GreenTree Hospitality Group Results

GreenTree Hospitality Group Ltd. Reports Second Quarter 2018 Financial Results

GreenTree Inn

  • A total of 2,434 hotels with 201,275 hotel rooms were in operation as of June 30, 2018, as compared to 2,354 hotels and 195,552 hotel rooms as of March 31, 2018. 
  • Total revenues increased 20.3% year-over-year from RMB193.9 million for the second quarter of 2017 to RMB233.4 million (US$35.3 million)[1] for the second quarter of 2018. Total revenues increased 21.7% year-over-year from RMB360.2 million for the first half of 2017 to RMB438.3 million (US$66.2 million) for the first half of 2018.
  • Adjusted EBITDA (non-GAAP) increased 21.2% year-over-year from RMB114.8 million for the second quarter of 2017 to RMB139.2 million (US$21.0 million)[1] for the second quarter of 2018. Adjusted EBITDA (non-GAAP) increased 24.8% year-over-year from RMB202.5 million for the first half of 2017 to RMB252.8 million (US$38.2 million)[1] for the first half of 2018.
  • Core net income (non-GAAP) increased 24.7% year-over-year from RMB88.9 million for the second quarter of 2017 to RMB110.9 million (US$16.8million)[1] for the second quarter of 2018. Core net income (non-GAAP) increased 25.9% year-over-year from RMB154.8 million for the first half of 2017 to RMB194.8 million (US$29.4 million)[1] for the first half of 2018.
  • Basic and diluted core net income per ADS (non-GAAP) were RMB1.09 (US$0.16)[1] for the second quarter of 2018. Basic and diluted core net income per ADS (non-GAAP) were RMB2.01 (US$0.30)[1] for the first half of 2018.
  • As of June 30, 2018, the Company had a strong pipeline with a total of 477 hotels contracted for or under development. For the second quarter of 2018, the Company opened 104 F&M hotels, compared to 97 hotels for the second quarter of 2017.
  • The Company reaffirmed guidance for growth in full year 2018 total revenues of 20-25% from 2017.

GreenTree Hospitality Group Ltd. (NYSE :GHG ), a leading franchised hotel operator in China, today announced its unaudited financial results for the second quarter ended June 30, 2018.

Second Quarter of 2018 Operational Highlights

  • As of June 30, 2018, GreenTree had 26 leased-and-operated ("L&O") hotels and 2,408 franchised-and-managed ("F&M") hotels in operation in 267 cities across China, compared to 26 L&O hotels and 2,328 F&M hotels in operation in 266 cities as of March 31, 2018.
  • In the second quarter of 2018, the Company opened 104 F&M hotels, 68 in the mid-scale segment, 5 in the business to mid-to-up-scale segment and 31 in the economy segment. Of the hotels opened, 7 hotels were in Tier 1 cities[2], 22 in Tier 2 cities[3] and the remaining 75 hotels in other cities in China, while the Company closed a total of 24 F&M hotels in the quarter.
  • As of June 30, 2018, the Company had a strong pipeline with a total of 477 hotels contracted for or under development.
  • The average daily room rate, or ADR, for all hotels in operation, was RMB164 in the second quarter of 2018, compared to RMB156 in the second quarter of 2017, an increase of 5.1% year-over-year.
  • The occupancy rate for all hotels in operation was 82.6% in the second quarter of 2018, compared to 83.2% in the second quarter of 2017, a decrease of 0.6% year-over-year.
  • The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB136 in the second quarter of 2018, representing a 4.6% year-over-year increase from RMB130 in the second quarter of 2017.

As of June 30, 2018, we had approximately 24 million individual loyal members and over 930,000 corporate members, compared to approximately 22 million and over 860,000 respectively, as of March 31, 2018. During the second quarter of 2018, we sold approximately 95.4% of our room nights through our direct sales channels, including our individual loyal members and corporate members, while online travel agencies, or OTAs, only contributed approximately 4.6% of our room nights.

"After our successful listing on the NYSE on March 27, 2018, we continued to execute our organic growth strategy in the second quarter." commented Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree. "We continue to grow our pipeline and are on track to open more new hotels in the second half of the year. We are also actively searching for appropriate acquisition opportunities, which we believe will build a stronger hotel platform and create long-term shareholder value."

