GreenTree Hospitality Group Ltd. Reports Second Quarter 2021 Financial Results

Rhea-AI Summary

GreenTree Hospitality Group Ltd. (NYSE: GHG) reported a 60.7% year-over-year increase in total revenues to RMB347.1 million (US$53.8 million) for Q2 2021. Income from operations rose 42.5% to RMB89.3 million (US$13.8 million). Adjusted EBITDA was RMB111.2 million (US$17.2 million), marking a 44.0% increase. The company's occupancy rate improved to 78.6%. Despite operational losses from newly opened hotels, GreenTree's pipeline includes 1,271 hotels, signaling continued expansion and optimistic recovery in domestic tourism.

Positive

• Total revenues increased 60.7% year-over-year to RMB347.1 million.
• Income from operations rose 42.5% year-over-year to RMB89.3 million.
• Adjusted EBITDA increased 44.0% to RMB111.2 million.
• Occupancy rate improved to 78.6%, up from 63.4% in Q2 2020.
• Opened 201 hotels in Q2 2021, increasing total to 4,542.

Negative

• Net income decreased to RMB80.3 million from RMB93.7 million in Q2 2020.
• Average daily room rate declined 0.8% compared to Q2 2019.
• Operating costs up 73.2% year-over-year, impacting margins.
• COVID-19 resurgence affected RevPAR recovery, dropping to 60.7% of 2019 levels in August.

• Total revenues increased 60.7% year-over-year to RMB347.1million (US$53.8 million) ^[[1]].
• Income from operations increased 42.5% year-over-year to RMB89.3 million (US$13.8 million) ^[1].
• Adjusted EBITDA (non-GAAP) ^[2] increased 44.0% year-over-year to RMB111.2 million (US$17.2 million) ^[1].
• Core net income (non-GAAP) ^[3] increased 5.7% year-over-year to RMB78.9 million (US$12.2 million) ^[1].

SHANGHAI, Nov. 15, 2021 /PRNewswire/ -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree", the "Company", "we", "us" and "our"), a leading hospitality management group in China, today announced its unaudited financial results for the second quarter of 2021.

Second Quarter of 2021 Operational Highlights

• A total of 4,542 hotels with 328,773 hotel rooms were in operation as of June 30, 2021, compared to 4,464 hotels and 323,648 hotel rooms as of March 31, 2021.
• As of June 30, 2021, the Company had 63 leased-and-operated ("L&O") hotels and 4,479 franchised-and-managed ("F&M") hotels in operation in 358 cities across China, compared to 35 L&O hotels and 4,029 F&M hotels in operation in 342 cities as of June 30, 2020. The geographic coverage increased by 4.7% year over year.
• During the quarter, the Company opened 201 hotels, an increase of 90 compared to 111 hotels in the second quarter of 2020. Two of those hotels were in the luxury segment, 43 in the mid-to-up-scale segment, 137 in the mid-scale segment, and 19 in the economy segment. Geographically speaking, 10 hotels were in Tier 1 cities ^[3], 49 in Tier 2 cities and the remaining 142 in Tier 3 and lower cities in China.
• As of June 30, 2021, the Company had a pipeline of 1,271 hotels contracted for or under development, among which 56 hotels were in the luxury hotel segment, 300 in the mid-to-up-scale segment, 506 in the mid-scale segment, and 409 in the economy segment.
• The average daily room rate, or ADR, for all hotels in operation, was RMB 171, an increase of 20.2% from RMB142 in the second quarter of 2020, and a 0.8% decrease compared with RMB172 in the pre-COVID-19 second quarter of 2019.
• The occupancy rate, or OCC for all hotels in operation was 78.6%, an increase of 15.2% compared with 63.4% in the second quarter of 2020, and a 2.5% decrease compared with 81.1% in the pre-COVID-19 second quarter of 2019.
• The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB 134, a 49.0% year-over-year increase, and a 3.8% decrease compared with RMB139 in the pre-COVID-19 second quarter of 2019.
• As of June 30, 2021, the Company's loyalty program had more than 62 million individual members and more than 1,760,000 corporate members, compared to over 59 million individual members and approximately 1,710,000 corporate members respectively as of March 31, 2021. The Company sold approximately 91.1% of room nights directly during the second quarter 2021.

"With the extensive contributions of every franchisee and members of our staff, our Q2 financials made substantial improvements," said Mr. Alex Xu, Chair and Chief Executive Officer of Greentree. "Although the new waves of COVID-19 outbreaks have somewhat dampened the recovery and had a negative impact in the affected regions, we have seen optimistic signs of recovery in domestic tourism and business travel, especially during the Tomb-Sweeping Day and the Labor Day Festival. During the quarter, we accelerated our expansion into the mid-range and high-end markets in central, southeast and southwest China. We opened 20 L&O hotels and finished the quarter. Unlike previous years, we were able to secure choice locations at economically attractive prices. All these L&O hotels are situated within popular transportation hubs, central business districts, or government centers. We believe that they will act as anchor hotels and will attract new franchisees to our Company. While improving our own services, we have also been developing a cloud-based IT infrastructure that secures internal and personal data in real time. We are the first to have moved all systems to the Cloud, and we are benefiting from higher operating efficiency and stability. Thanks to this new development, I believe that in the near future, our operations and performance will reach new heights. Once again, I would like to thank our dedicated teams, franchisees, and shareholders for their continuous support over the years.

