中国酒店业研究报告

BNP PARIBAS SECURITIES - SHANGHAI JIN JIANG INTERNATIONAL HOTELS GROUP CO LTD

27 February 2007， 64 pages，英文

All-star host

Benefiting from China’s travel boom
As China’s largest local hotel operator, Shanghai Jin Jiang International Hotels (Group) Co Ltd (Jin Jiang) is benefiting from the boom in tourism and business travel in China. Hotel refurbishments are also boosting realised room rates at its core star-rated hotel operations. The company is expanding outside its home base in Shanghai, while at the same time disposing of selected hotel properties to fund growth. We expect operating profit for its star-rated hotel investment segment to expand at a CAGR of 10% in 2006-08, despite major refurbishment work at some of its key properties ahead of the 2008 Olympics and 2010 World Expo.

Budget hotels will be major growth driver from 2008
The budget hotel segment is expected to be the principal growth driver for Jin Jiang from 2008 onwards, with a projected 600 budget hotels under the ‘Jin Jiang Inn’ brand by 2010. The budget hotel market in China is underdeveloped and the company’s first-mover advantage, leading position, well recognised brand name and experienced management will enable it to share in the growth of this market. The increasing proportion of franchisees (up from 50% plus to 70% in 2010) will enable the company to expand market share at controllable costs. We forecast operating profit at Jin Jiang’s budget hotel segment to achieve a 45% CAGR in 2006-08 and for this segment to contribute 18% of overall company profits by 2008.

Premium valuation deserved
Jin Jiang’s hotel management business is expanding, along with its investments in flagship hotels outside of Shanghai. Its fast-food JVs and upscale restaurant chain are also expected to profit from rising urban incomes. We expect the company to achieve a 16% profit CAGR in 2006-08. Applying comparables’ multiples, and with reference to the valuation of the company’s properties, our sum-of-the-parts method values Jin Jiang at HKD6.00 per share, representing 18.8x 2008 EV/EBITDA and 56x 2008 P/E. We assume 5% appreciation in the RMB in 2007 and another 5% in 2008.