GreenTree Hospitality Group Results

GreenTree Hospitality Group Ltd. Reports First Quarter of 2019 Financial Results

  • A total of 2,829 hotels with 225,757 hotel rooms were in operation as of  March 31, 2019, compared to 2,757 hotels and 221,529 hotel rooms as of December 31, 2018.
  • Total revenues increased 20.1% from the first quarter of 2018 to RMB235.3 million (US$35.1 million)[1] for the first quarter of 2019.
  • Adjusted EBITDA (non-GAAP) increased 20.0% from the first quarter of 2018 to RMB133.9 million (US$19.9 million)[1] for the first quarter of 2019.
  • Net income increased 58.8% from the first quarter of 2018 to RMB134.0 million (US$20.0 million)[1] for the first quarter of 2019.
  • Core net income (non-GAAP) increased 18.0% from the first quarter of 2018 to RMB92.3 million (US$13.7 million)[1] for the first quarter of 2019.
  • Basic and diluted net income per ADS were RMB1.33 (US$0.20)[1] for the first quarter of 2019.
  • Basic and diluted core net income per ADS (non-GAAP) were RMB0.91 (US$0.14)[1] for the first quarter of 2019.
  • As of March 31, 2019, the Company had a strong pipeline with a total of 481 hotels contracted for or under development. During the first quarter of 2019, the Company opened 101 F&M hotels and one L&O hotel, compared to 80 F&M hotels for the first quarter of 2018.
  • As of March 31, 2019, the Company had approximately 33 million individual loyal members (of which approximately 23 million are paid members) and over 1,320,000 corporate members, compared to approximately 29 million (of which approximately 21 million are paid members) and over 1,270,000 corporate members respectively, as of December 31, 2018.
  • The Company sold approximately 94.2% of its room nights through its direct sales channels, including its individual loyal members and corporate members.
  • The Company reaffirms guidance for growth in full year 2019 total revenues of 20-25% from 2018.

GreenTree Hospitality Group Ltd. (NYSE: GHG), a leading franchised hotel operator in China, announced its unaudited financial results for the first quarter ended March 31, 2019.

First Quarter of 2019 Operational Highlights

  • As of March 31, 2019, GreenTree had 30 leased-and-operated ("L&O") hotels and 2,799 franchised-and-managed ("F&M") hotels in operation in 292 cities across China, compared to 29 L&O hotels and 2,728 F&M hotels in operation in 290 cities as of December 31, 2018. The geographical coverage of cities grew by 26 year-over-year, representing an increase of 9.8%.
  • The Company opened 101 F&M hotels and one L&O hotel, 44 in the mid-scale segment, 14 in the business to mid-to-up-scale segment, 44 in the economy segment. Of the hotels opened, 6 hotels were in Tier 1 cities[2], 20 in Tier 2 cities[3] and the remaining 76 hotels in other cities in China, while the Company closed a total of 30 F&M hotels in the quarter.
  • As of March 31, 2019, the Company had a strong pipeline with a total of 481 hotels contracted for or under development.
  • The average daily room rate, or ADR, for all hotels in operation, was RMB162 in the first quarter of 2019, an increase of 3.9% year-over-year.
  • The occupancy rate for all hotels in operation was 78.1% in the first quarter of 2019, a decrease of 1.1% year-over-year.
  • The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB127 in the first quarter of 2019, representing a 2.5% year-over-year increase.

[1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.7112 on March 29, 2019 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20190401/.

[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.

"Thanks to our team's efforts, we delivered a strong first quarter with improved operating and financial performances, and strong execution on our expansion and strategic growth objectives. As of March 31, 2019, we were operating in 292 cities, further increasing of our geographical coverage across China. During the quarter we opened 102 new hotels, continued to grow our pipeline, and remained on track to open more new hotels in the remaining part of this year," commented Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree. "We took a number of strategic steps to strengthen our solid foundation for further growth in 2019 and beyond with a number of investments and strategic partnerships that complement our existing business. Beyond these, we remain engaged in exploring appropriate value-enhancing acquisition opportunities to help strengthen our hotel platform and increase long-term shareholder value."

