Financial News

GreenTree Hospitality Group Ltd. Reports Third Quarter 2020 Financial Results

  • Total revenues increased 23.6% to RMB266.9 million (US$39.3 million) [1] from RMB216.0 million in the second quarter.
  • Income from operations increased 61.1% to RMB100.9 million (US$14.9 million) [1] from RMB62.7 million in the second quarter.
  • Adjusted EBITDA (non-GAAP) increased 46.6% to RMB134.0 million (US$19.7 million) [1] from RMB91.4 million in the second quarter.
  • Core net income (non-GAAP) increased 23.8% to RMB92.4 million (US$13.6 million) [1] from RMB74.6 million in the second quarter.

SHANGHAI, Dec. 2, 2020 /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 third quarter ended September 30, 2020.

Operational Highlights

  • A total of 4,195 hotels with 305,125 hotel rooms were in operation as of September 30, 2020, compared to 4,066 hotels and 296,307 hotel rooms as of June 30, 2020.
  • As of September 30, 2020, the Company had 37 leased-and-operated ("L&O") hotels and 4,158 franchised-and-managed ("F&M") hotels in operation in 341 cities across China, compared to 30 L&O hotels and 3,072 F&M hotels in operation in 309 cities as of September 30, 2019. The geographic coverage increased by 10.4% year over year.
  • During the quarter, the Company opened 162 hotels, a decrease of 19 comparing to 181 hotels in the third quarter of 2019. Among the hotels opened, 1 was in the luxury segment, 45 in the mid-to-up-scale segment, 80 in the mid-scale segment, and 36 in the economy segment. Geographically speaking, 6 hotels were in Tier 1 cities [1], 31 in Tier 2 cities and the remaining 125 in Tier 3 and smaller cities in China.
    The Company closed 33 hotels, 3 due to brand upgrades, and 26 due to their non-compliance with the Company's brand and operating standards. The remaining 4 were closed for property related issues. The Company added a net opening of 129 hotels to its portfolio.
  • As of September 30, 2020, the Company had a pipeline of 1,110 hotels contracted for or under development, among which 55 hotels were in the luxury hotel segment, 218 in the mid-to-up-scale segment, 455 in the mid-scale segment, and 382 in the economy segment.
  • The average daily room rate, or ADR, for all hotels in operation, was RMB151, a decrease of 12.9% year-over-year, an increase of 6.5% compared with the second quarter.
  • The occupancy rate, or OCC for all hotels in operation was 79.1%, compared with 85.9% in the third quarter of 2019, and compared with 63.4% in the second quarter of 2020.
  • The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB120, representing a 19.8% year-over-year decrease, and a 32.9% sequential increase.
  • As of September 30, 2020, the Company's loyalty program had more than 52 million individual members and approximately 1,610,000 corporate members, compared to approximately 49 million and over 1,560,000 corporate members as of June 30, 2020. The Company had approximately 92.5% of room nights sold directly.

"We are glad to see a meaningful improvement in the third quarter of 2020 in some of our key operating and financial metrics, as a result of a return to more normal economic activities and living conditions in mainland China," said Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree. "We continued to serve and protect guests, constantly adapting our operations and marketing campaigns to the evolving market conditions, and we increased income from operations, net income, and Adjusted EBITDA. Our margins continue to rise thanks to our flexible cost structure and the measures we have implemented since the outbreak of COVID-19," continued Mr. Xu.

"China has been walking a fine line in balancing pandemic control and economic recovery, with targeted measures introduced to help companies safely restart their businesses and people get back to their normal daily life. As COVID-19 came under control gradually since the second quarter, we saw a sustained recovery in domestic tourism and business. Riding on the recovery, we continued to optimize our brands, products and technology to capture domestic travel demand. As a result, our same-hotel RevPAR, excluding hotels being used for quarantine and temporary closures, decreased 16.3% in the third quarter to 125 RMB. For the third consecutive quarter in 2020, our overall performance was better than the average performance across the hospitality industry in China.

Thanks to the tireless work and dedication of our staff and franchisees, and the strong support of our loyal individual members and corporate members, the performance of our hotels continued to improve, with our occupancy rate approaching 85% during October Golden week, nearly the same as last year. In November, our occupancy rate rebounded to nearly the same level as last year, and RevPAR recovered to almost 95% of last year's level."

"Having gone through the challenges of the first nine months of 2020, we believe we can continue to execute our growth strategy and further enhance our partnership with our franchisees. We have accumulated extensive experience and are well prepared should the pandemic last much longer. We are confident in our ability to consistently achieve profitable growth and create long-term value for our shareholders."

