GreenTree Hospitality Group Ltd. Reports Third Quarter 2021 Financial Results

    • Total revenues increased 16.3% year-over-year to RMB310.4 million (US$48.2 million)[1].
    • Income from operations decreased 45.6% year-over-year to RMB54.9 million (US$8.5 million) [1].
    • Adjusted EBITDA (non-GAAP) [2] decreased 33.5% year-over-year to RMB73.7 million (US$11.4 million) [1].
    • Core net income (non-GAAP) [3] decreased 45.7% year-over-year to RMB50.2 million (US$7.8 million) [1].

SHANGHAI, Jan. 13, 2022 /PRNewswire/ — GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree", the "Company", "we", "us" and "our"), a leading hospitality management group in China, today announced its unaudited financial results for the third quarter of 2021.

Third Quarter of 2021 Operational Highlights

  • A total of 4,626 hotels with 334,162 hotel rooms were in operation as of September 30, 2021, compared to 4,542 hotels and 328,773 hotel rooms as of June 30, 2021
  • As of September 30, 2021, the Company had 62 leased-and-operated ("L&O") hotels and 4,564 franchised-and-managed ("F&M") hotels in operation in 362 cities across China, compared to 37 L&O hotels and 4,158 F&M hotels in operation in 341 cities as of September 30, 2020. The geographic coverage increased by 6.2% year over year.
  • During the quarter, the Company opened 182 hotels, an increase of 20 compared to 162 hotels in the third quarter of 2020. Two of those hotels were in the luxury segment, 70 in the mid-to-up-scale segment, 83 in the mid-scale segment, and 27 in the economy segment. Geographically speaking, 12 hotels were in Tier 1 cities [3], 52 in Tier 2 cities and the remaining 118 in Tier 3 and lower cities in China.
  • As of September 30, 2021, the Company had a pipeline of 1,207 hotels contracted for or under development, of which 57 hotels were in the luxury hotel segment, 337 in the mid-to-up-scale segment, 465 in the mid-scale segment, and 348 in the economy segment.
  • The average daily room rate, or ADR, for all hotels in operation was RMB 163, an increase of 7.7% from RMB151 in the third quarter of 2020, and a 6.2% decrease compared with RMB174 in the pre-COVID-19 third quarter of 2019.
  • The occupancy rate, or OCC for all hotels in operation was 72.4%, a decrease of 6.7% compared with 79.1% in the third quarter of 2020, and a 13.5% decrease compared with 85.9% in the pre-COVID-19 third quarter of 2019.
  • The revenue per available room, or RevPAR, which is calculated by multiplying our hotels’ ADR by its occupancy rate, was RMB 118, a 1.4% year-over-year decrease, and a 20.9% decrease compared with RMB149 in the pre-COVID-19 third quarter of 2019.
  • As of September 30, 2021 the Company’s loyalty program had more than 66 million individual members and more than 1,810,000 corporate members, compared to over 62 million individual members and approximately 1,760,000 corporate members respectively as of June 30, 2021. The Company sold approximately 91.3% of room nights directly during the third quarter of 2021.

"Despite the unprecedented challenges brought upon us by resurgences of COVID-19 cases in various parts of China, the company delivered satisfactory quarterly results as the impact on our occupancy and RevPAR has been less severe than at the average of other hotels in China," said Mr. Alex Xu, Chair and Chief Executive Officer of GreenTree. "This has been an extraordinarily tough period, but it is one that has been shared across the industry. As for ourselves, we feel certain that we will get through the current pandemic wave given the resilience of our business model and the experience that our team and franchisees have accumulated while combatting Covid-19. Going forward, we will further optimize our management and operating systems, including design and technology features, and sales and marketing programs to improve hotel quality and operating performance. Once again, I am extremely grateful for the support and dedication of our employees, franchisees, guests, and shareholders as we continue to navigate uncertain times."

[1] The conversion of Renminbi ("RMB")into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.4434 on September 30, 2021 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20211004/

[2] Adjusted EBITDA (non-GAAP) is calculated as net income plus other operating expenses, income tax expense, interest expense, depreciation and amortization, losses from investment in equity securities, but excludes other operating income, interest income and other, net, gains from investment in equity securities, share of gains in equity investees (net of tax), and other income, net. The calculation of Adjusted EBITDA (non-GAAP) included in this report has been aligned according to the abovementioned definition.

[3] Core net income is calculated as net income plus share-based compensation, losses from investments in equity securities (net of 25% tax), one-time fees and expense, asset impairment/accrued bad debt and income tax expenses related to dividend distribution but excludes government subsidies (net of 25% tax), gains from investment in equity securities (net of 25% tax), and other income (net of 25% tax).

[4] Tier 1 Cities refers to Beijing, Shanghai, Shenzhen and Guangzhou; Tier 2 Cities refers to the 32 major cities, other than Tier 1 Cities, 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.