First Quarter of 2019 Financial Results

Quarter Ended

March 31, 2018

 March 31, 2019

 March 31, 2019

RMB

RMB

USD

Revenues

Leased-and-operated hotels

45,615,096

51,833,041

7,723,364

Franchised-and-managed hotels

150,343,349

183,460,067

27,336,403

Total revenues

195,958,445

235,293,108

35,059,767

Total revenues  for the first quarter of 2019 were RMB235.3 million (US$35.1 million)[1], representing a 20.1% increase over the first quarter of 2018.The increase in the first quarter of 2019 was primarily attributable to the 101 F&M hotels new addition to our network, the addition of a new L&O hotel and the conversion of three F&M hotels to L&O during the third quarter of 2018, improved RevPAR for both F&M and L&O hotels as well as contribution from membership growth; and was partially offset by the renovation of seven L&O hotels during this quarter and the conversion of one L&O hotel to F&M during the fourth quarter of 2018.

  • Total revenues from leased-and-operated hotels for the first quarter of 2019 were RMB51.8 million (US$7.7 million)[1], representing a 13.6% year-over-year increase. The year-over-year increase in the first quarter of 2019 was primarily attributable to RevPAR growth of 2.1%, moderate sublease revenue growth, the addition of a new L&O hotel during this quarter and the conversion of three F&M hotels to L&O since the Third quarter of 2018; and was partially offset by the renovation of seven L&O hotels during this quarter and the conversion of one L&O hotel to F&M in the fourth quarter of 2018.
  • Total revenues from franchised-and-managed hotels for the first quarter of 2019 were RMB183.5 million (US$27.3 million)[1], representing a 22.0% year-over-year increase. Initial franchise fees increased 44.2% year-over-year in the first quarter of 2019, primarily due to the gross opening of 101 hotels in the first quarter of 2019 as compared to 80 hotels opened in the first quarter of 2018. The 20.6% increase from the first quarter of 2018 in recurring franchisee management fees and others was primarily due to RevPAR growth of 2.5% 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

 March 31, 2018

 March 31, 2019

 March 31, 2019

RMB

RMB

USD

 Initial franchise fee

8,843,441

12,752,949

1,900,249

 Recurring franchise management fee and

others

141,499,908

170,707,118

25,436,154

 Revenues from franchised-and-managed

hotels

150,343,349

183,460,067

27,336,403

Total operating costs and expenses

Quarter Ended

 March 31, 2018

 March 31, 2019

 March 31, 2019

RMB

RMB

USD

Operating costs and expenses

Hotel operating costs

63,745,544

79,999,844

11,920,349

Selling and marketing expenses

10,468,855

24,676,102

3,676,854

General and administrative expenses

20,400,857

25,732,486

3,834,260

Other operating expenses

143,262

42,624

6,351

Total operating costs and expenses

94,758,518

130,451,056

19,437,814

Hotel operating costs for the first quarter of 2019 were RMB80.0 million (US$11.9 million)[1], representing a 25.5% increase from the same quarter of 2018. The increase in the first quarter of 2019 was mainly attributable to costs associated with the expansion of our F&M hotels; one time cost related to the renovation of seven L&O hotels; higher rental costs, consumables, personnel costs, depreciation and amortization associated with the four new L&O hotels added to our portfolio since the third quarter of 2018 and one new L&O hotel opened in this quarter.

Quarter Ended

 March 31, 2018

 March 31, 2019

 March 31, 2019

RMB

RMB

USD

Rental

17,632,067

20,608,265

3,070,727

Utilities

5,111,000

6,154,563

917,058

Personnel cost

7,231,850

8,794,274

1,310,388

Depreciation and amortization

4,820,413

6,524,205

972,137

Consumable, food and beverage

4,436,637

6,837,151

1,018,767

Costs of general managers of franchised-and-

managed hotels

15,585,608

22,444,643

3,344,356

Other costs of franchised-and-operated hotels

5,384,508

5,686,583

847,327

Others

3,543,461

2,950,160

439,589

Hotel Operating Costs

63,745,544

79,999,844

11,920,349

Selling and marketing expenses for the first quarter of 2019 were RMB24.7 million (US$3.7 million)[1], compared to RMB10.5 million in the first quarter of 2018. The increase of 135.7% in the first quarter of 2019 was mainly attributable to one-time expenses for the Annual Conference for Celebrating the First Anniversary of our Listing on NYSE; and other minor expenses such as increased advertising and promotion expenses to improve our brands' market recognition including celebrity endorsement; and increased personnel, compensation and other costs (i.e. travel expenses) of business development personnel, as a result of the increased hotel openings.