Second Quarter of 2018 Financial Results

Quarter Ended

June 30, 2017

June 30, 2018

June 30, 2018

RMB

RMB

USD

Revenues

Leased-and-operated hotels

47,063,998

49,740,478

7,516,960

Franchised-and-managed hotels

134,262,270

165,509,815

25,012,440

Membership fees

12,619,532

18,103,997

2,735,941

Total revenues

193,945,800

233,354,290

35,265,341

First Half of 2018 Financial Results

Six months Ended

June 30, 2017

June 30, 2018

June 30, 2018

RMB

RMB

USD

Revenues

Leased-and-operated hotels

88,826,814

93,915,936

14,192,915

Franchised-and-managed hotels

246,498,634

309,378,578

46,754,406

Membership fees

24,887,139

35,003,197

5,289,809

Total revenues

360,212,587

438,297,711

66,237,130

Total revenues for the second quarter of 2018 were RMB233.4 million (US$35.3 million)[1], representing a 20.3% increase over second quarter 2017. Total revenues for the first half of 2018 were RMB438.3 million (US$66.2 million)[1], representing a 21.7% increase over first half of 2017. The year-over-year increase in the second quarter of 2018 was primarily attributable to the net additional 80 F&M hotels to our network, the opening of a new L&O hotel in Shanghai in June 2017, improved RevPar for both F&M and L&O hotels as well as membership growth; and was partially offset by the conversion of five L&O hotels to F&M hotels after the first quarter of 2017.

  • Total revenues from leased-and-operated hotels for the second quarter of 2018 were RMB49.7 million (US$7.5 million)[1], representing a 5.7% year-over-year increase. Total revenues from leased-and-operated hotels for the first half of 2018 were RMB93.9 million (US$14.2 million)[1], representing a 5.7% year-over-year increase. The year-over-year increase in the second quarter of 2018 was attributable to RevPAR growth of 8.4% and moderate sublease revenue growth, resulting from a GreenTree Eastern hotel opened in Shanghai in June 2017, and partially offset by the conversion of five hotels to F&M hotels after the first quarter of 2017.
  • Total revenues from franchised-and-managed hotels for the second quarter of 2018 were RMB165.5 million (US$25.0 million)[1], representing a 23.3% year-over-year increase. Total revenues from franchised-and-managed hotels for the first half of 2018 were RMB309.4 million (US$46.8 million)[1], representing a 25.5% year-over-year increase. Initial franchise fees increased 20.3% year-over-year in the second quarter of 2018, primarily due to the gross opening of 104 hotels in the second quarter of 2018 as compared to 97 hotels opened in the second quarter of 2017. The 23.6% year-over-year increase in recurring franchisee management fees in the second quarter of 2018 was primarily due to RevPAR growth of 4.7% as well as growth in central reservation system ("CRS") usage fees, annual IT and marketing fees and hotel manager fees, which in turn resulted from the increased number of hotels and hotel rooms in operation. 

Quarter Ended

June 30, 2017

June 30, 2018

June 30, 2018

RMB

RMB

USD

 Initial franchise fee

13,928,628

16,759,749

2,532,794

 Recurring franchise management fee

120,333,642

148,750,066

22,479,646

 Revenues from franchised-and-managed hotels

134,262,270

165,509,815

25,012,440

Six months Ended

June 30, 2017

June 30, 2018

June 30, 2018

RMB

RMB

USD

 Initial franchise fee

21,051,209

29,254,662

4,421,070

 Recurring franchise management fee

225,447,425

280,123,916

42,333,336

 Revenues from franchised-and-managed hotels

246,498,634

309,378,578

46,754,406

  • Membership fees represent the one-time membership fee the Company charges in relation to its paid memberships recognized as our revenue on a straight-line basis over the estimated life of the membership, which is three to six years depending on the membership level. Membership fees totaled RMB18.1 million (US$2.7 million)[1] in the second quarter of 2018, representing a 43.5% year-over-year increase. These fees totaled RMB35.0 million (US$5.3 million)[1] in the first half of 2018, representing a 40.6% year-over-year increase. The year-over-year increase in the second quarter of 2018 was primarily a result of an increase in the number of our paid members from approximately 17 million as of December 31, 2017 to approximately 19 million as of June 30, 2018 as we continued to promote our paid membership program.

