GreenTree Hospitality Group, a prominent player in China’s hospitality and restaurant management sector, has released its financial results for the first half of 2023.
Under the leadership of founder Alex S Xu, the company recently acquired Da Niang Dumplings and Bellagio, two leading restaurant chains in China, accounting for these acquisitions using the pooling of interest method.
In the hotel business
GreenTree operated 4,108 hotels with 303,387 rooms as of 30 June 2023.
During H1 2023, they opened 183 new hotels and had plans for an additional 969 hotels in various stages of development.
Room rates displayed significant growth, with a 9.1% increase in Q1 2023 and a remarkable 23.1% increase in Q2 2023 compared to the same periods in 2022.
Occupancy rates also witnessed improvement, reaching 71.7% in Q1 2023 and 77.8% in Q2 2023, compared to 60.0% and 62.2% in 2022, respectively.
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Revenue per available room (RevPAR) showed substantial growth, with a 30.4% year-over-year increase in Q1 2023 and an impressive 54.0% year-over-year increase in Q2 2023.
In the restaurant business
GreenTree operated a total of 218 restaurants as of 30 June 2023.
The average check (AC) for their restaurants increased to 55 yaun ($6.09) in Q1 2023, reflecting a substantial 19.2% year-over-year growth.
Average daily tickets (ADT) fluctuated but reached 110 in Q1 2023 and 120 in Q2 2023.
Average daily sales per store (ADS) exhibited growth, with a 0.9% year-over-year increase in Q1 2023 and a significant 57.3% year-over-year increase in Q2 2023.
Financially, GreenTree achieved the following
Total revenues for H1 2023 amounted to 794.2m yuan, demonstrating a robust year-over-year increase of 12.1%.
Hotel revenues contributed significantly, reaching 563.2m yuan, marking a notable 23.1% year-over-year increase.
However, restaurant revenues were 232.1m yuan, showing a 7.7% year-over-year decrease attributed to the closure of 64 stores, partially offset by an increase in average daily sales.
In terms of profitability
Gross profit reached 306.1m yuan, reflecting an impressive 84.7% year-over-year increase and resulting in a gross margin of 38.5%.
Income from operations turned positive at 150.9m yuan, compared to a loss in H1 2022.
Net income showed substantial improvement, reaching 177.3m yuan, in contrast to a net loss in the same period last year.
Regarding cash flow and financial position
Operating cash inflow amounted to 313.1m yuan, primarily driven by income from operations.
Investing cash inflow for H1 2023 totalled 128.2m yuan, mainly due to proceeds from short-term investments and repayment from franchisees.
Financing cash outflow amounted to 37.4m yuan, primarily due to the repayment of bank loans by the end of 30 June 2023.
As of 30 June 2023, GreenTree held total cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposits of 1,440.1m yuan, reflecting a substantial increase from the end of 2022.
GreenTree anticipates strong growth prospects, projecting total revenues from organic hotels in 2023 to grow by 30%-35% compared to 2022 levels.
For the restaurant and organic hotel businesses, they expect a 15%-20% increase in total revenues over 2022 levels, though these projections may change based on market conditions.