General and administrative expenses for the first quarter of 2019 were RMB25.7 million (US$3.8 million)[1], compared to RMB20.4 million in the first quarter of 2018. The increase of 26.1% in the first quarter of 2019 was primarily attributable to increased share-based compensation expenses, and increased R&D costs.

Gross profit for the first quarter of 2019 was RMB155.3 million (US$23.1 million)[1], representing an increase of 17.5% from the same quarter of 2018. Gross margin in the first quarter was 66.0%, compared to 67.5% a year ago. The decrease was primarily due to increased operating costs mainly caused by rising staff numbers, and one-time cost related to the renovation of seven L&O hotels.

Income from operations for the first quarter of 2019 was RMB111.7 million (US$16.7 million)[1], representing a decrease of 2.8%. Operating margin in the first quarter declined to 47.5%, compared to 58.7% a year ago. The decreases were mainly attributable to one-time expenses for the Annual Conference for Celebrating the First Anniversary of our Listing on NYSE.

Adjusted EBITDA (non-GAAP) for the first quarter of 2019 was RMB133.9 million (US$19.9 million)[1], an increase of 20.0% from the same quarter of 2018. The adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 56.9% in the first quarter of 2019, compared to 57.0% in the first quarter of 2018. The margin decrease was mainly attributable to one-time expenses for the Annual Conference for Celebrating the First Anniversary of our Listing on NYSE.

Net income for the first quarter of 2019 was RMB134.0 million (US$20.0 million)[1], representing an increase of 58.8% from the same quarter of 2018. Net margin in the first quarter was 56.9%, compared to 43.1% a year ago.

Core net income (non-GAAP) for the first quarter of 2019 was RMB92.3 million (US$13.7 million)[1], representing a 18.0% increase from the same quarter of 2018. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 39.2% in the first quarter of 2019, compared to 39.9% in the first quarter of 2018.

Basic and diluted earnings per ADS for the first quarter of 2019 was RMB1.33 (US$0.20)[1], representing a 44.6% increase from the same quarter of 2018. Basic and diluted core net income per ADS (non-GAAP) was RMB0.91 (US$0.14)[1] for the first quarter of 2019, representing a 7.1% increase from the same quarter of 2018.

Cash flow. Operating cash inflow for the first quarter of 2019 was RMB122.2 million (US$18.2 million)[1], primarily due to improved operating performance across our hotel portfolio. Investing cash outflow for the first quarter of 2019 was RMB106.5 million (US$15.9 million)[1], which was attributable primarily to changes in short-term investments,  and partially offset by purchase of property and equipment and other investments, mainly including short-term investments and long-term deposits. Financing cash outflow for the first quarter of 2019 was RMB197.6 million (US$29.4 million)[1], which was attributable primarily to RMB208.0 million distributed to shareholders.

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities[4] and time deposit[5]. As of March 31, 2019, the Company had a total balance of cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposit of RMB2,180.8 million (US$325.0 million)[1], as compared to RMB2,260.5 million as of December 31, 2018, primary due to net operating cash flow and investments in equity securities, offset by dividend paid.

[4] Investments in equity securities include securities and investment in Gingko and New Century which is recorded in Long-term investments account.

[5] Time deposits are the time deposit certificates last over three months, which is recorded in Long-term time deposits.  

Recent Developments

In 2019, we intend to develop more hotels under the Wumian and GreenTree Apartment brands to meet the taste of young business travelers. During the first quarter, one Wumian hotel was under construction. GreenTree Apartment aims to provide long-term apartment rental services to urban white collars, especially newcomers to cities. Different from a standard mid-scale hotel, our apartments provide a more family-friendly living space and more community space. As of March 31, 2019, we opened 2 apartment hotels, of which one is L&O. For the first quarter of 2019, we added 8 more apartment hotels in our pipeline, and we plan to add total 30 apartment hotels into our pipeline during the rest of this year.

Yibon contributed one million paid members after the launch of our membership integration with them during March 2019. This year, we will continue to launch our membership integration with Argyle.