Third Quarter of 2020 Financial Results


Quarter Ended


 September 30, 2019


 September 30, 2020


 September 30, 2020


RMB


RMB


US$

Revenues






Leased-and-operated hotels

72,530,518


66,823,544


9,842,044

Franchised-and-managed hotels

219,606,332


200,044,031


29,463,302

Total revenues

292,136,850


266,867,575


39,305,346








Nine Months Ended


 September 30, 2019


 September 30, 2020


 September 30, 2020


RMB


RMB


US$

Revenues






Leased-and-operated hotels

184,867,320


150,961,027


22,234,156

Franchised-and-managed hotels

617,493,389


489,292,503


72,064,997

Total revenues

802,360,709


640,253,530


94,299,153

Total revenues for the third quarter of 2020 were RMB266.9 million (US$39.3 million) [1], representing a 8.6% year-over-year decrease. The decrease was primarily due to the impact of COVID-19, which resulted in declined RevPAR of L&O hotels and F&M hotels, as well as partial reduction and extension of sublease income recognition. Total revenues increased from 216.0 million RMB in the second quarter, a 23.6% sequential increase, which was mainly attributable to a RevPAR growth from 90 RMB to 120 RMB. Total revenues for the first nine months of 2020 were RMB640.3 million (US$94.3 million) [1], representing a 20.2% decrease.

  • Total revenues from leased-and-operated hotels for the third quarter of 2020 were RMB66.8 million (US$9.8 million) [1], representing a 7.9% year-over-year decrease. The decrease was primarily due to RevPAR decrease of 26.3%, and partial reduction and extension of sublease income recognition, and partially offset by the revenue contributed by 7 L&O hotels of the Urban Hotel Group ("Urban") which was acquired in November of 2019. Compared with the second quarter, total revenues from L&O hotels increased by 32.8%, mainly attributable to rising RevPAR and newly opened 3 L&O hotels. Total revenues from L&O hotels for the first nine months of 2020 were RMB151.0 million (US$22.2 million) [1], representing a 18.3% decrease.
  • Total revenues from franchised-and-managed hotels for the third quarter of 2020 were RMB200.0 million (US$29.5 million) [1], representing a 8.9% year-over-year decrease. Initial franchise fees increased by 8.8% year-over-year, mainly attributable to the gross opening of 159 hotels. The 10.2% decrease from the third quarter of 2019 in recurring franchisee management fees and others was primarily due to RevPAR decrease of 19.6%. Compared with the second quarter, initial franchise fees increased by 24.8%, mainly attributable to more hotels opened; recurring franchisee management fees and others increased by 20.4%, mainly due to RevPAR sequential growth from 90RMB to 120 RMB. Total revenues from F&M hotels for the first nine months of 2020 were RMB489.3 million (US$72.1 million) [1], representing a 20.8% decrease.

Quarter Ended


 September 30, 2019


 September 30, 2020


 September 30, 2020


RMB


RMB


US$

Initial franchise fee

15,277,606


16,619,577


2,447,799

Recurring franchise management
fee and others

204,328,726


183,424,454


27,015,503

Revenues from franchised-and-
managed hotels

219,606,332


200,044,031


29,463,302








Nine Months Ended


 September 30, 2019


 September 30, 2020


 September 30, 2020


RMB


RMB


US$

Initial franchise fee

41,274,393


42,985,481


6,331,077

Recurring franchise management
fee and others

576,218,996


446,307,022


65,733,920

Revenues from franchised-and-
managed hotels

617,493,389


489,292,503


72,064,997

 

Total operating costs and expenses


Quarter Ended


 September 30, 2019


 September 30, 2020


 September 30, 2020


RMB


RMB


US$

Operating costs and expenses






Hotel operating costs

87,277,200


108,025,295


15,910,406

Selling and marketing expenses

20,785,447


21,273,500


3,133,248

General and administrative expenses

39,891,061


44,782,915


6,595,811

Other operating expenses

53,736


434,792


64,038

Total operating costs and expenses

148,007,444


174,516,502


25,703,503








 Nine Months Ended


 September 30, 2019


 September 30, 2020


 September 30, 2020


RMB


RMB


US$

Operating costs and expenses






Hotel operating costs

246,216,861


292,705,145


43,110,808

Selling and marketing expenses

61,815,183


51,114,478


7,528,349

General and administrative expenses

105,391,932


121,672,457


17,920,417

Other operating expenses

161,710


1,633,064


240,524

Total operating costs and expenses

413,585,686


467,125,144


68,800,098

Hotel operating costs for the third quarter of 2020 were RMB108.0 million (US$15.9 million) [1], representing a 23.8% increase year-over-year. The increase was mainly attributable to higher rents, higher depreciation and amortization, and the consolidation of operation costs of Urban. In the third quarter, there were 3 L&O hotels newly opened and 5 L&O hotels under construction, which accounted for the main increase in hotel operating costs. Excluding L&O hotel operating costs, costs related to F&M hotels and others increased 0.8%, primarily due to the expansion of our business and F&M hotels. Comparing hotel operating costs with the second quarter, we observe a 13.8% sequential growth, mainly due to more L&O hotels coming into development. For the first nine months of 2020, hotel operating costs were RMB292.7 million (US$43.1 million) [1], representing a 18.9% increase.