Second Quarter of 2021 Financial Results

	Quarter Ended
	June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$
Revenues
Leased-and-operated hotels	50,337,339		116,882,174		18,102,743
Franchised-and-managed hotels	158,534,095		217,656,936		33,710,767
others	7,118,530		12,517,770		1,938,756
Total revenues	215,989,964		347,056,880		53,752,266
	Six Months Ended
	June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$
Revenues
Leased-and-operated hotels	84,137,483		172,995,482		26,793,588
Franchised-and-managed hotels	276,197,197		395,606,563		61,271,654
others	13,051,275		19,667,293		3,046,076
Total revenues	373,385,955		588,269,338		91,111,318

Total revenues were RMB347.1 million (US$53.8 million) ^[1], a 60.7% year-over-year increase. The increase was primarily due to the sustained recovery in hotel operations from the impact of COVID-19 and our newly opened L&O hotels. Compared with the pre-COVID-19 second quarter of 2019, total revenues increased by 26.2%. Total revenues for the first half of 2021 were RMB 588.3 million (US$91.1 million) ^[1], representing a 57.5% year-over-year increase.

Total revenues from leased-and-operated hotels were RMB116.9 million (US$18.1 million) ^[1], a 132.2% year-over-year increase. The increase was primarily due to the 98.7% year-over-year increase in L&O hotels' RevPAR and revenues from the 30 L&O hotels opened since the third quarter of 2020. The revenue increase was partially offset by the closure of 2 L&O hotels over the same period. Total revenues from L&O hotels for the first half of 2021 were RMB173.0 million (US$26.8 million) ^[1], representing a 105.6% year-over-year increase.

Total revenues from franchised-and-managed hotels were RMB217.7 million (US$33.7 million) ^[1], a 37.3% year-over-year increase. Initial franchise fees increased by 47.3% year-over-year, mainly attributable to the gross opening of 181 F&M hotels and the closed F&M hotels. Recurring franchisee management fees and others increased 36.4% year-over-year primarily due to the 47.9% increase in RevPAR and the 11.2% increase in the number of F&M hotels, and was offset by the fee waiver to franchisees related to newly acquired hotels. Total revenues from F&M hotels for the first half of 2021 were RMB395.6 million (US$61.3 million) ^[1], representing a 43.2% year-over-year increase.

	Quarter Ended
	June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$
Initial franchise fee	13,313,072		19,613,749		3,037,783
Recurring franchise management fee and others	145,221,023		198,043,187		30,672,984
Revenues from franchised-and-managed hotels	158,534,095		217,656,936		33,710,767
	Six Months Ended
	June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$
Initial franchise fee	26,365,904		37,592,607		5,822,353
Recurring franchise management fee and others	249,831,293		358,013,956		55,449,301
Revenues from franchised-and-managed hotels	276,197,197		395,606,563		61,271,654

Total operating costs and expenses

	Quarter Ended
	June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$
Operating costs and expenses
Hotel operating costs	94,916,577		164,437,048		25,468,056
Selling and marketing expenses	11,999,656		21,703,311		3,361,415
General and administrative expenses	48,143,971		71,043,670		11,003,263
Other operating expenses	41,123		2,752,734		426,344
Total operating costs and expenses	155,101,327		259,936,763		40,259,078
	Six Months Ended
	June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$
Operating costs and expenses
Hotel operating costs	184,679,850		286,667,300		44,399,111
Selling and marketing expenses	29,840,978		39,821,421		6,167,553
General and administrative expenses	76,889,542		127,001,827		19,670,078
Other operating expenses	1,198,272		4,146,290		642,178
Total operating costs and expenses	292,608,642		457,636,838		70,878,920

Hotel operating costs were RMB164.4 million (US$25.5 million) ^[1], a 73.2% increase year-over-year. The increase was mainly attributable to the opening of 23 L&O hotels since the beginning of 2021, which resulted in higher rents, higher staff headcount and compensation, higher depreciation and amortization, and higher utilities and consumables. Excluding the impact from newly opened L&O hotels in 2021, hotel operating costs increased 21.9%. For the first half of 2021, hotel operating costs were RMB286.7 million (US$44.4 million) ^[1], representing a 55.2% increase.