M&A and strategic investments are key growth strategies for GreenTree and the Company completed a number of strategic initiatives during the first quarter of 2019. First, on January 18, 2019, the Company invested in China Gingko Education Group Company Limited, or Gingko, a public company listed on the Hong Kong Stock Exchange ("HKSE") that had approximately 10,000 students enrolled in its university studying accredited 4 years full time BA/BS degrees all related to hospitality during the 2017/2018 school year. Gingko is currently ranked as China's No.1 hospitality university by the "Gaosan Web Association", a website with introductions to and rankings of universities in China. We will work together to cultivate professional talent for us and the hospitality industry in China.

Second, on January 28, 2019, the Company announced a strategic investment to become a major shareholder in Argyle. The Argyle hotel network consists of eight mid-scale and upscale brands, with footprints mainly in South West China, South East China, and Southeast Asia. Argyle's highly distinguished brand portfolio and geographic coverage are highly complementary to GreenTree's business.

Third, on March 11th, 2019, the Company acquired 4.95% in Zhejiang New Century Hotel Management Co., Ltd., or New Century, a company also listed on the HKSE. New Century operates and manages 150 hotels, ranging from mid-scale to upscale brands, with over 34,000 hotel rooms in 22 provinces. The two companies will explore opportunities for future strategic cooperation.

Fourth, on May 1, 2019, the Company announced an acquisition agreement to acquire a 70% equity stake in Urban Hotel Group. The Urban Hotel Group is a leading franchised hotel operator in China with strong brand portfolio and geographic coverage in China. It has more than 600 hotels in economy to mid-scale segment in Eastern and Northern China. The company plans to complete the transaction subject to customary closing conditions.

Adoption of New Revenue Recognition Accounting Standards

The Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) on January 1, 2019 on a full retrospective basis in the condensed consolidated financial statements. As such, prior period results have been adjusted to reflect the adoption of ASU 2014-09.

The most meaningful impacts of the adoption of ASU 2014-09 are as follows:

Under previous guidance, initial one-time franchise fee was recognized when the hotels opened for business and the Company had fulfilled its commitments and obligations. Upon adoption of new revenue standards the one-time franchise fee will be recognized over the term of the franchise contract.

Under previous guidance, the Company adopted the incremental cost model to account for membership program. The estimated incremental costs, net of the reimbursement received from the franchisees, are accrued and recorded as accruals for membership program as members accumulate points and are recognized as cost and expense in the accompanying consolidated statements of comprehensive income. Under new revenue standards, membership program is considered a separate performance obligation and the consideration allocated to the membership program will be recognized as revenue upon point redemption, net of any cost paid to the franchisees and other third parties.

Guidance

For the full year 2019, the Company expects growth in total revenues of 20-25% from 2018.

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 the full year ended December 31, 2019 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 March 31, 2019, GreenTree had 2,829 hotels, among which 2,799 are franchised and managed hotels. The Company had the highest proportion of franchised-and-managed hotels among the top four economy to mid-scale hotel networks in China. In 2018, GreenTree was the fourth largest economy to mid-scale hotel group in China in terms of the number of hotels according to a report from Shanghai Inntie Enterprise Management Consulting Co., Ltd. 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 and 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 travelers and leisure travelers.

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets

 December 31, 2018

 March 31, 2019

 March 31, 2019

RMB

RMB

USD

ASSETS

Current assets:

Cash and cash equivalents

1,264,025,785

1,062,188,750

158,271,062

Short-term investments

685,512,063

159,646,908

23,788,131

Investments in equity securities

307,693,782

253,822,369

37,820,713

Accounts receivable, net of allowance for

doubtful accounts 

64,864,184

81,990,976

12,217,037

Amounts due from related parties 

228,600

10,225,000

1,523,573

Prepaid rent 

4,478,413

3,766,832

561,275

Inventories 

2,547,729

1,098,846

163,733

Other current assets 

53,969,039

46,472,250

6,924,581

Loans receivable, net

67,196,568

98,198,518

14,632,036

Total current assets

2,450,516,163

1,717,410,449

255,902,141

Non-current assets:

Restricted cash

3,300,000

11,457,077

1,707,158

Long-term time deposits

60,000,000

500,000,000

74,502,324

Loan receivable, net

39,352,863

37,127,516

5,532,172

Property and equipment, net 

222,389,573

222,430,063

33,143,113

Intangible assets, net

27,213,391

26,520,809

3,951,724

Goodwill

5,787,068

5,787,068

862,300

Long-term investments

112,219,460

365,780,509

54,502,996

Other assets

25,701,523

57,391,152

8,551,549

Deferred tax assets

133,300,966

132,873,516

19,798,772

 TOTAL ASSETS

3,079,781,007

3,076,778,159

458,454,249

LIABILITIES AND EQUITY

Current liabilities:

Short-term bank loans

60,000,000

60,000,000

8,940,279

Accounts payable 

9,182,058

13,380,723

1,993,790

Advance from customers 

36,370,325

34,699,543

5,170,393

Amounts due to related parties 

285,578

218,814

32,604

Salary and welfare payable 

42,767,219

35,403,626

5,275,305

Deferred rent 

4,421,427

4,626,821

689,418

Deferred revenue 

217,668,659

206,866,473

30,824,066

Accrued expenses and other current

liabilities 

241,407,979

254,959,378

37,990,132

Income tax payable 

104,988,638

128,871,701

19,202,483

Total current liabilities

717,091,883

739,027,079

110,118,470

Deferred rent 

20,519,682

20,021,717

2,983,329

Deferred revenue 

373,090,530

379,499,640

56,547,211

Other long-term liabilities 

96,573,810

97,621,536

14,546,062

Deferred tax liabilities 

43,538,624

52,225,820

7,781,890

Unrecognized tax benefits 

169,619,409

175,666,160

26,175,075

 Total liabilities

1,420,433,938

1,464,061,952

218,152,037

Shareholders' equity:

Class A ordinary shares 

217,421,867

218,478,686

32,554,340

Class B ordinary shares 

115,534,210

115,534,210

17,215,134

Additional paid-in capital

1,003,026,803

1,033,819,435

154,043,902

Retained earnings

252,617,450

179,505,188

26,747,108

Accumulated other comprehensive income

62,367,692

47,565,174

7,087,432

Total GreenTree Hospitality Group Ltd.

shareholders' equity

1,650,968,022

1,594,902,693

237,647,916

Non-controlling interests

8,379,047

17,813,514

2,654,296

Total shareholders' equity

1,659,347,069

1,612,716,207

240,302,212

TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY

3,079,781,007

3,076,778,159

458,454,249

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

March 31, 2018

 March 31, 2019

 March 31, 2019

RMB

RMB

USD

Revenues

Leased-and-operated hotels

45,615,096

51,833,041

7,723,364

Franchised-and-managed hotels

150,343,349

183,460,067

27,336,403

Total revenues

195,958,445

235,293,108

35,059,767

Operating costs and expenses

Hotel operating costs

(63,745,544)

(79,999,844)

(11,920,349)

Selling and marketing expenses

(10,468,855)

(24,676,102)

(3,676,854)

General and administrative expenses

(20,400,857)

(25,732,486)

(3,834,260)

Other operating expenses

(143,262)

(42,624)

(6,351)

Total operating costs and expenses

(94,758,518)

(130,451,056)

(19,437,814)

Other operating income

13,825,401

6,906,453

1,029,094

Income from operations

115,025,328

111,748,505

16,651,047

Interest income and other, net 

4,703,862

16,469,011

2,453,959

Interest expense

-

(685,125)

(102,087)

(Losses) gains on investments in equity securities

(5,173,627)

59,934,470

8,930,515

Other income, net

-

829,781

123,641

Income before income taxes and share of loss of equity method investments

114,555,563

188,296,642

28,057,075

Income tax expense

(29,286,411)

(54,165,392)

(8,070,895)

Income before share of loss in equity method investments

85,269,152

134,131,250

19,986,180

Share of losses in equity investees, net of tax

(907,036)

(173,231)

(25,812)

Net income

84,362,116

133,958,019

19,960,368

Net loss attributable to non-controlling interests

29,519

955,533

142,378

Net income attributable to ordinary shareholders

84,391,635

134,913,552

20,102,746

Net earnings per share

Class A ordinary share-basic and diluted

0.92

1.33

0.20

Class B ordinary share-basic and diluted

0.92

1.33

0.20

Net earnings per ADS

Class A ordinary share-basic and diluted

0.92

1.33

0.20

Class B ordinary share-basic and diluted

0.92

1.33

0.20

Weighted average shares outstanding

Class A ordinary share-basic and diluted

50,856,151

67,015,625

67,015,625

Class B ordinary share-basic and diluted

40,949,391

34,762,909

34,762,909

Other comprehensive income, net of tax

-Foreign currency translation adjustments

(169,882)