Quarter Ended


September 30,


September 30,


September 30,

2019


2020


2020


RMB


RMB


US$

Rental

17,679,757


27,189,274


4,004,547

Utilities

4,231,308


3,666,479


540,014

Personnel cost

10,918,296


11,732,599


1,728,025

Depreciation and amortization

5,627,887


14,946,857


2,201,434

Consumable, food and beverage

7,760,883


7,937,167


1,169,018

Costs of general managers of
franchised-and-managed hotels

27,616,095


24,241,736


3,570,422

Other costs of franchised-and-managed
hotels

8,400,931


7,873,516


1,159,644

Others

5,042,043


10,437,667


1,537,302

Hotel Operating Costs

87,277,200


108,025,295


15,910,406








 Nine Months Ended


September 30,


September 30,


September 30,

2019


2020


2020


RMB


RMB


US$

Rental

57,327,190


90,098,256


13,270,039

Utilities

15,277,291


11,258,969


1,658,267

Personnel cost

28,207,871


31,296,079


4,609,414

Depreciation and amortization

19,326,123


36,873,883


5,430,936

Consumable, food and beverage

21,529,959


23,477,610


3,457,878

Costs of general managers of
franchised-and-managed hotels

73,106,207


65,575,838


9,658,277

Other costs of franchised-and-managed
hotels

21,393,731


17,853,103


2,629,478

Others

10,048,489


16,271,407


2,396,519

Hotel Operating Costs

246,216,861


292,705,145


43,110,808

Selling and marketing expenses for the third quarter of 2020 were RMB21.3 million (US$3.1 million) [1], representing a 2.3% year-over-year increase. The increase was mainly attributable to the Company's first attempt to cooperate with Internet social platforms which became prevalent because of COVID-19. Excluding the above-mentioned advertising fees, selling and marketing expenses in this quarter decreased 40.4% year over year, and increased 3.3% quarter over quarter. For the first nine months of 2020, selling and marketing expenses were RMB 51.1 million (US$7.5 million) [1], representing a 17.3% decrease.

General and administrative expenses for the third quarter of 2020 were RMB44.8 million (US$6.6 million) [1], representing a 12.3% year-over-year increase. The increase was primarily attributable to higher depreciation and amortization for our property and equipment, increased investment in Research and Development, higher consulting fees, and the consolidation of expenses from Argyle Hotel Management Group (Australia) Pty Ltd ("Argyle") and Urban. Compared with the second quarter, G&A expenses decreased by 7.0%. General and administrative expenses for the first nine months of 2020 were RMB121.7 million (US$17.9 million) [1], representing a 15.4% year-over-year increase.

Gross profit for the third quarter of 2020 was RMB158.8 million (US$23.4 million) [1], representing a year-over-year decrease of 22.5%. Gross margin was 59.5%, compared to 70.1% a year ago. The decrease was primarily due the impact of COVID-19. Compared with the second quarter, gross profit increased by 31.2%, and gross margin increased from 56.1% to 59.5%. Gross profit for the first nine months of 2020 was RMB347.5 million (US$51.2 million) [1], representing a 37.5% year-over-year decrease.

Income from operations for the third quarter of 2020 totaled RMB100.9 million (US$14.9 million) [1], representing a year-over-year decrease of 33.9%. The decrease was mainly due to decreased revenues resulting from lower RevPAR, delays in new hotel openings, and certain extension of sublease income recognition. Operating margin, defined as income from operations as percentage of total revenues, was 37.8%, compared to 52.2% a year ago. Compared with the second quarter, income from operations increased by 61.1%, and operating margin increased from 29.0% to 37.8%, mainly attributable to revenue increase. Income from operations for the first nine months of 2020 totaled RMB200.8 million (US$29.6 million) [1], representing a year-over-year decrease of 50.5%.

Adjusted EBITDA (non-GAAP) for the third quarter of 2020 was RMB134.0 million (US$19.7 million) [1], representing a year-over-year decrease of 24.3%. Adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 50.2%, compared to 60.6% a year ago. Compared with the second quarter, adjusted EBITDA increased by 46.6%, and adjusted EBITDA margin increased from 42.3% to 50.2%. Adjusted EBITDA (non-GAAP) for the first nine months of 2020 was RMB272.9 million (US$40.2 million) [1], representing a year-over-year decrease of 43.6%.

Net income for the third quarter of 2020 was RMB85.6 million (US$12.6 million) [1], representing a year-over-year decrease of 16.2%. Net margin was 32.1%, compared to 35.0% a year ago. The year-over-year decrease was primarily due to revenue decrease partially offset by gains from investments in equity securities. Compared with the second quarter, net income decreased by 8.6%, and net margin decreased from 43.4% to 32.1%, mainly due to decline in gains from investment in equity securities since the second quarter. Net income for the first nine months of 2020 was RMB165.2 million (US$24.3 million) [1], representing a year-over-year decrease of 54.5%.