 

Third Quarter 2021 Financial Results

Quarter Ended

September
30, 2020

September
30, 2021

September
30, 2021

RMB

RMB

US$

Revenues

Leased-and-operated hotels

66,823,544

106,518,761

16,531,452

Franchised-and-managed hotels

194,060,899

194,002,860

30,108,772

others

5,983,132

9,922,553

1,539,956

Total revenues

266,867,575

310,444,174

48,180,180

Nine Months Ended

September
30, 2020

September
30, 2021

September
30, 2021

RMB

RMB

US$

Revenues

Leased-and-operated hotels

150,961,027

279,514,243

43,379,930

Franchised-and-managed hotels

470,258,096

589,609,423

91,505,948

others

19,034,407

29,589,847

4,592,272

Total revenues

640,253,530

898,713,513

139,478,150

Total revenues were RMB310.4 million (US$48.2 million) [1], a 16.3% year-over-year increase. The increase was primarily due to our newly opened L&O hotels. Compared with the pre-COVID-19 third quarter of 2019, total revenues increased by 6.3%. Total revenues for the first nine months of 2021 were RMB 898.7 million (US$139.5 million) [1], representing a 40.4% year-over-year increase.

Total revenues from leased-and-operated hotels were RMB106.5 million (US$16.5 million) [1], a 59.4% year-over-year increase. The increase was primarily due to the 20.7% year-over-year increase in L&O hotels’ RevPAR and revenues from the 24 L&O hotels opened since the beginning of 2021. This revenue increase was partially offset by the closure of 2 L&O hotels over the same period. Total revenues from L&O hotels for the nine months of 2021 were RMB279.5 million (US$43.4 million) [1], an 85.2% year-over-year increase.

Total revenues from franchised-and-managed hotels were RMB194.0 million (US$30.1 million) [1], almost the same as in the same quarter last year. Initial franchise fees increased by 17.8% year-over-year, mainly attributable to the gross opening of 181 F&M hotels and the closure of 96 F&M hotels. Recurring franchisee management fees and others decreased 1.7% year-over-year primarily due to the 2.2% decrease in RevPAR and offset by the 9.8% increase in the number of F&M hotels. Total revenues from F&M hotels for the first nine months of 2021 were RMB589.6 million (US$91.5 million) [1], representing a 25.4% year-over-year increase.

Quarter Ended

September 30, 2020

 September
30, 2021

 September
30, 2021

RMB

RMB

US$

Initial franchise fee

16,619,577

19,579,815

3,038,740

Recurring franchise
management fee and others

177,441,322

174,423,045

27,070,032

Revenues from franchised-
and-managed hotels

194,060,899

194,002,860

30,108,772

Nine Months Ended

September 30, 2020

 September
30, 2021

 September
30, 2021

RMB

RMB

US$

Initial franchise fee

42,985,481

57,172,423

8,873,021

Recurring franchise
management fee and others

427,272,615

532,437,000

82,632,927

Revenues from franchised-
and-managed hotels

470,258,096

589,609,423

91,505,948

 

Total operating costs and expenses

Quarter Ended

 September
30, 2020

 September
30, 2021

 September
30, 2021

RMB

RMB

US$

Operating costs and expenses

Hotel operating costs

108,025,295

172,797,324

26,817,724

Selling and marketing expenses

21,273,500

16,450,435

2,553,067

General and administrative expenses

44,782,915

68,776,812

10,673,994

Other operating expenses

434,792

760,850

118,083

Total operating costs and expenses

174,516,502

258,785,421

40,162,868

Nine Months Ended

 September
30, 2020

 September
30, 2021

 September
30, 2021

RMB

RMB

US$

Operating costs and expenses

Hotel operating costs

292,705,145

459,464,624

71,307,792

Selling and marketing expenses

51,114,478

56,271,856

8,733,255

General and administrative expenses

121,672,457

195,778,639

30,384,368

Other operating expenses

1,633,064

4,907,140

761,576

Total operating costs and expenses

467,125,144

716,422,259

111,186,991

Hotel operating costs were RMB172.8 million (US$26.8 million) [1], a 60.0% increase year-over-year. The increase was mainly attributable to the opening of 24 L&O hotels since the beginning of 2021, which resulted in higher rents, higher utilities and consumables, higher staff headcount and compensation, higher depreciation and amortization, and higher ramp up cost. Excluding the impact from newly opened L&O hotels in 2021, hotel operating costs increased 10.3%. For the first nine months of 2021, hotel operating costs were RMB459.5 million (US$71.3 million) [1], representing a 57.0% increase.