(14,802,518)

(2,205,644)

Comprehensive income, net of tax

84,192,234

119,155,501

17,754,724

Comprehensive loss attributable to non-controlling interests

29,519

955,533

142,378

Comprehensive income attributable to ordinary shareholders

84,221,753

120,111,034

17,897,102

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

 Quarter Ended 

  March 31,2018 

  March 31,2019 

  March 31,2019 

 RMB 

 RMB 

 USD 

Operation activities:

Net (loss) income 

84,362,116

133,958,019

19,960,368

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

5,394,502

7,670,772

1,142,981

Share of loss in equity method investments

907,036

173,231

25,812

Interest income 

(4,703,862)

(7,961,638)

(1,186,321)

Bad debt expense 

319,258

891,369

132,818

Loss (Gain) from investments in equity securities 

5,173,627

(59,934,470)

(8,930,515)

Foreign exchange losses (gains)

725,206

(204,117)

(30,414)

Share-based compensation 

159,839

4,849,451

722,591

Income tax expenses related to dividend distribution 

-

3,844,492

572,847

Changes in operating assets and liabilities:

Accounts receivable 

(11,222,590)

(18,018,161)

(2,684,790)

Prepaid rent 

1,586,377

711,581

106,029

Inventories 

775,180

1,448,883

215,890

Amounts due from related parties 

(416,358)

3,600

536

Other current assets 

(6,803,749)

7,196,789

1,072,355

Other assets 

-

(4,689,629)

(698,777)

Accounts payable 

4,696,940

4,198,665

625,621

Amounts due to related parties 

326,696

(66,764)

(9,948)

Salary and welfare payable 

(1,679,085)

(7,363,593)

(1,097,210)

Deferred revenue 

22,243,661

(4,393,076)

(654,589)

Advance from customers 

(8,488,483)

(1,670,782)

(248,954)

Accrued expenses and other current liabilities 

3,487,779

25,592,668

3,813,428

Income tax payable 

19,733,840

23,883,063

3,558,687

Unrecognized tax benefits 

3,751,152

6,046,751

900,994

Deferred rent 

(1,014,448)

(292,571)

(43,594)

Other long-term liabilities 

1,773,389

1,047,726

156,116

Deferred taxes 

(5,046,994)

5,270,154

785,277

Net cash provided by operating activities 

116,041,029

122,192,413

18,207,238

Investing activities:

Purchases of property and equipment 

(58,332,109)

(9,059,949)

(1,349,975)

Proceeds from disposal of property and equipment 

-

300,000

44,701

Acquisitions, net of cash received 

-

(10,000,000)

(1,490,046)

Purchases of short-term investments 

(516,561,589)

(182,229,182)

(27,152,995)

Proceeds from short-term investments 

745,000,000

716,055,975

106,695,669

Increase of long-term time deposits 

-

(440,000,000)

(65,562,046)

Purchases of investments in equity securities 

(4,795,838)

(1,976,351)

(294,485)

Purchases of long term investments in equity securities 

-

(249,464,401)

(37,171,355)

Proceeds from disposal of investments in equity securities 

11,267,910

108,603,914

16,182,488

Loan to related parties 

-

(10,000,000)

(1,490,046)

Loan to third parties 

(5,000,000)

(15,940,000)

(2,375,134)

Loan to franchisees 

(15,000,000)

(18,130,000)

(2,701,454)

Repayment from franchisees 

3,500,000

5,293,397

788,740

Net cash (used in) provided by investing activities 

160,078,374

(106,546,597)

(15,875,938)

Financing activities:

Distribution to the shareholders

(39,691,103)

(208,025,814)

(30,996,813)

Income tax paid related to the above distribution 

(3,000,000)

-

-

Contribution from noncontrolling interest holders 

-

10,390,000

1,548,158

Proceeds from issuance of Class A ordinary shares 

837,505,007

-

-

Payment for initial public offering costs 

(4,302,762)

-

-

Net cash provided by (used in) financing activities 

790,511,142

(197,635,814)