Core net income (non-GAAP) for the third quarter of 2020 was RMB92.4 million (US$13.6 million) [1], representing a year-over-year decrease of 31.5%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 34.6%, compared to 46.2% one year ago. Compared with the second quarter, core net income increased by 23.8%. Core net income (non-GAAP) for the first nine months of 2020 was RMB194.8 million (US$28.7 million) [1], representing a year-over-year decrease of 44.8%.

Earnings per ADS (basic and diluted) for the third quarter of 2020 was RMB0.81 (US$0.12) [1], down from earnings per ADS of RMB1.01 one year ago, down from RMB1.01 in the second quarter of 2020, mainly due to the decline in gains from investment in equity securities since the second quarter. Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.90 (US$0.13) [1], down from RMB1.32 a year ago, up from RMB0.72 of the second quarter of 2020. Earnings per ADS (basic and diluted) for the first nine months of 2020 was RMB1.71 (US$0.25) [1] down from RMB3.60 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.89 (US$0.28) [1] for the first nine months of 2020, decreased from RMB3.46 of 2019.

Cash flow. Operating cash inflow for the third quarter of 2020 was RMB175.4 million (US$25.8 million) [1] as a result of the recovery from COVID-19 and improved operating performance. Investing cash outflow for the third quarter of 2020 was RMB54.9 million (US$8.1 million) [1], which was primarily attributable to loans to franchisees, and investment in property and equipment. The investing cash outflow was partially offset by repayment from franchisees, as well as proceeds from short-term investments. Financing cash outflow was RMB4.1 million (US$0.6 million). Operating cash inflow for the first nine months of 2020 was RMB176.8 million (US$26.0  million) [1]. Investing cash inflow for the first nine months of 2020 was RMB53.8 million (US$7.9 million) [1]. Financing cash inflow for the first nine months of 2020 was RMB17.7 million (US$2.6 million) [1].

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposit. As of September 30, 2020, the Company had total cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposits of RMB1,815.4 million (US$267.4 million) [1], compared to RMB1,714.0 million as of June 30, 2020. The increase from the second quarter was primarily attributable to cash inflow from operating activities, changes in fair value of equity securities and dividends from equity securities, and offset by loans to franchisees, investment in the decoration of L&O hotels, and cash outflow for balance fees for acquisitions.

COVID-19 Update

With effective control measures implemented by the Chinese government. Recently, China showed strong signs of economic rebound as the government introduced various policies to encourage domestic consumption. During the October Golden week, the number of domestic tourists rebounded to 637 million reaching 79 percent of last year's level and generating 466.6 billion RMB in revenue reaching 69.9 percent of last year's level, according to statistics from China's Ministry of Culture and Tourism. These figures pointed to a considerable improvement compared to the three-day Dragon Boat Festival vacation period this June, when there were 48.81 million tourists, accounting for 50.9% of last year's level.

With all these efforts the performance of our hotels continued to improve, with our occupancy rate approaching 85% during the October Golden week, nearly the same as last year. In November, our occupancy rate rebounded to nearly the same level as last year, and RevPAR recovered to almost 95% of last year's level.

Guidance

So far in 2020, our operations are in line with our previous forecast. Assuming the pandemic remains under control in China in Q4, the Company expects a decline in total revenues of 12%-15% for the full year 2020, 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 December 2, 2020 (9:00 AM Beijing/Hong Kong Time on December 3, 2020).

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 call will be available after the conclusion of the conference call until December 9, 2020.

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:

10149105

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 September30, 2020, GreenTree had a total number of 4,195 hotels. In 2019, GreenTree ranked among the Top 12 worldwide in terms of number of hotels in "World's Largest Hotel Companies: HOTELS' 325", published by HOTELS magazine, and was as well the fourth largest hospitality company in China in 2019 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.


---Financial Tables and Operational Data Follow—

                                

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets



December 31,


September 30,


September 30,

2019


2020


2020


RMB


RMB


US$

ASSETS






Current assets:






Cash and cash equivalents

319,847,701


567,434,639


83,574,090

Short-term investment

437,279,026


205,186,988


30,220,777

Investments in equity securities

207,007,926


181,974,105


26,801,889

Accounts receivable, net of allowance

99,701,226


121,005,102


17,822,125

Amounts due from related parties

31,739,731


29,114,524


4,288,106

Prepaid rent

18,794,665


8,230,135


1,212,168

Inventories

2,537,717


4,064,736


598,671

Other current assets

66,004,017


62,839,705


9,255,288

Loans receivable, net

82,312,201


181,054,867


26,666,500

Total current assets

1,265,224,210


1,360,904,801


200,439,614







Non-current assets:






Restricted cash

22,312,522


22,169,900


3,265,273

Long-term time deposits

560,000,000


570,000,000


83,951,926

Loan receivable, net

121,563,742


163,841,761


24,131,283

Property and equipment, net

614,936,505


641,366,729


94,463,110

Intangible assets, net

496,280,316


492,028,655


72,467,989

Goodwill

100,078,236


100,231,487


14,762,503

Long-term investments

398,637,701


410,512,592


60,461,970

Other assets

76,957,992


56,102,628


8,263,023

Deferred tax assets

160,488,193


170,466,037


25,106,934

 TOTAL ASSETS

3,816,479,417


3,987,624,590


587,313,625













LIABILITIES AND EQUITY






Current liabilities:






Short-term bank loans

60,000,000


60,000,000


8,837,045

Accounts payable

15,296,042


22,783,708


3,355,678

Advance from customers

40,105,627


32,007,939


4,714,260

Amounts due to related parties

3,518,031


1,991,598


293,331

Salary and welfare payable

42,650,527


52,459,503


7,726,450

Deferred rent

5,179,664


1,454,458


214,218

Deferred revenue

231,925,272


239,482,475


35,271,956

Accrued expenses and other current liabilities

302,448,361


310,355,001


45,710,351

Income tax payable

93,909,177


63,387,103


9,335,911

Total current liabilities

795,032,701


783,921,785


115,459,200







Deferred rent

17,821,686


26,330,439


3,878,055

Deferred revenue

410,807,248


370,646,075


54,590,267

Other long-term liabilities

118,112,511


136,266,485


20,069,884

Deferred tax liabilities

195,303,547


206,682,669


30,441,067

Unrecognized tax benefits

261,641,717


275,349,655


40,554,621

 TOTAL LIABILITIES

1,798,719,410


1,799,197,108


264,993,094







Shareholders' equity:






Class A ordinary shares

219,526,699


222,587,070


32,783,531

Class B ordinary shares

115,534,210


115,534,210


17,016,349

Additional paid-in capital

1,152,108,217


1,149,280,404


169,270,709

Retained earnings

308,698,533


484,484,710


71,356,886

Accumulated other comprehensive income

65,300,854


64,250,172


9,463,028

Total GreenTree Hospitality Group Ltd. shareholders'
equity

1,861,168,513


2,036,136,566


299,890,503







Non-controlling interests

156,591,494


152,290,916


22,430,028

Total shareholders' equity

2,017,760,007


2,188,427,482


322,320,531







TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

3,816,479,417


3,987,624,590


587,313,625

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income



Quarter Ended


 Nine Months Ended


 September 30,
2019


 September 30,
2020


 September 30,
2020


 September 30,
2019


 September 30,
2020


 September 30,
2020


RMB


RMB


US$


RMB


RMB


US$

Revenues












Leased-and-operated hotels

72,530,518


66,823,544


9,842,044


184,867,320


150,961,027


22,234,156

Franchised-and-managed hotels

219,606,332


200,044,031


29,463,302


617,493,389


489,292,503


72,064,997

Total revenues

292,136,850


266,867,575


39,305,346


802,360,709


640,253,530


94,299,153













Operating costs and expenses












Hotel operating costs

(87,277,200)


(108,025,295)


(15,910,406)


(246,216,861)


(292,705,145)


(43,110,808)

Selling and marketing expenses

(20,785,447)


(21,273,500)


(3,133,248)


(61,815,183)


(51,114,478)


(7,528,349)

General and administrative expenses

(39,891,061)


(44,782,915)


(6,595,811)


(105,391,932)


(121,672,457)


(17,920,417)

Other operating expenses

(53,736)


(434,792)


(64,038)


(161,710)


(1,633,064)


(240,524)

Total operating costs and expenses

(148,007,444)


(174,516,502)


(25,703,503)


(413,585,686)


(467,125,144)


(68,800,098)













Other operating income

8,449,390


8,577,445


1,263,321


16,995,685


27,671,358


4,075,551

Income from operations

152,578,796


100,928,518


14,865,164


405,770,708


200,799,744


29,574,606













Interest income and other, net

18,055,095


23,140,692


3,408,256


52,283,638


47,861,876


7,049,293

Interest expense

(735,927)


(203,604)


(29,988)


(2,121,402)


(2,941,850)


(433,288)

(Losses)/gains from investment in
equity securities

(21,796,444)


2,905,553


427,942


54,040,607


(9,734,782)


(1,433,778)

Other income, net

-


517,981


76,290


2,690,742


517,981


76,290

Income before income taxes

148,101,520


127,289,140


18,747,664


512,664,293


236,502,969


34,833,123













Income tax expense

(46,994,932)


(41,821,938)


(6,159,706)


(150,211,254)


(72,398,501)


(10,663,147)

