China Hotels:Secular growth kicking in

类别:行业研究 机构:德意志银行 研究员:Tallan Zhou,Karen Tang 日期:2017-12-01

A secular growth sector

    We analyze the supply and demand of China’s limited service hotels (economyhotels) and conclude that the sector will see secular growth (RevPAR growth of6% CAGR) in the next five years. We believe the like-for-like hotel average dailyrate (ADR) for both economy and midscale hotels will continue to grow to meetconsumers’ trade-up demand. Meanwhile, on a blended basis, we believe theshort supply of midscale hotels will continue to increase its percentage of thetotal, leading to a favorable mix change (40% of new hotel additions will bemid- to high-scale hotels).

    Hotels are a leveraged business, RevPAR is the key

    Changes in operating cost per room (excluding rent) are manageable foreconomy and midscale hotels; hence to maximize profit, the key is to increaseRevPAR. The two largest costs in operating economy hotels are: 1) staff cost(already manageable at a staff-to-room ratio of 0.18-0.2), and 2) rent cost,which is normally fixed for 15-20years. We believe the two key drivers toincreasing RevPAR in the next five years are: 1) a higher percentage ofupgraded economy hotels and 2) a higher percentage of midscale hotels.

    Economy segment has likely bottomed

    We believe 2016was the trough for economy hotels’ RevPAR as the high hotelsupply growth is likely to slow significantly in the next five years (6-7% CAGRvs. 38% CAGR over 2006-16). We believe the sharp decline in economy hoteladditions, from 5k in 2015to 2k in 2016, is a turnaround point for the sector as1) loss-making franchisees leave the market; 2) property supply for hotels isbeing tightened; and 3) both HomeInns and 7Days have been delisted andacquired by BTG and Jinjiang, respectively. We forecast a stable 2k neweconomy hotel additions over the next five years, a 6-7% CAGR.

    Midscale segment’s barriers to entry remain high

    While the economy segment started in 2005, the mid-scale segment onlyemerged in 2010. Given the government’s anti-corruption campaign, demandfor high-end hotels is shifting to midscale hotels, and alongside consumerstrading up, we believe midscale hotels’ RevPAR (8% CAGR) should be higherthan economy hotels’ (3% CAGR over 2018-2022E). The barriers to entry formidscale hotels are much higher than for economy hotels, as: 1) initiationinvestment for franchisee is 4-5x higher, 2) property criteria is morecomplicated, and 3) brand/product designs are more demanding.

    Valuation and risks

    We initiate coverage of BTG with a Buy rating and TP of RMB35(25% upsidepotential). We also slightly lift China Lodging’s TP to USD130. We maintainBuy on Jinjiang with TP unchanged. We change our primary valuation fromEV/EBTIDA to DCF as we view DCF as a better methodology to capture seculargrowth over the medium term. We use EV/EBITDA as a check on the targetvaluations. Risks include: 1) lower tourism demand; 2) stronger RMB leading tomore outbound travel; and 3) government policy changes.



永辉超市 持有 -- 研报
宁波港 持有 -- 研报
大秦铁路 买入 -- 研报
深高速 持有 -- 研报
宁沪高速 持有 -- 研报
山东高速 持有 -- 研报
铁龙物流 持有 -- 研报
上港集团 持有 -- 研报
日照港 买入 -- 研报
招商公路 持有 -- 研报
粤高速A 持有 -- 研报


重庆钢铁 0.01 -0.22 研报
三钢闽光 0.44 0.26 研报
韶钢松山 -0.07 -0.25 研报
河钢股份 0.18 0.07 研报
南钢股份 0.22 0.00 研报
新钢股份 0.26 -0.28 研报
马钢股份 0.10 -0.15 研报
新兴铸管 0.75 0.67 研报
鞍钢股份 0.15 -0.13 研报
山东钢铁 0.06 -0.11 研报
久立特材 0.51 0.51 研报


贵州茅台 34 持有 买入
万科A 34 持有 买入
五粮液 32 持有 买入
海天味业 29 持有 持有
中信证券 28 持有 买入
通威股份 28 持有 买入
伊利股份 27 持有 买入
万科A 27 买入 买入
华鲁恒升 26 持有 持有
隆基股份 26 持有 买入
新华保险 26 持有 中性
三一重工 25 持有 持有
先导智能 25 持有 持有
保利地产 24 持有 买入
上汽集团 24 持有 买入
中国国航 24 持有 持有
泸州老窖 24 持有 持有


电子信息 490 90 270
建筑建材 436 47 190
化工行业 404 53 140
机械行业 355 50 143
钢铁行业 329 30 151
金融行业 286 32 98
汽车制造 286 40 148
生物制药 280 52 179
电子器件 255 50 140
交通运输 254 29 99
煤炭行业 247 30 134
酿酒行业 241 17 108
房地产 226 26 133
家电行业 221 17 118
食品行业 203 23 78
酒店旅游 173 18 61
电力行业 172 31 76