues up 8.8% and restaurant revenues down 38.9% due to strategic repositioning and closures.

• Net income rose 76% to CNY/RMB 57.3 million, with a margin of 16.3%; adjusted EBITDA increased 17.2% to CNY/RMB 109.4 million, margin at 31.1%.

• Strategic focus included expanding mid-to-upscale hotel segments, deeper penetration in tier 3 and lower cities, and repositioning the restaurant business for profitability.

• The company operated 4,256 hotels and 185 restaurants as of March 31, 2024, with a pipeline of 994 hotels contracted or under development.

• Expanded franchise network and increased street store presence in both hotel and restaurant segments.

Financial highlights

• Gross profit increased 5.9% year-over-year to RMB 144.1 million, with gross margin improving to 40.9%.

• Income from operations reached CNY/RMB 72.2 million, margin of 20.5%.

• Core net income ADS (non-GAAP) increased by 22.3% to CNY 0.60; earnings per ADS (basic and diluted) were RMB 0.58.

• Operating cash inflow was RMB 90.7 million, investing cash inflow RMB 213.1 million, and financing cash inflow RMB 83.2 million.

• Hotel income from operations grew 35.4% to RMB 70.4 million; restaurant income from operations was RMB 1.9 million.

Outlook and guidance

• Maintains hotel business revenue guidance of 7%-12% year-over-year growth for 2024.

• Withdraws restaurant business guidance due to revenue unpredictability from ongoing repositioning.

• Plans to open 45-50 new restaurants by year-end, targeting a total of around 230.

• Hotel openings target set at 480 for the year, with 99% franchised and managed.