Income before share of gains in equity
investees

101,106,588


85,467,202


12,587,958


362,453,039


164,104,468


24,169,976













Share of gains in equity investees, net of tax

1,067,166


170,211


25,070


779,369


1,118,542


164,743

Net income

102,173,754


85,637,413


12,613,028


363,232,408


165,223,010


24,334,719













Net losses/(gains) attributable to non-
controlling interests

939,576


(2,347,248)


(345,713)


3,271,890


10,563,167


1,555,787

Net income attributable to ordinary
shareholders

103,113,330


83,290,165


12,267,315


366,504,298


175,786,177


25,890,506













Net earnings per share












Class A ordinary share-basic and
diluted

1.01


0.81


0.12


3.60


1.71


0.25

Class B ordinary share-basic and
diluted

1.01


0.81


0.12


3.60


1.71


0.25













Net earnings per ADS












Class A ordinary share-basic and
diluted

1.01


0.81


0.12


3.60


1.71


0.25

Class B ordinary share-basic and
diluted

1.01


0.81


0.12


3.60


1.71


0.25













Weighted average shares outstanding












Class A ordinary share-basic and
diluted

67,416,046


68,286,954


68,286,954


67,183,025


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

19,606,912


(11,616,690)


(1,710,954)


15,824,409


(7,800,682)


(1,148,916)

Unrecognized gain on an available-for-
sale investment

-


6,750,000


994,168


-


6,750,000


994,168

Comprehensive income, net of tax

121,780,666


80,770,723


11,896,242


379,056,817


164,172,328


24,179,971













Comprehensive (losses)/income attributable to
non-controlling interests

939,576


(2,347,248)


 

(345,713)


3,271,890


10,563,167


1,555,786

Comprehensive income attributable
to ordinary shareholders

122,720,242


78,423,475


11,550,529


382,328,707


174,735,495


25,735,757

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows



 Quarter Ended


 Nine Months Ended


 September 30, 2019


 September 30, 2020


 September 30, 2020


 September 30, 2019


 September 30, 2020


 September 30, 2020


RMB


RMB


US$


RMB


RMB


US$

Operating activities:












Net income

102,173,754


85,637,413


12,613,028


363,232,408


165,223,010


24,334,719













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












Depreciation and amortization

11,069,474


18,063,004


2,660,393


26,890,288


50,068,849


7,374,344

Share of gains in equity method investments

(757,717)


(170,211)


 

(25,070)


(469,920)


(1,118,542)


(164,743)

Gains from disposal of a long-term investment

(309,449)


-


-


(309,449)


-


-

Interest income

(4,248,415)


(2,217,211)


(326,560)


(14,662,224)


(7,059,071)


(1,039,689)

Bad debt expense

10,663,023


4,123,789


607,368


5,663,910


22,052,714


3,248,014

Losses/(gains) from investment in equity securities

21,796,444


(2,905,553)


(427,942)


(54,040,607)


9,734,782


1,433,778

Foreign exchange losses/(gains)

614,390


(51,687)


(7,613)


85,951


(261,556)


(38,523)

Share-based compensation

7,522,984


-


-


18,632,776


232,558


34,252

Income tax expenses related to dividend distribution
or retained profits

4,140,689


6,486,874


955,413


11,940,633


14,576,403


2,146,872

Contingent consideration included in other current
liabilities and other assets

-


2,046,066


301,353


-


2,046,066


301,353













Changes in operating assets and liabilities:












Accounts receivable

(6,591,451)


(4,658,499)


(686,123)


(30,460,379)


(43,356,590)


(6,385,736)

Prepaid rent

(2,070,338)


642,280


94,599


(1,358,757)


10,564,530


1,555,988

Inventories

(55,490)


(1,274,556)


(187,722)


1,113,304


(1,511,933)


(222,684)

Amounts due from related parties

(1,974,899)


8,625,331


1,270,374


(1,996,450)


10,135,528


1,492,802

Other current assets

4,784,543


(18,021,028)


(2,654,211)


4,970,725


(3,193,950)


(470,418)

Other assets

4,267,763


(8,142,812)


(1,199,306)


(7,875,091)


(17,157,334)


(2,527,002)

Accounts payable

1,332,798


4,598,670


677,311


3,302,907


7,487,666


1,102,814

Amounts due to related parties

(76,817)


521,868


76,863


755,531


(1,526,433)


(224,819)

Salary and welfare payable

(471,404)


8,405,275


1,237,963


(5,521,054)


9,778,026


1,440,148

Deferred revenue

5,676,928


6,439,785


948,478


10,502,629


(32,603,970)


(4,802,046)

Advance from customers

3,127,446


(339,768)


(50,042)


849,222


(8,097,688)


(1,192,661)

Accrued expenses and other current liabilities

3,050,771


36,865,011


5,429,629


31,312,003


16,760,864


2,468,608

Income tax payable

11,452,280


15,896,890


2,341,359


(15,880,832)


(30,522,077)


(4,495,416)