	Quarter Ended
	June 30,		June 30,		June 30,
	2020		2021		2021
	RMB		RMB		US$
Rental	35,806,000		64,073,601		9,923,737
Utilities	3,172,300		6,307,116		976,848
Personnel cost	9,332,835		17,417,652		2,697,651
Depreciation and amortization	10,588,191		17,515,961		2,712,877
Consumable, food and beverage	8,440,379		20,386,884		3,157,526
Costs of general managers of franchised-and-managed hotels	20,691,454		28,077,251		4,348,612
Other costs of franchised-and-managed hotels	5,476,527		6,906,955		1,069,751
Others	1,408,891		3,751,628		581,054
Hotel Operating Costs	94,916,577		164,437,048		25,468,056
	Six Months Ended
	June 30,		June 30,		June 30,
	2020		2021		2021
	RMB		RMB		US$
Rental	62,908,982		103,794,352		16,075,698
Utilities	7,592,490		12,203,535		1,890,087
Personnel cost	19,080,814		31,071,099		4,812,300
Depreciation and amortization	21,927,026		33,683,464		5,216,904
Consumable, food and beverage	19,026,605		31,726,274		4,913,774
Costs of general managers of franchised-and-managed hotels	41,334,102		55,395,961		8,579,742
Other costs of franchised-and-managed hotels	9,979,587		12,448,949		1,928,097
Others	2,830,244		6,343,666		982,509
Hotel Operating Costs	184,679,850		286,667,300		44,399,111

Selling and marketing expenses were RMB21.7 million (US$3.4million) ^[1], an 80.9% year-over-year increase. The increase was mainly attributable to higher staff headcount and compensation and the opening of 23 L&O hotels since the beginning of 2021. Excluding the impact from newly opened L&O hotels in 2021, selling and marketing expenses increased 41.1%. For the first half of 2021, selling and marketing expenses were RMB39.8 million (US$6.2 million) ^[1], representing a 33.4% increase.

General and administrative expenses were RMB71.0 million (US$11.0 million) ^[1], a 47.6% year-over-year increase. The increase was mainly attributable to the opening of 23 L&O hotels since the beginning of 2021, the increased one-time consulting fees for exploring financial or investment alternatives as well as for capital market advice. Excluding the impact from newly opened L&O hotels and one-time consulting fees, general and administrative expenses increased 0.5%. General and administrative expenses for the first half of 2021 were RMB127.0 million (US$19.7 million) ^[1], representing a 65.2% year-over-year increase.

Gross profit was RMB182.6 million (US$28.3 million) ^[1], a year-over-year increase of 50.8%. Gross margin was 52.6%, compared to 56.1% a year ago. The increase was primarily due to the recovery in our hotel RevPAR from the impact of COVID-19 but was offset by the operating loss of recorded by newly opened L&O hotels during their ramp-up period. Gross profit for the first half of 2021 was RMB301.6 million (US$46.7 million) ^[1], representing a 59.8% year-over-year increase.

Income from operations were RMB89.3 million (US$13.8 million) ^[1], a year-over-year increase of 42.5%. The increase was mainly due to the sustained recovery in RevPAR but was offset by the operating loss of recorded by newly opened L&O hotels during their ramp-up period. Operating margin was 25.7%, compared to 29.0% a year ago. Excluding the negative impact of newly opened hotels, income from operations was RMB123.0 million, a year-over-year increase of 96.4%. Income from operations for the first half of 2021 was RMB150.7 million (US$23.3 million) ^[1], representing a year-over-year increase of 50.9%.

Net income was RMB80.3 million (US$12.4 million) ^[1], compared to RMB93.7 million in the second quarter of 2020 and net margin was 23.1%.The year-over-year decrease was mainly attributable to the operating loss of recorded by newly opened L&O hotels during their ramp-up period. Excluding the impact of newly opened hotels, net income was RMB114.0 million, a year-over-year increase of 21.6%. Net income for the first half of 2021 was RMB146.3 million (US$22.7 million) ^[1], representing a year-over-year increase of 83.8%.

Adjusted EBITDA (non-GAAP) ^[2] was RMB111.2 million (US$17.2 million) ^[1], a year-over-year increase of 44.0%. Adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 32.1%, compared to 35.8% a year ago. Adjusted EBITDA (non-GAAP) for the first half of 2021 was RMB175.2 million (US$27.1 million) ^[1], representing a year-over-year increase of 53.4%.

Core net income (non-GAAP) was RMB78.9 million (US$12.2 million) ^[1], a year-over-year increase of 5.7%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 22.7%, compared to 34.6% one year ago. Core net income (non-GAAP) for the first half of 2021 was RMB122.8 million (US$19.0 million) ^[1], representing a year-over-year increase of 31.1%.

Earnings per ADS (basic and diluted) was RMB0.79 (US$0.12) ^[1], down from RMB1.01 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.77 (US$0.12) ^[1], up from RMB0.72 a year ago. Earnings per ADS (basic and diluted) for the first half of 2021 was RMB1.47 (US$0.23) ^[1] up from RMB0.90 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.19 (US$0.18) ^[1] for the first half of 2021, an increase from RMB0.91 a year ago.

