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Yangtze Business Daily News● Yangtze Business Daily reporter Shen Yourong

The Olympic whirlwind has blown into the A-share market, and Jinjiang Hotels (600754.SH) has seized the opportunity to provide catering and accommodation services for the Olympics and global tourists.

According to public information, during this year's Paris Olympics, Jinjiang Hotels will have at least 795 hotels and 52,234 rooms to provide services.

As hotels and guest rooms become more popular, price increases are inevitable. Jinjiang Hotel may reap a wave of dividends from the Olympic Games.

Jinjiang Hotels said that its overseas hotel business may turn losses into profits by 2025.

Jinjiang Hotels is one of the largest listed companies in China's hotel and catering industry. Through capital operation, the company has realized the development strategy of global layout and transnational operation.

In recent years, Jinjiang Hotel's operations have been under pressure. As the global economy slowly recovers, the company's operating performance has gradually improved. In 2023, the company's net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") was 1.002 billion yuan, a year-on-year increase of nearly 7 times. In the first half of 2024, the company sold a subsidiary, resulting in an estimated net profit of 800 million to 850 million yuan in the first half of the year.

Jinjiang Hotels actively and continuously returns to investors. Since its listing, the company has distributed a total of 5.824 billion yuan in cash dividends.

Overseas hotels are expected to turn losses into profits by 2025

A capital operation in 2015 enabled Jinjiang Hotels to deeply embrace the Paris Olympics.

According to the major asset purchase report (draft) disclosed by Jinjiang Hotel at that time, Jinjiang Hotel established a wholly-owned subsidiary Hailu Investment as the acquisition entity in foreign countries, and acquired 100% of the shares of Louvre Group (GDL) owned by Star SDL Investment Co S.àr.l. in cash. The main subsidiaries of Louvre Group are Star Eco and Louvre Hotel Group (LHG), as well as 31 holding subsidiaries controlled by them. The price of this transaction is 1.277 billion euros (about 8.85 billion yuan).

Founded in 1976 and headquartered in Paris, France, Louvre Group has a long history and is the second largest hotel group in Europe.

After the acquisition, Jin Jiang International's hotel scale increased from more than 1,600 hotels with 250,000 rooms to more than 2,900 hotels with more than 360,000 rooms. It has expanded from 11 countries around the world to 52 countries and regions, ranking among the top eight hotels in the world.

With the 2024 Olympic Games about to open, the hotels and restaurants under the Louvre Group will certainly provide services.

So, how many hotels, guest rooms, etc. under Jinjiang Hotels will participate in the service?

On May 27 this year, Jinjiang Hotels responded to investors' questions on the investor interaction platform, saying that as of March 2024, the company has opened 795 hotels in France (195 directly-operated stores and 600 franchise stores), with 52,234 hotel rooms; 32 hotels have been opened in Germany (29 directly-operated stores and 3 franchise stores), with 3,021 hotel rooms. In order to better meet the accommodation needs of tourists during the Paris Olympics, some of Jinjiang Hotels' hotels have been rapidly renovated.

It has been reported that Jinjiang Hotels' hotels in and around Paris, France, were in short supply during the Paris Olympics. Room rates were determined by factors such as supply and demand, market competition, etc. Hotel room rates in the Paris region and other related areas rose to varying degrees during the Olympics, with the average room rate up about 150% over the same period last year. It is expected that the average room rate of directly-operated hotels in July and August will increase by about 70% over the same period last year.

The minutes of the 2023 performance exchange telephone conference disclosed by Jinjiang Hotels on May 23 showed that in the first half of the year, Jinjiang Hotels invested 200 million euros in Hailu. The company's goal is to turn losses into profits in the overseas hotel business in 2025 and turn losses into profits in the entire overseas business in 2026.

The company pointed out that the actual impact of the Olympics on Paris Hotel and other businesses was only about 20 days, so it had a positive impact on the full-year performance, but the impact was not very large.

Cumulative dividends of 5.8 billion

As the global economy recovers, Jinjiang Hotels' operating performance is also improving.

The predecessor of Jinjiang Hotels was Shanghai New Asia (Group) Joint Venture Company, which was listed on the Shanghai Stock Exchange B shares in 1994. In 2003, the company underwent asset restructuring, changed its name to Jinjiang Hotels, and established limited service hotel operations as its main business.

Since then, the company has carried out capital operations many times. Its landmark move, in addition to the acquisition of Louvre Group, was a strategic investment in Plateno Group, implementing the company's development strategy of global layout and transnational operations.

As of the end of 2023, Jinjiang Hotels has signed contracts for a total of 16,655 hotels, with a total of approximately 1.5808 million hotel rooms; 12,448 hotels have opened, with approximately 1.1907 million guest rooms.

Jinjiang Hotels has strong profitability. In 2016, the company's operating income exceeded 10 billion for the first time, reaching 10.636 billion yuan. From 2017 to 2019, it was 13.583 billion yuan, 14.697 billion yuan, and 15.099 billion yuan respectively. The net profits from 2016 to 2019 were 695 million yuan, 882 million yuan, 1.082 billion yuan, and 1.092 billion yuan respectively.

In fact, from 2012 to 2019, the company's operating income and net profit continued to increase.

However, affected by the epidemic, the company's net profit fell back to around 100 million yuan from 2020 to 2022.

In 2023, the company's performance recovered, with a net profit of 1.002 billion yuan, a year-on-year increase of 691.14%; the net profit after deducting non-recurring gains and losses (hereinafter referred to as "net profit after deducting non-recurring gains and losses") was 774 million yuan, a year-on-year increase of 480.27%.

According to the performance forecast, in the first half of the year, the company achieved a net profit of 800 million to 850 million yuan, a year-on-year increase of 52.93% to 62.49%. Compared with the restated financial data of the same period last year, it will increase by 50.22% to 59.61%.

The company explained that in order to further optimize resource allocation and implement a light-asset development strategy, the company transferred 100% of the equity of Fashion Journey Hotel Management Co., Ltd. through public listing, and can confirm an investment income of 420 million yuan before tax.

Jinjiang Hotels actively returns to investors. In 2023, the company's cash dividends were 535 million yuan, with a dividend rate of 53.41%.

Wind data shows that Jinjiang Hotels has distributed cash dividends every year since 2000, with an annual dividend rate of more than 50%. The company has distributed a total of 5.824 billion yuan in dividends, and its average dividend rate since listing has reached 58.87%.