Quarter Ended

June 30, 2017

June 30, 2018

June 30, 2018

RMB

RMB

USD

Operating costs and expenses

Hotel operating costs

57,725,535

65,633,713

9,918,803

Selling and marketing expenses

9,401,701

11,555,287

1,746,277

General and administrative expenses

18,146,306

25,150,930

3,800,899

Other operating expenses

295,431

35,330

5,339

Total operating costs and expenses

85,568,973

102,375,260

15,471,318

Six months Ended

June 30, 2017

June 30, 2018

June 30, 2018

RMB

RMB

USD

Operating costs and expenses

Hotel operating costs

114,760,347

130,744,785

19,758,623

Selling and marketing expenses

19,055,646

22,904,354

3,461,389

General and administrative expenses

36,581,236

45,551,787

6,883,950

Other operating expenses

1,148,166

178,592

26,989

Total operating costs and expenses

171,545,395

199,379,518

30,130,951

Hotel operating costs for the second quarter of 2018 were RMB65.6 million (US$9.9 million)[1], compared to RMB57.7 million in the second quarter of 2017, representing a 13.7% year-over-year increase. Hotel operating costs for the first half of 2018 were RMB130.7 million (US$19.8 million)[1], compared to RMB114.8 million in the first half of 2017, representing a 13.9% year-over-year increase. The year-over-year increase in the second quarter of 2018 were mainly attributable to the increased general managers in our hotel network and other costs associated with the expansion of our F&M hotels, and higher rental costs, utilities and personnel cost in the GreenTree Eastern L&O hotel and other L&O hotels; and was partially offset by reduced rental costs, depreciation and amortization and operating costs related to the conversion of five L&O hotels.

Quarter Ended

June 30, 2017

June 30, 2018

June 30, 2018

RMB

RMB

USD

Rental

15,216,595

17,660,357

2,668,897

Utilities

4,093,561

5,104,337

771,386

Personnel cost

6,828,204

7,937,739

1,199,580

Depreciation and amortization

5,601,660

3,714,393

561,332

Consumable, food and beverage

2,803,351

4,602,750

695,584

Costs of general managers of franchised-and-operated hotels

13,756,357

15,729,674

2,377,125

Other costs of franchised-and-operated hotels

5,957,711

7,417,928

1,121,024

Others

3,468,096

3,466,535

523,875

Hotel Operating Costs

57,725,535

65,633,713

9,918,803

Six months Ended

June 30, 2017

June 30, 2018

June 30, 2018

RMB

RMB

USD

Rental

30,516,774

35,292,424

5,333,518

Utilities

8,789,648

10,215,337

1,543,779

Personnel cost

13,230,428

15,169,589

2,292,483

Depreciation and amortization

11,743,087

8,534,806

1,289,811

Consumable, food and beverage

5,548,470

9,039,387

1,366,065

Costs of general managers of franchised-and-operated hotels

26,678,079

31,315,282

4,732,478

Other costs of franchised-and-operated hotels

11,549,511

14,167,964

2,141,114

Others

6,704,350

7,009,996

1,059,375

Hotel Operating Costs

114,760,347

130,744,785

19,758,623

Selling and marketing expenses for the second quarter of 2018 were RMB11.6 million (US$1.7 million)[1], compared to RMB9.4 million in the second quarter of 2017. Selling and marketing expenses for the first half of 2018 were RMB22.9 million (US$3.5 million)[1], compared to RMB19.1 million in the first half of 2017. The year-over-year increase of 22.9% in the second quarter of 2018 was mainly attributable to model room construction, exhibition and other advertising and promotion expenses related to our three new business to mid-to-upscale brands, increased personnel, compensation and other costs (i.e. travel expenses) of business development personnel, as a result of the increased opening of hotels.

General and administrative expenses for the second quarter of 2018 were RMB25.2 million (US$3.8 million)[1], compared to RMB18.1 million in the second quarter of 2017. General and administrative expenses for the first half of 2018 were RMB45.6 million (US$6.9 million)[1], compared to RMB36.6 million in the first half of 2017. The year-over-year increase of 38.6% in the second quarter of 2018 was primarily attributable to increased headquarter staff costs, increased share-based compensation expenses and new IT program expenses.

Gross profit for the second quarter of 2018 was RMB167.7 million (US$25.3 million)[1], compared to RMB136.2 million in the second quarter of 2017, representing a year-over-year increase of 23.1%. Gross margin in the second quarter improved to 71.9%, compared to 70.2% a year ago. Gross profit for the first half of 2018 was RMB307.6 million (US$46.5 million)[1], compared to RMB245.5 million in the first half of 2017, representing a year-over-year increase of 25.3%.

Income from operations for the second quarter of 2018 was RMB143.2 million (US$21.6 million)[1], compared to RMB113.1 million in the second quarter of 2017, representing a year-over-year increase of 26.6%. Operating margin in the second quarter improved to 61.4%, compared to 58.3% a year ago. Income from operations for the first half of 2018 was RMB265.0 million (US$40.0 million)[1], compared to RMB193.7 million in the first half of 2017, representing a year-over-year increase of 36.8%.