Cash flow. Operating cash inflow was RMB44.6 million (US$6.9 million) ^[1] as a result of income from operations. Investing cash outflow was RMB 242.5 million (US$37.6 million) ^[1], which was primarily attributable to acquisition costs of our L&O hotels, investments and deposits of property and equipment, loans to franchisees, and purchases of short-term investments. The investing cash outflow was partially offset by proceeds from the disposal of equity securities and proceeds from short-term investments. Financing cash inflow was RMB13.7 million (US$2.1 million). Operating cash inflow for the first half of 2021 was RMB42.9 million (US$6.6 million) ^[1]. Investing cash outflow for the first half of 2021 was RMB500.7 million (US$77.6 million) ^[1]. Financing cash inflow for the first half of 2021 was RMB149.8 million (US$23.2 million) ^[1].

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposit. As of June 30, 2021, the Company had total cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposits of RMB1,291.0 million (US$200.0 million) ^[1], compared to RMB1,734.0 million as of March  31, 2021. The decrease from the prior quarter was primarily attributable to acquisition costs of our L&O hotels, loans to franchisees, and property investments, offset by drawing down of bank facilities.

COVID-19 Update

During the second quarter, travel demand gradually resumed as the pandemic was well contained and life returned to normalcy, especially for travel during the Tomb-Sweeping day and the Labor Day Festivals. Our RevPAR recovered substantially month-over-month in April, May and June. However, these recovery trends and the momentum in the business were negatively impacted during the third quarter and in October. There were some resurgences of COVID-19 cases in Nanjing city and Jiangsu Province at the end of July, leading to tightened travel restrictions which inevitably imposed a negative impact on the travel industry in the region. Our RevPAR dropped to about 60.7% of the 2019 level during the first week of August from 106.0% of the 2019 level by the end of June. The recent COVID-19 outbreaks in several cities in China have definitely caused some short-term turbulences and created pressure on China's domestic travel market again. This resulted in a drop in our RevPAR to about 81.3% of the 2019 level during the first week of November from 99.9% of the 2019 level by the second week of September after rebounding from the end of July. We are very optimistic about our pipeline plans and expect our recovery to resume shortly after the resurgence of COVID-19 is well under control with effective control measures implemented by the Chinese government, and we expect travel restrictions to gradually ease once again. Moving forward, we are well positioned with our resilient business model to meet the demand when domestic travels increase.  

Guidance

Considering the impact of COVID-19 clusters in Nanjing city and other places in China recently, and assuming the resurgence of these outbreaks remains under control in China in the coming quarters, the Company expects an increase in total revenues of 25%-30% for the full year 2021, compared to 2020 and an increase in total revenues of 7%-12% for the full year 2021, compared to 2019.

The guidance set forth above reflects the Company's current and preliminary views based on our recovery speed and may not be indicative of the final financial results for future interim periods and the full year.

Conference Call

GreenTree's management will hold an earnings conference call at 8:00 PM U.S. Eastern Time on November 15, 2021 (9:00 AM Beijing/Hong Kong Time on November 16, 2021).

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

International	1-412-902-4272
Mainland China	4001-201-203
US	1-888-346-8982
Hong Kong	800-905-945 or 852-3018-4992
Singapore	800-120-6157

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

A telephone replay of the conference call will be available after the conclusion of the live conference call until November 22, 2021.

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:	10161822

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

Use of Non-GAAP Financial Measures

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

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

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

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

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

About GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company") (NYSE: GHG) is a leading hospitality management group in China. As of June 30, 2021, GreenTree had a total number of 4,542 hotels. In 2020, HOTELS magazine ranked GreenTree Top 12 Ranking among 225 largest global hotel groups in terms of number of hotels in its annual HOTELS' 225. GreenTree was also the fourth largest hospitality company in China in 2020 based on the statistics issued by the China Hospitality Association.

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

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

Safe Harbor Statements

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

1      The conversion of Renminbi ("RMB")into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.4566 on June 30, 2021 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20210706/

2      Adjusted EBITDA (non-GAAP) is calculated as net income plus other operating expenses, income tax expense, interest expense, depreciation and amortization, losses from investment in equity securities, but excludes other operating income, interest income and other, net, gains from investment in equity securities, share of gains in equity investees (net of tax). The calculation of Adjusted EBITDA (non-GAAP) included in this report has been aligned according to the abovementioned definition.

3      Core net income is calculated as net income plus share-based compensation, losses from investments in equity securities (net of 25% tax), one-time fees and expense, asset impairment/accrued bad debt and income tax expenses related to dividend distribution but excludes government subsidies (net of 25% tax) and gains from investment in equity securities (net of 25% tax).

4      Tier 1 Cities refers to Beijing, Shanghai, Shenzhen and Guangzhou; Tier 2 Cities refers to the 32 major cities, other than Tier 1 Cities, including provincial capitals, administrative capitals of autonomous regions, direct-controlled municipalities and other major cities designated as municipalities with independent planning by the State Council.