Unrecognized tax benefits

7,662,789


16,917,849


2,491,730


36,577,122


13,707,938


2,018,961

Deferred rent

(681,471)


632,148


93,106


(2,532,739)


4,783,547


704,541

Other long-term liabilities

8,456,070


424,893


62,580


12,049,539


1,603,859


236,223

Deferred taxes

(2,297,390)


(3,180,335)


(468,413)


2,700,045


(15,548,950)


(2,290,113)

Net cash provided by operating activities

188,257,305


175,365,486


25,828,545


395,471,491


176,798,246


26,039,567













Investing activities:












Purchases of property and equipment

(33,707,518)


(26,948,009)


(3,969,013)


(47,218,828)


(68,576,946)


(10,100,293)

Purchases of intangible assets

-


-


-


-


(9,075)


(1,337)

Proceeds from disposal of property and equipment

-


60,262


8,876


1,300,000


71,387


10,514

Acquisitions, net of cash received

(4,318,317)


(6,660,000)


(980,912)


(248,978,924)


(7,915,807)


(1,165,872)

Advances for acquisitions

(11,244,749)


-


-


(59,111,449)


-


-

Repayment of advances for acquisitions

-


872,700


128,535


-


36,312,700


5,348,283

Purchases of short-term investments

(405,305,933)


(610,180)


(89,870)


(617,825,906)


(148,300,207)


(21,842,260)

Proceeds from short-term investments

4,248,415


8,817,211


1,298,635


761,078,783


407,451,316


60,011,093

Increase of long-term time deposits

(40,000,000)


-


-


(500,000,000)


(30,000,000)


(4,418,522)

Purchases of investments in equity securities

(65,086,928)


-


-


(89,123,279)


-


-

Purchases of long term investments

-


-


-


(247,456,740)


-


-

Proceeds from disposal of equity securities

76,361,856


263,768


38,849


221,583,600


263,768


38,849

Dividends received from investment in equity
securities

-


5,081,888


748,481


-


7,622,306


1,122,644

Proceeds from disposal of equity method investments

-


-


-


-


6,380,000


939,672

Loan to a related party

 

(220,536,455)


(119,400,000)


(17,585,719)


(337,516,205)


(304,766,500)


(44,887,254)

Repayment from a related party

 

220,300,000


111,100,000


16,363,261


337,279,750


297,256,179


43,781,103

Loan to third parties

(104,000,000)


(3,800,000)


(559,680)


(255,775,219)


(7,000,000)


(1,030,987)

Repayment of loan from third parties

-


-


-


121,280,219


-


-

Loan to franchisees

(34,861,152)


(59,310,002)


(8,735,419)


(66,451,152)


(205,761,780)


(30,305,435)

Repayment from franchisees

3,187,806


35,586,060


5,241,260


10,455,159


70,801,095


10,427,874

Net cash (used in)/provided by investing activities

(614,962,975)


(54,946,302)


(8,092,716)


(1,016,480,191)


53,828,436


7,928,072













Financing activities:












Distribution to the shareholders

-


-


-


(208,025,814)


-


-

Proceeds from short-term borrowings

-


2,997,225


441,444


-


21,437,555


3,157,411

Repayment of short-term borrowings

-


(10,000,000)


(1,472,841)


-


(10,000,000)


(1,472,841)

Capital contribution from noncontrolling interest
holders

2,370,000


2,884,202


424,797


12,760,000


6,262,589


922,380

Net cash provided by/(used in) financing activities

2,370,000


(4,118,573)


(606,600)


(195,265,814)


17,700,144


2,606,950













Effect of exchange rate changes on cash and cash
equivalents and restricted cash

8,375,549


(1,474,708)


(217,201)


(64,704)


(882,510)


(129,980)

Net (decrease) increase in cash and cash
equivalents and restricted cash

(415,960,121)


114,825,903


16,912,028


(816,339,218)


247,444,316


36,444,609

Cash and cash equivalents and restricted cash at the
beginning of the period

866,946,688


474,778,636


69,927,335


1,267,325,785


342,160,223


50,394,754

Cash and cash equivalents and restricted cash at
the end of the period

450,986,567


589,604,539


86,839,363


450,986,567


589,604,539


86,839,363

 

 

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results



Quarter Ended


 Nine Months Ended


 September 30, 2019


 September 30, 2020


 September 30, 2020


 September 30, 2019


 September 30, 2020


 September 30, 2020


RMB


RMB


US$


RMB


RMB


US$

Net income

102,173,754


85,637,413


12,613,028


363,232,408


165,223,010


24,334,719













Deduct:












Other operating income

8,449,390


8,577,445


1,263,321


16,995,685


27,671,358


4,075,551

Gains from investment in equity securities

-


2,905,553


427,942


54,040,607


45,440,136


6,692,609

Share of gain in equity investees, net of tax

1,067,166


170,211


 