Adjusted EBITDA (non-GAAP) for the second quarter of 2018 was RMB139.2 million (US$21.0 million)[1], compared to RMB114.8 million for the second quarter of 2017, a year-over-year increase of 21.2%. The adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as percentage of total revenues, was 59.6% in the second quarter of 2018, compared to 59.2% in the second quarter of 2017. Adjusted EBITDA (non-GAAP) for the first half of 2018 was RMB252.8 million (US$38.2 million)[1], compared to RMB202.5 million for the first half of 2017, a year-over-year increase of 24.8%.

Core net income (non-GAAP) for the second quarter of 2018 was RMB110.9 million (US$16.8 million)1, compared to RMB88.9 million in the second quarter of 2017, representing a 24.7% year-over-year increase. The core net margin, defined as core net income (non-GAAP) as percentage of total revenues, was 47.5% in the second quarter of 2018, compared to 45.9% in the second quarter of 2017. Core net income (non-GAAP) for the first half of 2018 was RMB194.8 million (US$29.4 million)[1], compared to RMB154.8 million in the first half of 2017, representing a 25.9% year-over-year increase.

Net income attributable to GreenTree Hospitality Group Ltd. for the second quarter of 2018 was RMB97.2 million (US$14.7 million)[1], or 41.7% of total revenues, compared to RMB108.7 million, or 56.0% of total revenues, in the second quarter of 2017, a year-over-year decrease of 10.5%. Net income attributable to GreenTree Hospitality Group Ltd. for the first half of 2018 was RMB187.4 million (US$28.3 million)[1] compared to RMB183.2 million in the first half of 2017, a year-over-year increase of 2.3%.

Basic and diluted core net income per ADS (non-GAAP) were RMB1.09 (US$0.16)[1] for the second quarter of 2018, compared to RMB0.97 for the second quarter of 2017. Basic and diluted core net income per ADS (non-GAAP) were RMB2.01 (US$0.30)[1] for the first half of 2018, compared to RMB1.69 for the first half of 2017.

Basic and diluted earnings per ADS for the second quarter of 2018 was RMB0.96 (US$0.14)[1], compared to RMB1.19 for the second quarter of 2017. Basic and diluted earnings per ADS were RMB1.94 (US$0.29)[1] for the first half of 2018, compared to RMB2.01 for the first half of 2017.

Cash flow. Operating cash inflow for the second quarter of 2018 was RMB83.4 million (US$12.6 million)[1], due primarily to improved operating performance across our hotel portfolio. Operating cash inflow for the first half of 2018 was RMB199.4 million (US$30.1 million)[1]. Investing cash outflow for the second quarter of 2018 was RMB337.3 million (US$51.0 million)[1], which was attributable primarily to net purchase of short term investments of RMB274.9 million and purchase of property and equipment of RMB54.7 million. Investing cash outflow for the first half of 2018 was RMB177.2 million (US$26.8 million)[1]. Financing cash outflow for the second quarter of 2018 was RMB185.9 million (US$28.1 million)[1], which was mainly due to dividends distributed to pre-IPO shareholders of RMB160.8 million and IPO related costs. Financing cash inflow for the first half of 2018 was RMB604.6 million (US$91.4 million)[1],

Cash and cash equivalents, restricted cash, Short term investments and Trading securities. As of June 30, 2018, the Company had a total balance of cash and cash equivalents, restricted cash, short term investments and trading securities of RMB1,898.8 million (US$286.9 million)[1], as compared to RMB1,254.6 million as of December 31, 2017, primarily due to the proceeds of our IPO net of capitalized expenses and net operating cash inflow.

Guidance

For the full year 2018, the Company reaffirms total revenue growth guidance of 20-25% from 2017.

The guidance set forth above reflects the Company's current and preliminary view based on our estimates, may not be indicative of our financial results for future interim periods and the full year ended December 31, 2018 and is subject to change.

About GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company") (NYSE :GHG ) is a leading franchised hotel operator in China. As of December 31, 2017, GreenTree had the highest proportion of franchised-and-managed hotels among the top four economy to mid-scale hotel networks in China. In 2017, GreenTree was the fourth largest economy to mid-scale hotel group in China in terms of number of hotel rooms according to the China Hospitality Association. The Company 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, the consistent quality of its services, signature hotel designs, broad geographic coverage and convenient locations. GreenTree has positioned its brands to appeal to value- and quality-conscious business and leisure travelers.

 

[1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.6171 on June 29, 2018 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20180702 .

[2] "Tier 1 cities" refers to the term used by the National Bureau of Statistics of China and refer to Beijing, Shanghai, Shenzhen and Guangzhou.