 

Financial Tables and Operational Data Follow

 

GreenTree Hospitality Group Ltd.
Unaudited Condensed Consolidated Balance Sheets
	December 31,		June 30,		June 30,
	2020		2021		2021
	RMB		RMB		US$
ASSETS
Current assets:
Cash and cash equivalents	611,358,209		301,977,626		46,770,379
Short-term investment	301,983,182		457,389,492		70,840,611
Investments in equity securities	242,378,696		258,063,433		39,968,936
Accounts receivable, net of allowance	101,511,057		118,420,083		18,340,935
Amounts due from related parties	9,770,871		96,724,469		14,980,713
Prepaid rent	13,597,867		27,794,835		4,304,872
Inventories	3,804,680		2,124,236		329,002
Other current assets	77,649,794		207,630,731		32,157,906
Loans receivable, net	222,244,629		229,822,383		35,594,954
Total current assets	1,584,298,985		1,699,947,288		263,288,308
Non-current assets:
Restricted cash	22,369,900		22,369,900		3,464,656
Long-term time deposits	490,000,000		200,000,000		30,976,056
Loan receivable, net	145,703,988		374,363,755		57,981,562
Property and equipment, net	668,605,661		932,584,414		144,438,933
Intangible assets, net	491,513,073		528,910,391		81,917,788
Goodwill	100,231,487		104,582,687		16,197,796
Long-term investments	369,525,917		184,385,036		28,557,606
Other assets	66,635,394		304,334,781		47,135,455
Deferred tax assets	156,070,112		134,764,674		20,872,390
TOTAL ASSETS	4,094,954,517		4,486,242,926		694,830,550
LIABILITIES AND EQUITY
Current liabilities:
Short-term bank loans	150,000,000		290,000,000		44,915,280
Accounts payable	19,606,344		18,092,131		2,802,114
Advance from customers	34,305,508		27,860,877		4,315,100
Amounts due to related parties	3,198,253		5,355,911		829,525
Salary and welfare payable	51,567,587		56,836,957		8,802,924
Deferred rent	1,356,132		2,568,897		397,871
Deferred revenue	221,314,997		222,434,022		34,450,643
Accrued expenses and other current liabilities	300,696,673		384,637,018		59,572,690
Income tax payable	87,483,970		51,441,614		7,967,291
Total current liabilities	869,529,464		1,059,227,427		164,053,438
Deferred rent	28,642,973		42,833,226		6,634,022
Deferred revenue	361,901,369		336,579,118		52,129,467
Other long-term liabilities	115,862,713		130,626,161		20,231,416
Deferred tax liabilities	178,413,413		175,797,535		27,227,571
Unrecognized tax benefits	290,679,902		312,079,760		48,335,000
TOTAL LIABILITIES	1,845,029,834		2,057,143,227		318,610,914
Shareholders' equity:
Class A ordinary shares	222,587,070		222,587,070		34,474,347
Class B ordinary shares	115,534,210		115,534,210		17,893,971
Additional paid-in capital	1,149,280,404		1,150,227,409		178,147,540
Retained earnings	570,042,924		721,270,906		111,710,638
Accumulated other comprehensive income	45,586,647		44,212,936		6,847,712
Total GreenTree Hospitality Group Ltd. shareholders' equity	2,103,031,255		2,253,832,531		349,074,208
Non-controlling interests	146,893,428		175,267,168		27,145,428
Total shareholders' equity	2,249,924,683		2,429,099,699		376,219,636
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	4,094,954,517		4,486,242,926		694,830,550

 

 