(29,448,655)

Effect of exchange rate changes on cash and cash equivalents, and restricted cash* 

(895,088)

(11,689,960)

(1,741,859)

Net increase (decrease) in cash and cash equivalents and restricted cash

1,065,735,457

(193,679,958)

(28,859,214)

Cash, cash equivalents and restricted cash at the beginning of the period

164,963,665

1,267,325,785

188,837,434

Cash, cash equivalents and restricted cash at the end of the period

1,230,699,122

1,073,645,827

159,978,220

* Upon the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, restricted cash was included within cash and cash

equivalents in the consolidated statement of cash flows for the three months period ended March 31, 2019 and the comparative disclosure had been

restated to conform to the current period presentation.

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results

Quarter Ended

 March 31, 2018

 March 31, 2019

 March 31, 2019

RMB

RMB

USD

Net income 

84,362,116

133,958,019

19,960,368

 Deduct: 

Other operating income

13,825,401

6,906,453

1,029,094

Gains on investments in equity securities

-

59,934,470

8,930,515

Other income, net

-

829,781

123,641

 Add: 

Other operating expenses

143,262

42,624

6,351

Income tax expense 

29,286,411

54,165,392

8,070,895

Share of loss in equity investees, net of tax 

907,036

173,231

25,812

Interest expense

-

685,125

102,087

Share-based compensation

159,839

4,849,451

722,591

Depreciation and amortization 

5,394,502

7,670,772

1,142,981

Losses on investments in equity securities

5,173,627

-

-

 Adjusted EBITDA (Non-GAAP) 

111,601,392

133,873,910

19,947,835

Quarter Ended

 March 31, 2018

 March 31, 2019

 March 31, 2019

RMB

RMB

USD

Net income 

84,362,116

133,958,019

19,960,368

Deduct:

Government subsidies (net of 25% tax)

10,236,002

4,815,000

717,457

Gains on investments in equity securities (net of 25% tax)

-

44,950,853

6,697,886

Other income (net of 25% tax)

-

622,336

92,731

Add:

Share-based compensation

159,839

4,849,451

722,591

Losses on investments in equity securities (net of  25% tax)

3,880,220

-

-

Income tax expenses related to dividend distribution

-

3,844,492

572,847

Losses from joint venture closure

Core net income (Non-GAAP)

78,166,173

92,263,773

13,747,732

Core net income per ADS (Non-GAAP)

Class A ordinary share-basic and diluted

0.85

0.91

0.14

Class B ordinary share-basic and diluted

0.85

0.91

0.14

Operational Data

As of March 31, 2018

As of March 31, 2019

Total hotels in operation:

2,354

2,829

     Leased and owned hotels

26

30

     Franchised hotels

2,328

2,799

Total hotel rooms in operation

195,552

225,757

     Leased and owned hotels

3,301

3,790

     Franchised hotels

192,251

221,967

Number of cities

266

292

Quarter Ended

As of March 31, 2018

As of March 31, 2019

Occupancy rate (as a percentage)

     Leased-and-owned hotels

60.5%

59.6%

     Franchised hotels

79.6%

78.4%

     Blended

79.2%

78.1%

Average daily rate (in RMB)

     Leased-and-owned hotels

193

200

     Franchised hotels

155

162

     Blended

156

162

RevPAR (in RMB)

     Leased-and-owned hotels

117

119

     Franchised hotels

124

127

     Blended

124

127

 Number of Hotels in Operation 

 Number of Hotel Rooms in Operation 

As of March 31,2018

As of March 31,2019

As of March 31,2018

As of March 31,2019

 Economy hotels 

287

508

15,810

25,639

 Vatica                                      

111

121

8,280

8,923

 Shell  

176

387

7,530

16,716

 Mid-scale 

2,012

2,198

173,456

187,462

 GreenTree Inn  

1,755

1,901

152,821

164,181

 GT Alliance  

257

294

20,635

23,090

 Wumian Hotel

-

1

-

62

 GreenTree Apartment 

-

2

-

129

 Business to Mid-to-up-scale 

55

123

6,286

12,656

 GreenTree Eastern  

55

91

6,286

9,732

 GMe 

-

14

-

1,337

 Geya 

-

5

-

445

 VX 

-

13

-

1,142

  Total  

2,354

2,829

195,552

225,757



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