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Public company info - Zhejiang New Century Hotel Management Co. Ltd.- H Shares , 01158.HK
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Zhejiang New Century Hotel Management Co. Ltd.- H Shares, 01158.HK - Company Profile
Chairman Jin Wenjie
Share Issued (share) 70,000,000
Par Currency Renminbi
Par Value 1.0
Industry Hotels & Resorts
Corporate Profile Business Summary: The group is principally engaged in hotel operation and management business in the PRC. Performance for the year: The Group’s revenue for the year ended 31 December 2020 (“FY2020” or “Reporting Period”) was approximately RMB1,597.7 million, decreased by approximately 17.1% from approximately RMB1,928.0 million in the corresponding period of 2019 (“FY2019”). The Group’s earnings before interest, tax, depreciation and amortization (“EBITDA”) for the year ended 31 December 2020 decreased from approximately RMB741.9 million in the corresponding period of 2019 to approximately RMB563.3 million, representing a decrease of 24.0%. The EBITDA rate for the year ended 31 December 2020 decreased from approximately 38.5% in 2019 to approximately 35.3%. The Group’s gross profit for the year ended 31 December 2020 was approximately RMB334.6 million, decreased by approximately 40.8% from approximately RMB565.0 million in the corresponding period of 2019. The gross profit margin for the year ended 31 December 2020 was approximately 20.9%, decreased by approximately 8.4 percentage points from approximately 29.3% in the corresponding period of 2019. The Group’s net profit for the year ended 31 December 2020 was approximately RMB26.6 million, decreased by approximately 87.0% from approximately RMB205.0 million in the corresponding period of 2019. During the year ended 31 December 2020, the profit and total comprehensive income attributable to owners of the Company was approximately RMB19.7 million, decreased by approximately 90.3% from approximately RMB202.4 million in the corresponding period of 2019. During the year ended 31 December 2020, the basic and diluted earnings per share was approximately RMB0.07, decreased by approximately 90.8% from approximately RMB0.76 in the corresponding period of 2019. Business Review In 2020, the unanticipated outbreak of COVID-19 (the “pandemic”) spurred on a turbulent and transformative period for the world, resulting in a historic recession in the global economy pandemic. Despite the PRC economy being under domestic and international pressure, China was one of the first countries in the world to succeed in epidemic prevention and control and resumed economic and social development in 2020. A new development mode was taking shape in the PRC with domestic circulation as the mainstay and mutual promotion of the domestic and international “dual circulation”. Following stringent epidemic control measures in the first quarter, an effective recovery of the market demand in the hotel industry was driven by: highly efficient and accurate COVID-19 testing, resumption of domestic flights and flights to popular destinations, consumers’ confidence in travelling to nearby and cross-province destinations and travelling for business and small scale conferences and exhibitions, as well as the support mechanism implemented by governments for the prevention and control of epidemics and the promotion of the economic domestic circulation. As one of the leading enterprises in the hotel industry in the PRC, the Group actively responded and took appropriate measures in light of the pandemic and its continuing impact. On the one hand, the Group has always focused on the development strategy of the Company, clearly defined the Group's development positioning, focused on the Group's mission, implemented transformation, integrated internal and external resources, and achieved innovative chains in terms of space, management, services, marketing and business model. On the other hand, the Group has re-examined the Group's corporate social responsibility development strategy and launched a new “Kaiyuan Cares” (至美開元) corporate social responsibility plan; strengthened the Group's brand marketing and actively explored the model of selling products via live broadcast in the Group's hotels to enhance their capacity of content-led trading. Leveraging its well-established organization mechanism and independent innovation advantages, the Group continued to maintain the Group's leading position in the face of adversities. During the Reporting Period, the Group recorded a revenue of approximately RMB1,597.7 million, representing a decrease of approximately 17.1% as compared to the same period last year, which was mainly attributable to the impact of the pandemic, and the gross profit of the Group was approximately RMB334.6 million, representing a decrease of approximately 40.8% as compared to the same period last year, and the EBITDA of the Group was approximately RMB563.3 million, representing a decrease of approximately 24.0% as compared to the same period last year, which was mainly attributable to the significant decrease in revenue due to the impact of the pandemic. Profit