[3] "Tier 2 cities" refers to the 32 major cities, other than Tier 1 cities, as categorized by the National Bureau of Statistics of China, 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.

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets

December 31,

2017

June 30,

2018

June 30,

2018

RMB

RMB

USD

ASSETS

Current assets:

Cash and cash equivalents

161,963,665

789,355,308

119,290,219

Short-term investment

781,850,000

843,769,909

127,513,550

Trading securities

307,754,960

262,642,263

39,691,445

Accounts receivable, net of allowance for doubtful

accounts

53,882,894

72,652,828

10,979,557

Amounts due from related parties

3,248,692

6,026,569

910,757

Prepaid rent

4,292,472

4,161,168

628,851

Inventories

2,355,154

1,393,732

210,626

Other current assets

127,269,801

143,086,346

21,623,724

Loans receivable, net

6,600,000

20,360,000

3,076,877

Deferred tax assets

36,207,884

37,158,836

5,615,577

Total current assets

1,485,425,522

2,180,606,959

329,541,183

Non-current assets:

Amounts due from a related party

2,600,000

2,600,000

392,921

Restricted cash

3,000,000

3,000,000

453,371

Loan receivable, net

-

12,900,000

1,949,494

Property and equipment, net

96,669,251

92,693,446

14,008,168

Intangible assets, net

3,727,383

6,649,314

1,004,868

Goodwill

2,959,183

2,959,183

447,202

Long-term investments

122,508,832

121,418,808

18,349,248

Other assets

5,741,301

113,274,089

17,118,389

Deferred tax assets

33,351,457

33,396,565

5,047,009

 TOTAL ASSETS

1,755,982,929

2,569,498,364

388,311,853

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

7,293,341

10,152,957

1,534,351

Advance from customers

33,662,363

33,191,324

5,015,993

Amounts due to related parties

473,018

953,720

144,130

Salary and welfare payable

44,577,683

42,926,392

6,487,191

Deferred rent

2,916,205

4,146,333

626,609

Deferred revenue

109,101,986

134,668,678

20,351,616

Accrued expenses and other current liabilities

293,741,951

266,921,014

40,338,066

Income tax payable

103,830,578

64,290,664

9,715,837

Dividends payable

39,691,103

-

-

Deferred tax liabilities

27,745,951

18,111,810

2,737,122

Total current liabilities

663,034,179

575,362,892

86,950,915

Deferred rent

23,050,635

19,777,360

2,988,826

Deferred revenue

144,258,584

155,257,846

23,463,125

Other long-term liabilities

73,937,277

83,412,257

12,605,561

Deferred tax liabilities

5,797,260

4,806,469

726,371

Unrecognized tax benefits

113,299,633

160,240,788

24,216,165

 Total liabilities

1,023,377,568

998,857,612

150,950,963

Shareholders' equity:

Class A ordinary shares

160,189,926

217,421,867

32,857,576

Class B ordinary shares

140,696,841

115,534,210

17,459,946

Additional paid-in capital

212,309,734

990,664,622

149,712,808

Retained earnings

223,134,889

249,728,708

37,739,902

Accumulated other comprehensive loss

(4,086,149)

(3,042,408)

(459,780)

Total GreenTree Hospitality Group Ltd.

shareholders' equity

732,245,241

1,570,306,999

237,310,452

Noncontrolling interests

360,120

333,753

50,438

Total shareholders' equity

732,605,361

1,570,640,752

237,360,890

TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY

1,755,982,929

2,569,498,364

388,311,853

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

Six Months Ended

June 30,

2017

June 30,

2018

June 30,

2018

June 30,  

2017

June 30,

2018

June 30,

2018

RMB

RMB

USD

RMB

RMB

USD

Revenues

Leased-and-operated hotels

47,063,998

49,740,478

7,516,960

88,826,814

93,915,936

14,192,915

Franchised-and-managed hotels

134,262,270

165,509,815

25,012,440

246,498,634

309,378,578

46,754,406

Membership fees

12,619,532

18,103,997

2,735,941

24,887,139

35,003,197

5,289,809

Total revenues

193,945,800

233,354,290

35,265,341

360,212,587

438,297,711

66,237,130

Operating costs and expenses

Hotel operating costs

(57,725,535)

(65,633,713)

(9,918,803)

(114,760,347)

(130,744,785)

(19,758,623)

Selling and marketing expenses

(9,401,701)

(11,555,287)

(1,746,277)

(19,055,646)

(22,904,354)

(3,461,389)

General and administrative expenses

(18,146,306)

(25,150,930)