GreenTree Hospitality Group Ltd.
Unaudited Condensed Consolidated Statements of Comprehensive Income
	Quarter Ended						Six Months Ended
	June 30, 2020		June 30, 2021		June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$		RMB		RMB		US$
Revenues
Leased-and-operated hotels	50,337,339		116,882,174		18,102,743		84,137,483		172,995,482		26,793,588
Franchised-and-managed hotels	158,534,095		217,656,936		33,710,767		276,197,197		395,606,563		61,271,654
Others	7,118,530		12,517,770		1,938,756		13,051,275		19,667,293		3,046,076
Total revenues	215,989,964		347,056,880		53,752,266		373,385,955		588,269,338		91,111,318
Operating costs and expenses
Hotel operating costs	(94,916,577)		(164,437,048)		(25,468,056)		(184,679,850)		(286,667,300)		(44,399,111)
Selling and marketing expenses	(11,999,656)		(21,703,311)		(3,361,415)		(29,840,978)		(39,821,421)		(6,167,553)
General and administrative expenses	(48,143,971)		(71,043,670)		(11,003,263)		(76,889,542)		(127,001,827)		(19,670,078)
Other operating expenses	(41,123)		(2,752,734)		(426,344)		(1,198,272)		(4,146,290)		(642,178)
Total operating costs and expenses	(155,101,327)		(259,936,763)		(40,259,078)		(292,608,642)		(457,636,838)		(70,878,920)
Other operating income	1,762,982		2,181,186		337,823		19,093,913		20,053,589		3,105,905
Income from operations	62,651,619		89,301,303		13,831,011		99,871,226		150,686,089		23,338,303
Interest income and other, net	14,107,924		14,151,551		2,191,796		24,721,184		29,282,647		4,535,304
Interest expense	(1,727,991)		(4,089,714)		(633,417)		(2,738,246)		(7,477,925)		(1,158,183)
Gains (losses) from investment in equity securities	42,534,583		16,149,045		2,501,169		(12,640,335)		43,873,336		6,795,115
Income before income taxes	117,566,135		115,512,185		17,890,559		109,213,829		216,364,147		33,510,539
Income tax expense	(24,399,003)		(35,332,983)		(5,472,382)		(30,576,563)		(70,539,794)		(10,925,223)
Income before share of loss in equity investees	93,167,132		80,179,202		12,418,177		78,637,266		145,824,353		22,585,316
Share of gains in equity investees, net of tax	553,487		84,331		13,061		948,331		463,897		71,849
Net income	93,720,619		80,263,533		12,431,238		79,585,597		146,288,250		22,657,165
Net loss attributable to non-controlling interests	10,621,047		1,053,211		163,122		12,910,415		4,939,732		765,067
Net income attributable to ordinary shareholders	104,341,666		81,316,744		12,594,360		92,496,012		151,227,982		23,422,232
Net earnings per share
Class A ordinary share-basic and diluted	1.01		0.79		0.12		0.90		1.47		0.23
Class B ordinary share-basic and diluted	1.01		0.79		0.12		0.90		1.47		0.23
Net earnings per ADS
Class A ordinary share-basic and diluted	1.01		0.79		0.12		0.90		1.47		0.23
Class B ordinary share-basic and diluted	1.01		0.79		0.12		0.90		1.47		0.23
Weighted average shares outstanding
Class A ordinary share-basic and diluted	68,286,954		68,286,954		68,286,954		68,286,954		68,286,954		68,286,954
Class B ordinary share-basic and diluted	34,762,909		34,762,909		34,762,909		34,762,909		34,762,909		34,762,909
Other comprehensive income, net of tax
Foreign currency translation adjustments	(1,181,225)		(3,804,473)		(589,238)		3,816,008		(1,373,712)		(212,761)
Comprehensive income, net of tax	92,539,394		76,459,060		11,842,000		83,401,605		144,914,538		22,444,404
Comprehensive loss attributable to non-controlling interests	10,621,047		1,053,211		163,122		12,910,415		4,939,732		765,067
Comprehensive income attributable to ordinary shareholders	103,160,441		77,512,271		12,005,122		96,312,020		149,854,270		23,209,471

 

