GreenTree Hospitality Group Ltd. Q4 FY2022 earnings call

• 2022 was a year of change and challenges with COVID-19 outbreaks affecting RevPAR, but RevPAR recovered to over 95% of pre-pandemic levels by end of year.
• Continued execution of long-term strategic growth plan to assist franchisees, extend hotel networks, and maintain profitability/cash flow.
• Acquisition of Da Niang Dumplings and Bellagio in Q1 2023; Da Niang Dumplings had 236 locations, Bellagio 36 locations, combined 2022 revenue ~RMB 509 million.
• Membership programs grew: individual members to 78 million, corporate members to 1.94 million.

Compared with the second half of 2021, RevPAR decreased 4.2% to RMB 112. Total revenues decreased 21.1% to RMB 487.8 million. The decrease was partially due to deconsolidation of Argyle and disposal of interest in Urban. Excluding these impacts, organic revenues decreased 15.7%. Income from operations increased to RMB 20 million, margin 4.1%. Net income was negative RMB 48.3 million, margin negative 9.9%. Adjusted EBITDA as non-GAAP decreased to RMB 118.3 million, margin 24.3%. By the end of the second half of 2022, mid-to-upscale segment had 426 hotels, 10.5% of total hotel portfolio, up from 50 in 2017.

• Total hotel business revenues for 2023 expected to grow 30%-35% over 2022 and 5%-9% over 2019.
• With restaurant business merger, total company revenues for 2023 expected to grow 90%-95% over 2022 and 50%-55% over 2019.

• Impact of ongoing COVID-19 outbreaks and related restrictions on hotel operations and revenue.
• Uncertainties in economic recovery and travel patterns affecting business and leisure demand.
• Challenges in integrating acquired restaurant business and realizing synergies.

Q: Can you share about current profitability of the restaurant business?

A: Don't have fully audited 2022 numbers, but maintained healthy cash flow; projected 20%-30% gross profit margin for 2023.

Q: What's the dividend outlook?

A: Current focus is on growing business; will plan to resume previous dividend once picture is clear and stable.

Q: Elaborate on synergies between F&B and hotel business?

A: Some success stories like branded restaurants in hotels increasing revenue, but team needs to be built to bridge resources; expect more synergies in future as integration progresses.