(3,800,899)

(36,581,236)

(45,551,787)

(6,883,950)

Other operating expenses

(295,431)

(35,330)

(5,339)

(1,148,166)

(178,592)

(26,989)

Total operating costs and expenses

(85,568,973)

(102,375,260)

(15,471,318)

(171,545,395)

(199,379,518)

(30,130,951)

Other operating income

4,722,477

12,242,088

1,850,069

5,066,976

26,067,489

3,939,413

Income from operations

113,099,304

143,221,118

21,644,092

193,734,168

264,985,682

40,045,592

Interest income and other, net 

5,674,569

11,420,031

1,725,836

12,409,580

16,123,893

2,436,701

Gains (losses) from trading securities

24,385,333

(25,862,935)

(3,908,500)

35,967,385

(31,036,562)

(4,690,357)

Other expense, net

(28,852)

-

-

(69,818)

-

-

Income before income taxes

143,130,354

128,778,214

19,461,428

242,041,315

250,073,013

37,791,936

Income tax expense

(34,494,218)

(31,356,198)

(4,738,662)

(58,331,623)

(61,574,619)

(9,305,378)

Income before share of loss in equity investees

108,636,136

97,422,016

14,722,766

 

183,709,692

 

188,498,394

 

28,486,558

Share of (gain ) loss in equity investees, net

of tax

52,078

(182,988)

(27,654)

(513,447)

(1,090,024)

(164,728)

Net income

108,688,214

97,239,028

14,695,112

183,196,245

187,408,370

28,321,830

Net loss (gain) attributable to noncontrolling

interests

7,131

(3,152)

(476)

35,249

26,367

3,985

Net income attributable to ordinary

shareholders

108,695,345

97,235,876

14,694,636

183,231,494

187,434,737

28,325,815

Net earnings per share

Class A ordinary share-basic and diluted

1.19

0.96

0.14

2.01

1.94

0.29

Class B ordinary share-basic and diluted

1.19

0.96

0.14

2.01

1.94

0.29

Net earnings per ADS

Class A ordinary share-basic and diluted

1.19

0.96

0.14

2.01

1.94

0.29

Class B ordinary share-basic and diluted

1.19

0.96

0.14

2.01

1.94

0.29

Weighted average shares outstanding

Class A ordinary share-basic and diluted

48,635,252

66,789,299

66,789,299

48,635,252

58,866,740

58,866,740

Class B ordinary share-basic and diluted

42,716,957

34,762,909

34,762,909

42,716,957

37,839,060

37,839,060

Other comprehensive income, net of tax

-Foreign currency translation adjustments

(827,530)

1,213,623

183,407

(1,979,774)

1,043,741

157,734

Comprehensive income, net of tax

107,860,684

98,452,651

14,878,519

181,216,471

188,452,111

28,479,564

Comprehensive loss (gain) attributable to

noncontrolling interests

7,131

(3,152)

(476)

35,249

26,367

3,985

Comprehensive income attributable to

ordinary shareholders

107,867,815

98,449,499

14,878,043

181,251,720

188,478,478

28,483,549

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

Quarter Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

June 30,

June 30,

2017

2018

2018

2017

2018

2018

RMB

RMB

USD

RMB

RMB

USD

Operation activities:

Net income

108,688,214

97,239,028

14,695,112

183,196,245

187,408,370

28,321,830

Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation and amortization

6,115,165

4,557,247

688,708

12,674,080

9,951,749

1,503,944

Share of loss (gain) in equity method

investments

(52,078)

182,988

27,654

513,447

1,090,024

164,728

Interest income

(2,788,706)

(234,004)

(35,364)

(5,838,706)

(4,937,866)

(746,228)

Bad debt expense

581,251

379,445

57,343

1,154,523

698,703

105,591

(Gains) losses from trading securities

(24,385,333)

25,862,935

3,908,500

(35,967,385)

31,036,562

4,690,357

Loss on disposal of property and

equipment

(695,230)

-

-

157,506

-

-

Foreign exchange (gain) loss

(374,755)

(1,340,059)

(202,515)

(1,298,256)

(614,853)

(92,919)

Share-based compensation

-

3,586,930

542,070

-

3,746,769

566,225

Changes in operating assets and

liabilities:

Restricted cash

-

-

-

7,200,000

-

-

Accounts receivable

(15,539,614)

(8,246,047)

(1,246,172)

(26,245,214)

(19,468,637)

(2,942,171)

Prepaid rent

2,630,635

(1,455,073)

(219,896)

6,598,997

131,304

19,843

Inventories

(206,252)