attributable to owners of the Company was approximately RMB19.7 million, representing a decrease of approximately 90.3% as compared with the same period of last year, which was mainly attributable to the significant decrease in profit due to a significant decrease in revenue, while expenses such as depreciation and amortisation increased as the number of hotels increased. During the Reporting Period, the Group had 147 newly contracted hotels in total (2019: 150). The number of contracted hotels decreased due to the impact of the pandemic as compared to the same period last year, however the total amount of contracted hotels reflected a steady growth trend, which reflected the increasing influence of the “New Century Hotel” brand throughout the PRC. As at 31 December 2020, the Group’s hotel portfolio consisted of 311 hotels in operation (as at 31 December 2019: 216), with approximately 59,231 rooms (as at 31 December 2019: 44,785) throughout China, representing an increase of approximately 44.0% and approximately 32.3% as compared to 31 December 2019, respectively. Among the 311 hotels in operation, 228 were under full service management agreements, 40 were under franchise agreements, two were owned hotels, three were hotels managed by third parties, and 38 were under lease agreements. As at 31 December 2020, the Group had 278 hotels in the pipeline with over 50,000 rooms, representing an increase of approximately 16.3% and 12.0% respectively as compared to 31 December 2019. During the Reporting Period, hotels operating under the “New Century Hotel” brand received 15 awards and accolades including the Quality Award from the Zhejiang Provincial Government, improving the Group's public and market recognition. New Century hotel group ranked 18th in terms of scale among global hotel groups, maintaining the industry leading position of the global top 30 hotel groups for five consecutive years; ranked first in terms of scale of full-service hotels among China hotel groups, and being included in top 60 of China hotel groups for six consecutive years. Hotel operation segment During the Reporting Period, the Group’s revenue generated from the hotel operation segment amounted to approximately RMB1,408.0 million, representing a decrease of approximately 16.7% as compared to the previous year. In spite of the pandemic, the Group strived to create a new driver for revenue growth by focusing on developing new hotel projects in the upscale and mid-scale markets. During the Reporting Period, Hangzhou Boao Grand New Century Hotel and Inner Mongolia Grand New Century Hotel, two upscale full-service hotels leased and operated by the Group, were opened in February 2020 and June 2020, respectively. Nanchang Qingshan Lake Manju Hotel, a mid-scale select service hotel, commenced operation in April 2020, while New Century Yuyao Manju Hotel converted from entrustment to leased operation and New Century Manju Hotel Wanda Plaza Minhang Shanghai ceased operation due to property issues. The leasing agreement of New Century Maison Changzhou Taihu Bay was terminated due to change in ownership of the hotel. As a result, the number of operated hotels increased from 38 as at the end of 2019 to 40 at the end of the Reporting Period. Owned hotels As at 31 December 2020, the Group owned two hotels with 382 hotel rooms, accounted for approximately 0.6% of the total hotel rooms in operation. Leased hotels In the Reporting Period, while enhancing the brand value by expanding the national hotel network rapidly with the entrusted management model, the Group actively sought opportunities of leasing hotels at reasonable rents to create a new driver for revenue and profit growth. Four new leased hotels commenced operation during the Reporting Period. As at 31 December 2020, the Group had 38 leased hotels with 9,897 hotel rooms, accounting for approximately 16.7% of the total hotel rooms in operation. Operating data Due to the aforementioned impact of the pandemic, the occupancy rate and average room rate of all types of hotels have declined significantly. As the impact of the pandemic relatively eased in the second half of 2020, the RevPAR of all types of hotels rebounded significantly in the second half of 2020 and reached the combined annual levels for each type of hotels as set out above. Among which, the RevPAR of upscale business hotels was RMB239.9 in the second half of 2020, representing an increase of 103.8% from RMB117.7 in the first half of 2020, the RevPAR of upscale resort hotels was RMB351.8 in the second half of 2020, representing an increase of 89.8% from RMB185.4 of the first half of 2020, and the RevPAR of mid-scale full service hotels was RMB181.5 in the second half of 2020, representing an increase of 88.5% from RMB96.3 of the first half of 2020. F&B services In 2020, as travelling was restricted due to the pandemic, the demand of conference decreased significantly. With easing of travelling restriction in the second half of 2020, wedding banquets and short and local trips significantly increased. In the second half of 2020, the utilization rate of seats was 67.18%, representing a decrease of