GreenTree Hospitality Group Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
	Quarter Ended						Six Months Ended
	June 30, 2020		June 30, 2021		June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$		RMB		RMB		US$
Operating activities:
Net income	93,720,619		80,263,533		12,431,238		79,585,597		146,288,250		22,657,165
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	16,339,200		21,363,445		3,308,776		32,005,845		40,437,845		6,263,025
Share of gains in equity method investments	(553,487)		(84,331)		(13,061)		(948,331)		(463,897)		(71,848)
Fair value change in returnable consideration and contingent consideration, net	-		-		-		-		(502,712)		(77,860)
Interest income	(2,097,419)		(1,765,790)		(273,486)		(4,841,860)		(3,855,030)		(597,068)
Bad debt expense	12,009,289		8,703,709		1,348,033		17,928,925		20,461,144		3,169,028
(Gains)losses from investments in equity securities	(42,534,582)		(16,149,045)		(2,501,169)		12,640,335		(43,873,336)		(6,795,115)
Foreign exchange (gains) losses	(1,367,301)		1,775,361		274,968		(209,869)		2,507,642		388,384
Share-based compensation	-		529,166		81,957		232,558		1,307,865		202,562
Income tax expenses related to dividend distribution or retained profits	4,089,529		-		-		8,089,529		-		-
Changes in operating assets and liabilities:
Accounts receivable	(44,819,542)		(20,719,952)		(3,209,112)		(38,698,091)		(32,846,596)		(5,087,290)
Prepaid rent	5,586,585		(6,091,256)		(943,415)		9,922,250		(14,196,968)		(2,198,830)
Inventories	156,836		507,466		78,596		(237,377)		1,680,444		260,268
Amounts due from related parties	715,354		(488,496)		(75,658)		1,510,197		(3,873,538)		(599,935)
Other current assets	(5,488,452)		(42,766,291)		(6,623,655)		14,827,078		(123,719,995)		(19,161,787)
Other assets	(3,332,215)		(9,573,784)		(1,482,790)		(9,014,522)		(7,784,920)		(1,205,731)
Accounts payable	1,602,850		(3,319,895)		(514,186)		2,888,996		(1,514,213)		(234,522)
Amounts due to related parties	(30,278)		2,056,471		318,507		(2,048,301)		2,157,658		334,179
Salary and welfare payable	3,390,002		4,595,233		711,711		1,372,751		5,269,370		816,121
Deferred revenue	(8,125,238)		(9,538,448)		(1,477,317)		(39,043,755)		(24,203,226)		(3,748,602)
Advance from customers	(5,183,719)		(2,191,085)		(339,356)		(7,757,920)		(6,444,631)		(998,146)
Accrued expenses and other current liabilities	76,631,257		36,992,871		5,729,466		(28,104,147)		52,388,512		8,113,947
Income tax payable	(30,267,700)		(41,031,173)		(6,354,919)		(46,418,967)		(36,042,356)		(5,582,250)
Unrecognized tax benefits	(17,495,140)		15,757,387		2,440,508		(3,209,911)		21,399,858		3,314,416
Deferred rent	(910,363)		11,168,115		1,729,721		4,151,399		15,403,018		2,385,624
Other long-term liabilities	4,624,768		3,352,037		519,164		17,619,297		14,233,448		2,204,480
Deferred taxes	1,599,014		11,269,091		1,745,360		(12,368,615)		18,689,560		2,894,644
Net cash provided by operating activities	58,259,867		44,614,339		6,909,881		9,873,091		42,903,196		6,644,859
Investing activities:
Purchases of property and equipment	(18,550,705)		(89,389,814)		(13,844,719)		(41,628,937)		(157,888,825)		(24,453,865)
Purchases of intangible assets	(9,075)		-		-		(9,075)		-		-
Proceeds from disposal of property and equipment	11,125		-		-		11,125		-		-
Payment for acquisition of minority equity	-		-		-		-		(868,388)		(134,496)
Acquisitions, net of cash received	(1,255,807)		(119,469,020)		(18,503,395)		(1,255,807)		(173,128,625)		(26,814,209)
Collection of acquisition advances	35,440,000		9,148,000		1,416,845		35,440,000		10,148,000		1,571,725
Advances for purchases of property and equipment			(170,426,363)		(26,395,682)				(204,889,383)		(31,733,325)
Purchases of short-term investments	(46,420,027)		(73,361,955)		(11,362,320)		(147,690,027)		(138,286,310)		(21,417,822)
Proceeds from short-term investments	3,567,419		133,185,790		20,627,852		398,634,105		356,735,030		55,251,220
Proceeds from sales of long-term time deposits	-		-		-		-		50,000,000		7,744,015
Increase of long-term time deposits	-		-		-		(30,000,000)		(130,000,000)		(20,134,436)
Proceeds from disposal of equity securities and dividends received from equity securities	2,540,418		211,307,112		32,727,304		2,540,418		211,307,112		32,727,304
Proceeds from disposal of euqity method investments	6,380,000		-		-		6,380,000		-		-
Loan to related parties	(19,850,000)		(53,467,680)		(8,281,090)		(185,366,500)		(231,745,560)		(35,892,818)
Repayment from related parties	20,639,679		1,250,000		193,600		186,156,179		148,665,500		23,025,354
Loan to third parties	(1,200,000)		(9,000,000)		(1,393,922)		(3,200,000)		(10,500,000)		(1,626,243)
Repayment of loan from third parties	-		46,500,000		7,201,933		-		46,500,000		7,201,933
Loan to franchisees	(47,721,778)		(269,415,292)		(41,727,115)		(146,451,778)		(460,435,294)		(71,312,346)
Repayment from franchisees	20,199,572		140,599,873		21,776,147		35,215,035		183,674,199		28,447,511
Net cash (used in) provided by investing activities	(46,229,179)		(242,539,349)		(37,564,562)		108,774,738		(500,712,544)		(77,550,498)
Financing activities:
Loan from non-controlling interest	-		-		-		-		2,792,853		432,558
Proceeds from short-term borrowings	-		10,000,000		1,548,803		10,000,000		140,000,000		21,683,239
Capital contribution from noncontrolling interest holders	2,978,387		3,740,000		579,252		3,378,387		7,031,000		1,088,963
Net cash provided by financing activities	2,978,387		13,740,000		2,128,055		13,378,387		149,823,853		23,204,760
Effect of exchange rate changes on cash and cash equivalents	1,167,214		(1,804,220)		(279,437)		592,196		(1,395,088)		(216,071)
Net increase(decrease) in cash and cash equivalents	16,176,289		(185,989,230)		(28,806,063)		132,618,412		(309,380,583)		(47,916,950)
Cash and cash equivalents at the beginning of the period	458,602,346		510,336,756		79,041,098		342,160,223		633,728,109		98,151,985
Cash and cash equivalents at the end of the period	474,778,635		324,347,526		50,235,035		474,778,635		324,347,526		50,235,035

 