186,242

28,146

11,224

961,422

145,294

Amounts due from related parties

1,181,694

1,938,481

292,950

3,435,718

1,522,123

230,029

Other current assets

970,740

(19,562,202)

(2,956,310)

(1,819,059)

(26,365,951)

(3,984,518)

Other assets

-

-

-

1,728,263

-

-

Accounts payable

800,856

(4,359,732)

(658,858)

2,115,442

337,208

50,960

Amounts due to related parties

(157,557)

154,006

23,274

2,538,414

480,702

72,645

Salary and welfare payable

2,140,122

27,794

4,200

(678,679)

(1,651,291)

(249,549)

Deferred revenue

(2,225,451)

21,657,037

3,272,889

14,667,526

36,565,954

5,525,979

Advance from customers

8,312,326

8,017,444

1,211,625

11,776,047

(471,039)

(71,185)

Accrued expenses and other current

liabilities

3,252,222

(31,297,653)

(4,729,814)

15,533,168

(27,214,366)

(4,112,733)

Income tax payable

(42,196,868)

(56,273,754)

(8,504,293)

(27,193,374)

(36,539,914)

(5,522,043)

Unrecognized tax benefits

15,194,271

43,190,003

6,527,029

14,744,258

46,941,155

7,093,917

Deferred rent

(5,683,343)

(1,028,699)

(155,461)

(10,891,391)

(2,043,147)

(308,768)

Other long-term liabilities

8,865,201

7,701,591

1,163,892

(172,893)

9,474,980

1,431,893

Deferred taxes

5,754,724

(7,506,008)

(1,134,335)

5,790,416

(11,620,992)

(1,756,206)

Net cash provided by operating

activities

70,182,234

83,377,940

12,600,374

173,730,317

 

199,418,969

 

30,136,915

Investing activities:

Purchases of property and equipment

(2,350,676)

(54,676,146)

(8,262,856)

(7,110,402)

(113,008,255)

(17,078,215)

Purchases of intangible assets

-

(900,000)

(136,011)

-

(900,000)

(136,011)

Purchases of short-term investments

-

(275,105,052)

(41,574,867)

-

(791,666,641)

(119,639,516)

Proceeds from short-term investments

-

234,004

35,364

-

745,234,004

112,622,449

Proceeds from disposal of property and equipment

-

-

-

1,600,000

-

-

Purchases of trading securities

(5,886,700)

-

-

(37,029,398)

(4,795,838)

(724,764)

Proceeds from disposal of trading

securities

10,667,510

7,604,063

1,149,153

31,396,866

18,871,973

2,852,001

Loan to a related party

(3,100,000)

-

-

(4,100,000)

-

-

Loan to franchisees

-

(17,800,000)

(2,690,000)

(3,500,000)

(37,800,000)

(5,712,472)

Repayment from a franchisee

-

3,340,000

504,753

-

6,840,000

1,033,685

Net cash (used in) provided by

investing activities

(669,866)

(337,303,131)

(50,974,464)

(18,742,934)

 

(177,224,757)

 

(26,782,843)

Financing activities:

Distribution to the shareholders

(9,651,158)

(160,840,918)

(24,306,859)

(9,651,158)

(200,532,021)

(30,305,123)

Income tax paid related to the above

distribution

-

-

-

-

 

(3,000,000)

 

(453,372)

Proceeds from short-term borrowings

60,000,000

-

-

60,000,000

-

-

Changes in restricted cash

90,000,000

-

-

(785,000,000)

-

-

Proceeds from IPO, net of capitalized

expenses

-

-

-

 

833,202,245

 

125,916,526

Payment for initial public offering

costs

-

(25,087,646)

(3,791,336)

-

 

(25,087,646)

 

(3,791,336)

Net cash provided by (used in)

financing activities

140,348,842

(185,928,564)

(28,098,195)

(734,651,158)

 

604,582,578

 

91,366,695

Effect of exchange rate changes on cash

and cash equivalents

(452,775)

1,509,941

228,188

(681,516)

 

614,853

 

92,919

Net increase (decrease) in cash and

cash equivalents

209,408,435

(438,343,814)

(66,244,097)

(580,345,291)

 

627,391,643

 

94,813,686

Cash and cash equivalents at the

beginning of the period

107,029,209

1,227,699,122

185,534,316

896,782,935

 

161,963,665

 

24,476,533

Cash and cash equivalents at the

end of the period

316,437,644

789,355,308

119,290,219

316,437,644

 

789,355,308

 

119,290,219

Supplemental disclosure of cash

flow information:

Income taxes paid

(55,742,089)