just 6.06% from 73.24% in the second half of 2019 and a significant increase when compared to the year-on-year decrease of 34.9% recorded in the first half of 2020. Revenue per sq.m. of banquet rooms was RMB5,727.75 in the second half of 2020, representing an increase of 14.87% from RMB4,986.41 in the second half of 2019. Hotel Management Segment During the Reporting Period, the Group recorded a revenue of approximately RMB189.7 million from the hotel management segment, representing a year-on-year decrease of approximately 20.3%. Although the number of managed hotels from new openings increased during the Reporting Period, after the outbreak of the pandemic, the Group proactively waived the management fees of all entrusted hotels from 24 January to 31 March 2020; and subsequently from 1 April to 30 June 2020, the performance of each hotel also dropped significantly, with the revenue of the hotel management segment recording a year-on-year decrease of 44.7% in the first half of 2020. In the second half of 2020, as the pandemic was gradually brought under control in the PRC, the performance of all hotels gradually recovered, and the revenue of the hotel management segment recovered to a year-on-year decrease of 2.9% for the Reporting Period. Prospects: During the Reporting Period, in view of the normalisation of pandemic control measures and the revival of domestic tourism, fresh demand for tourism spending had accumulated continuously. Basing on the Group's development strategy, the Group focused on the demand for residents’ tourism and faced the challenges of the industry in a reformed, open and innovative manner, consolidating the Group's core competitiveness. Looking ahead, there will continue to be challenges and opportunities in the hotel industry in China. The impact of the pandemic is extensive and far-reaching. Although the global economy is likely to see a general recovery in the near future, the external environment is still complex and volatile and the probability of a significant economic recovery is low. In terms of the domestic economy, as the 14th Five-year Plan begins, the PRC government’s economic work will closely align with the targets and goals of the 14th Five-year Plan and the Group expect China will strive to promote reform and innovation and accelerate the establishment of a new development landscape. Meanwhile, as the spending power of residents on tourism and the demand for diverse tourism cultural products continue to grow, it will be a challenge for the hotel industry to develop in both quality and scale, presenting an opportunity for the industry to increase its overall competitiveness. The Company will adhere to the Group's development strategy of “leading upscale development and winning in mid-scale market”, facilitate project development through diversified cooperation, and strengthen strategic cooperation, joint venture and alliance to promote regional development. The Company will improve channel construction, accelerate the establishment of presence throughout the country and expansion to strategic cities, improve the development of key brand projects and improve quality control, maintain the Group’s competitive edge in the upscale hotel market and fully promote the rapid development of mid-scale hotels. The Group believes the following competitive strengths will provide a solid foundation for the Group’s rapid development in the future: (i) being one of the leading upscale hotel groups in China with strong brand recognition; (ii) a strong portfolio of hotel brands with extensive network in China and with strong pipeline of new hotel projects; (iii) distinct synergy in executing a business model combining both hotel operation and hotel management businesses; (iv) significant experience as a hotel group in China; (v) the Company’s diverse and effective hotel reservation channels and loyalty program provides wide hotel guest exposure; and (vi) experienced and professional management team and a dedicated workforce. The Group intends to seize market opportunities by implementing the following strategies: (i) adhere to and improve the Group's talent training strategies, especially the three-tier talent training plan; (ii) complete the Group's coverage of key cities and improve the nationwide hotel network; (iii) rapidly expand mid-scale hotel business with targeted launch of mid-scale hotels offering unique designs and experience so as to increase the Group's mid-scale market share; (iv) increase marketing activities and crossover marketing initiatives to maintain the Group's strong brand recognition and expand the Group's guests base; (v) further investment and development in innovative digital strategies and improving operational efficiency; and (vi) using the Group's wealth of financial resources to strategically develop the business of the Group through business acquisitions and cooperation. The Group will continuously innovate the Group's products and services, improve operational and management efficiency, serving hotel guests to their satisfaction while creating value for hotel owners.

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