GreenTree Hospitality Group Ltd.
Unaudited Reconciliation of GAAP and Non-GAAP Results
	Quarter Ended						Six Months Ended
	June 30, 2020		June 30, 2021		June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$		RMB		RMB		US$
Net income	93,720,619		80,263,533		12,431,238		79,585,597		146,288,250		22,657,165
Deduct:
Other operating income	1,762,982		2,181,186		337,823		19,093,913		20,053,589		3,105,905
Interest income and other, net	14,107,924		14,151,551		2,191,796		24,721,184		29,282,647		4,535,304
Gains from investment in equity securities	42,534,583		16,149,045		2,501,169		42,534,583		43,873,336		6,795,114
Share of gains in equity investees, net of tax	553,487		84,331		13,061		948,331		463,897		71,848
Add:
Other operating expenses	41,123		2,752,734		426,344		1,198,272		4,146,290		642,179
Income tax expense	24,399,003		35,332,983		5,472,382		30,576,563		70,539,794		10,925,223
Interest expense	1,727,991		4,089,714		633,416		2,738,246		7,477,925		1,158,183
Depreciation and amortization	16,339,200		21,363,445		3,308,776		32,005,845		40,437,845		6,263,025
Losses from investment in equity securities	-		-		-		55,174,918		-		-
Adjusted EBITDA(Non-GAAP)	77,268,960		111,236,296		17,228,308		114,213,988		175,216,635		27,137,601
	Quarter Ended						Six Months Ended
	June 30, 2020		June 30, 2021		June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$		RMB		RMB		US$
Net income	93,720,619		80,263,533		12,431,238		79,585,597		146,288,250		22,657,165
Deduct:
Government subsidies (net of 25% tax)	779,513		843,954		130,712		13,212,085		11,134,872		1,724,572
Gains from investment in equity securities  (net of 25% tax)	31,900,937		12,111,784		1,875,876		31,900,937		32,905,002		5,096,336
Add:
Share-based compensation	-		529,166		81,957		232,558		1,307,865		202,562
Losses from investments in equity securities  (net of 25% tax)	-		-		-		41,381,189		-		-
One-time fees and expense			11,033,914		1,708,936		-		14,707,304		2,277,871
Asset impairment/Accrued bad debt	9,501,082				-		9,501,082		4,523,574		700,612
Income tax expenses related to dividend distribution	4,089,529		-		-		8,089,529		-		-
Core net income(Non-GAAP)	74,630,780		78,870,874		12,215,543		93,676,933		122,787,119		19,017,303
Core net income per ADS (Non-GAAP)
Class A ordinary share-basic and diluted	0.72		0.77		0.12		0.91		1.19		0.18
Class B ordinary share-basic and diluted	0.72		0.77		0.12		0.91		1.19		0.18

Operational Data  

	2020 Q2	2021 Q2
Total hotels in operation:	4,064	4,542
Leased-and-owned hotels	35	63
Franchised hotels	4,029	4,479
Total hotel rooms in operation	296,307	328,773
Leased-and-owned hotels	4,359	7,229
Franchised hotels	291,948	321,544
Number of cities	342	358
	Quarter Ended
	2020 Q2	2021 Q2
Occupancy rate (as a percentage)
Leased-and-owned hotels	46.5%	72.9%
Franchised hotels	63.7%	78.8%
Blended	63.4%	78.6%
Average daily rate (in RMB)
Leased-and-owned hotels	173	219
Franchised hotels	142	169
Blended	142	171
RevPAR (in RMB)
Leased-and-owned hotels	80	160
Franchised hotels	90	133
Blended	90	134

 

	Number of Hotels in Operation		Number of Hotel Rooms in Operation
	2020 Q2	2021 Q2	2020 Q2	2021 Q2
Luxury	21	28	4,388	5,821
Argyle	21	28	4,388	5,821
Mid-to-up-scale	296	423	26,682	38,704
GreenTree Eastern	118	170	12,509	18,155
Deepsleep Hotel	2	5	161	356
Gem	32	39	2,896	3,605
Gya	28	50	2,348	4,212
Vx	28	52	2,260	4,520
Ausotel	11	14	1,521	1,877
Urban Garden and others[1]	77	93	4,987	5,979
Mid-scale	2,610	2,917	212,674	231,105
GreenTree Inn	2,047	2,158	173,519	179,790
GT Alliance	316	508	24,176	35,937
GreenTree Apartment	10	15	488	1,058
Vatica	124	115	9,026	8,386
City 118 Selected and others[1]	113	121	5,465	5,934
Economy hotels	1,139	1,174	52,563	53,143
Shell	574	617	25,017	26,714
City 118 and others[1]	565	557	27,546	26,429
Total	4,066	4,542	296,307	328,773

For more information, please contact:

GreenTree

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

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

Christensen

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

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

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

View original content:https://www.prnewswire.com/news-releases/greentree-hospitality-group-ltd-reports-second-quarter-2021-financial-results-301424732.html

SOURCE GreenTree Hospitality Group Ltd.

FAQ

What were GreenTree Hospitality's Q2 2021 total revenues?

GreenTree Hospitality reported total revenues of RMB347.1 million (US$53.8 million) for Q2 2021.

How much did GreenTree's income from operations increase in Q2 2021?

Income from operations increased by 42.5% year-over-year to RMB89.3 million (US$13.8 million).

What is the projected revenue increase for GreenTree Hospitality in 2021?

GreenTree expects total revenues to increase by 25%-30% for the full year 2021 compared to 2020.

How many hotels does GreenTree Hospitality currently operate?

As of June 30, 2021, GreenTree operates 4,542 hotels across China.

What impacted GreenTree's net income in Q2 2021?

Net income decreased primarily due to operational losses from newly opened hotels during their ramp-up period.