25,070


779,369


1,118,542


164,743

Other income, net

-


517,981


76,290


2,690,742


517,981


76,290













Add:












Other operating expenses

53,736


434,792


64,038


161,710


1,633,064


240,524

Income tax expense

46,994,932


41,821,938


6,159,706


150,211,254


72,398,501


10,663,147

Interest expense

735,927


203,604


29,988


2,121,402


2,941,850


433,288

Share-based compensation

7,643,465


-


-


19,819,047


232,558


34,252

Depreciation and amortization

7,172,700


18,063,004


2,660,393


22,993,514


50,068,849


7,374,344

Losses from investment in equity securities

21,796,444


-


-


-


55,174,918


8,126,387

Adjusted EBITDA (Non-GAAP)

177,054,402


133,989,561


19,734,530


484,032,932


272,924,733


40,197,468














Quarter Ended


 Nine Months Ended


 September 30, 2019


 September 30, 2020


 September 30, 2020


 September 30, 2019


 September 30, 2020


 September 30, 2020


RMB


RMB


US$


RMB


RMB


US$

Net income

102,173,754


85,637,413


12,613,028


363,232,408


165,223,010


24,334,719













Deduct:












Government subsidies (net of 25% tax)

-


1,005,153


148,043


5,048,981


14,217,238


2,093,973

Gains from investment in equity securities  (net
of 25% tax)

-


2,179,165


320,956


40,530,455


34,080,102


5,019,457

Other income  (net of 25% tax)

-


388,486


57,218


2,018,057


388,486


57,218













Add:












Share-based compensation

7,643,465


-


-


19,819,047


232,558


34,252

Losses from investments in equity securities  (net
of  25% tax)

16,347,333


-


-


-


50,081,189


7,376,162

One-off selling expense(net of 25% tax)

4,306,969


-


-


4,306,969


-


-

One-time fees and expense

210,000


3,839,368


565,478


1,153,650


3,839,368


565,478

One-time provision of bad debt

-


-


-


-


9,501,082


1,399,358

Income tax expenses related to dividend
distribution

4,140,689


6,486,874


955,413


11,940,633


14,576,403


2,146,872

Core net income(Non-GAAP)

134,822,210


92,390,851


13,607,702


352,855,214


194,767,784


28,688,193

























Core net income per ADS (Non-GAAP)












Class A ordinary share-basic and diluted

1.32


0.90


0.13


3.46


1.89


0.28

Class B ordinary share-basic and diluted

1.32


0.90


0.13


3.46


1.89


0.28

 

 

Operational Data


As of September 30, 2019

As of September 30, 2020

 Total hotels in operation:

3,102

4,195

 Leased-and-owned hotels

30

37

 Franchised hotels

3,072

4,158

 Total hotel rooms in operation

245,705

305,125

 Leased-and-owned hotels

3,724

4,620

 Franchised hotels

241,981

300,505

 Number of cities

309

341








Quarter Ended

As of September 30, 2019

As of September 30, 2020

 Occupancy rate (as a percentage)



 Leased-and-owned hotels

73.1%

70.6%

 Franchised hotels

86.1%

79.3%

 Blended

85.9%

79.1%

 Average daily rate (in RMB)



 Leased-and-owned hotels

224

171

 Franchised hotels

173

151

 Blended

174

151

RevPAR (in RMB)



 Leased-and-owned hotels

164

121

 Franchised hotels

149

120

 Blended

149

120

 


Number of Hotels in Operation

Number of Hotel Rooms in Operation


As of September 30, 2019

As of September 30, 2020

As of September 30, 2019

As of September 30, 2020

Luxury

21

20

4,739

4,042

Argyle

21

20

4,739

4,042

 Mid-to-up-scale

171

337

17,147

30,303

 GreenTree Eastern

100

137

10,691

14,305

 Deepsleep Hotel (无眠酒店)

2

3

161

221

 Gem

22

33

2,002

3,016

 Gya

18

39

1,566

3,340

 Vx

19

32

1,544

2,563

Ausotel

10

12

1,183

1,561

Urban Garden and others*

/

81

/

5,297

 Mid-scale

2,412

2,684

202,235

217,922

 GreenTree Inn

1,986

2,113

169,889

178,179

 GT Alliance

297

321

22,951

24,560

 GreenTree Apartment

7

13

373

862

Vatica                                    

122

123

9,022

8,925

City 118 Selected and others*

/

114

/

5,396

 Economy hotels

498

1,154

21,584

52,858

Shell

498

593

21,584

25,791

City 118 and others*

/

561

/

27,067

Total

3,102

4,195

245,705

305,125

 * Others include other brands in each segment of Urban.

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

1  The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.7896 on September 30, 2020 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20201005/

2  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.

Cision View original content:http://www.prnewswire.com/news-releases/greentree-hospitality-group-ltd-reports-third-quarter-2020-financial-results-301185175.html

SOURCE GreenTree Hospitality Group Ltd.

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