(48,194,805)

(7,283,373)

(65,025,390)

(62,794,370)

(9,489,712)

Interest paid

(261,294)

-

-

(261,294)

-

-

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results

Quarter Ended

Six Months Ended

June 30,

2017

June 30,

2018

June 30,

2018

June 30,

2017

June 30,

2018

June 30,

2018

RMB

RMB

USD

RMB

RMB

USD

 Net income 

108,688,214

97,239,028

14,695,112

183,196,245

187,408,370

28,321,830

 Deduct:

Other operating income

4,722,477

12,242,088

1,850,069

5,066,976

26,067,489

3,939,413

Interest income and other, net

5,935,863

11,420,031

1,725,836

12,670,874

16,123,893

2,436,701

Gains from trading securities

24,385,333

-

-

35,967,385

-

-

Share of gain in equity investees, net of tax

52,078

-

-

52,078

-

-

 Add:

Other operating expenses

295,431

35,330

5,339

1,148,166

178,592

26,989

Income tax expense

34,494,218

31,356,198

4,738,662

58,331,623

61,574,619

9,305,378

Share of loss in equity investees, net of tax

-

182,988

27,654

565,525

1,090,024

164,728

Interest expense

261,294

-

-

261,294

-

-

Share-based compensation

-

3,586,930

542,070

-

3,746,769

566,225

Depreciation and amortization

6,115,165

4,557,247

688,708

12,674,080

9,951,749

1,503,944

Losses from trading securities

-

25,862,935

3,908,500

-

31,036,562

4,690,357

Other expense, net

28,852

-

-

69,818

-

-

 Adjusted EBITDA (Non-GAAP)

114,787,423

139,158,537

21,030,140

202,489,438

252,795,303

38,203,337

Quarter Ended

Six Months Ended

June 30,2017

June 30,2018

June 30,2018

June 30,2017

June 30,2018

June 30,2018

RMB

RMB

USD

RMB

RMB

USD

Net income

108,688,214

97,239,028

14,695,112

 

183,196,245

 

187,408,370

 

28,321,830

Deduct:

Government subsidies (net of 25% tax)

1,493,208

76,774

11,602

1,493,246

10,312,776

1,558,504

Gains from trading securities (net of 25% tax)

18,289,000

-

-

26,975,539

-

-

Reimbursement related to the ADS program

-

9,271,648

1,401,165

-

9,271,648

1,401,165

Add:

Share-based compensation

-

3,586,930

542,070

-

3,746,769

566,225

Losses from trading securities (net of  25% tax)

-

19,397,201

2,931,375

-

23,277,421

3,517,768

Other expense (net of 25% tax)

21,639

-

-

52,364

-

-

Core net income (Non-GAAP)

88,927,645

110,874,737

16,755,790

154,779,824

194,848,136

29,446,154

Core net income per ADS (Non-GAAP)

Class A ordinary share-basic and diluted

0.97

1.09

0.16

1.69

2.01

0.30

Class B ordinary share-basic and diluted

0.97

1.09

0.16

1.69

2.01

0.30

Operational Data

As of June 30,2017

As of June 30,2018

Total hotels in operation:

2,035

2,434

  Leased and owned hotels

27

26

  Franchised hotels

2,008

2,408

Total hotel rooms in operation

173,836

201,275

  Leased and owned hotels

3,351

3,358

  Franchised hotels

170,485

197,917

Number of cities

242

267

Quarter Ended

June 30,2017

June 30,2018

Occupancy rate (as a percentage)

  Leased and owned hotels

72.1%

70.7%

  Franchised hotels

83.5%

82.9%

  Blended

83.2%

82.6%

Average daily room rate  (in RMB)

  Leased and owned hotels

182

201

  Franchised hotels

155

163

  Blended

156

164

RevPAR  (in RMB)

  Leased and owned hotels

131

142

  Franchised hotels

129

135

  Blended

130

136

Number of Hotels in Operation

Number of Hotel Rooms in Operation

As of

June 30, 2017

As of

June 30, 2018

As of

June 30, 2017

As of

June 30, 2018

Economy hotels

172

312

9,964

16,850

Vatica 

83

111

6,224

8,295

Shell

89

201

3,740

8,555

Mid-scale

1,829

2,062

159,837

177,665

GreenTree Inn

1,604

1,785

141,553

155,470

GreenTree Alliance

225

277

18,284

22,195

Business to Mid-to-up-scale

34

60

4,035

6,760

GreenTree Eastern

34

59

4,035

6,650

 VX

0

1

0

110

 Total

2,035

2,434

173,836

201,275

 



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