Quarter Ended

September
30,

September
30,

September
30,

2020

2021

2021

RMB

RMB

US$

Rental

27,189,274

68,151,443

10,576,938

Utilities

3,666,479

7,272,803

1,128,721

Personnel cost

11,732,599

21,175,692

3,286,416

Depreciation and amortization

14,946,857

17,781,855

2,759,701

Consumable, food and beverage

7,937,167

17,297,833

2,684,582

Costs of general managers of franchised-
and-managed hotels

24,241,736

29,575,721

4,590,080

Other costs of franchised-and-managed
hotels

7,873,516

7,670,523

1,190,447

Others

10,437,667

3,871,454

600,839

Hotel Operating Costs

108,025,295

172,797,324

26,817,724

Nine Months Ended

September
30,

September
30,

September
30,

2020

2021

2021

RMB

RMB

US$

Rental

90,098,256

171,945,795

26,685,569

Utilities

11,258,969

19,476,338

3,022,680

Personnel cost

31,296,079

52,246,791

8,108,575

Depreciation and amortization

36,873,883

51,465,319

7,987,292

Consumable, food and beverage

23,477,610

49,024,107

7,608,422

Costs of general managers of franchised-
and-managed hotels

65,575,838

84,971,682

13,187,398

Other costs of franchised-and-managed
hotels

17,853,103

20,119,472

3,122,493

Others

16,271,407

10,215,120

1,585,363

Hotel Operating Costs

292,705,145

459,464,624

71,307,792

Selling and marketing expenses were RMB16.5 million (US$2.6 million) [1], a 22.7% year-over-year decrease. The decrease was mainly attributable to lower advertising expenses. For the first nine months of 2021, selling and marketing expenses were RMB56.3 million (US$8.7 million) [1], representing a 10.1% increase.

General and administrative expenses were RMB68.8 million (US$10.7 million) [1], a 53.6% year-over-year increase. The increase was mainly attributable to the opening of 24 L&O hotels since the beginning of 2021 and the increased one-time consulting fees for capital market advice. Excluding the impact from newly opened L&O hotels and one-time consulting fees, general and administrative expenses increased by 16.6%. General and administrative expenses for the nine months of 2021 were RMB195.8 million (US$30.4 million[1], a 60.9% year-over-year increase.

Gross profit was RMB137.6 million (US$21.4 million) [1], a year-over-year decrease of 13.3%. Gross margin was 44.3%, compared to 59.5% a year ago. The decrease was primarily due to the operating loss recorded by newly opened L&O hotels during their ramp-up period. Gross profit for the first nine months of 2021 was RMB439.2 million (US$68.2 million[1], a 26.4% year-over-year increase.

Income from operations was RMB54.9 million (US$8.5 million) [1], a year-over-year decrease of 45.6%, with a margin of 17.7%. The decrease was mainly due to the operating loss recorded by newly opened L&O hotels during their ramp-up period. Excluding the impact of newly opened hotels, income from operations was RMB88.5 million, a year-over-year decrease of 12.3%, with a margin of 31.5%. Income from operations for the first nine months of 2021 was RMB205.6 million (US$31.9 million[1], a year-over-year increase of 2.4%.

Net income was RMB33.0 million (US$5.1 million) [1], compared to RMB85.6 million in the third quarter of 2020 and net margin was 10.6%. The year-over-year decrease was mainly attributable to the operating loss recorded by newly opened L&O hotels during their ramp-up period. Net income for the first nine months of 2021 was RMB179.3 million (US$27.8 million[1], a year-over-year increase of 8.5%.

Adjusted EBITDA (non-GAAP) [2] was RMB73.7 million (US$11.4 million) [1], a year-over-year decrease of 33.5%. Adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 23.7%, compared to 41.5% a year ago. Excluding the impact of newly opened hotels, Adjusted EBITDA was RMB107.3 million, with a margin of 38.2%. Adjusted EBITDA (non-GAAP) for the first nine months of 2021 was RMB248.9 million (US$38.6 million[1], a year-over-year increase of 10.7%.

Core net income (non-GAAP) was RMB50.2 million (US$7.8 million) [1], a year-over-year decrease of 45.7%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 16.2%, compared to 34.6% one year ago. Core net income (non-GAAP) for the first nine months of 2021 was RMB173.0 million (US$26.8 million[1], a year-over-year decrease of 11.2%.

Earnings per ADS (basic and diluted) were RMB0.33 (US$0.05[1], down from RMB0.81 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.49 (US$0.08) [1]down from RMB0.90 a year ago. Earnings per ADS (basic and diluted) for the first nine months of 2021 was RMB1.80 (US$0.28[1] up from RMB1.71 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.68 (US$0.26[1] for the nine months of 2021, a decrease from RMB1.89 a year ago.

Cash flow. Operating cash inflow was RMB116.8 million (US$18.1 million) [1] as a result of income from operations. Investing cash outflow was RMB171.3 million (US$26.6 million[1], which was primarily attributable to acquisition costs of our L&O hotels, investments and deposits of property and equipment, loans to franchisees, and purchases of short-term investments. The investing cash outflow was partially offset by proceeds from repayment from franchisees, and proceeds from short-term investments. Financing cash outflow was RMB48.4 million (US$7.5 million). Operating cash inflow for the first nine months of 2021 was RMB159.7 million (US$24.8 million[1]. Investing cash outflow for the first nine months of 2021 was RMB672.0 million (US$104.3 million[1]. Financing cash inflow for first nine months of 2021 was RMB101.5 million (US$15.7 million[1].

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposit. As of September 30, 2021, the Company had total cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposits of RMB1,192.1 million (US$185.0 million[1], compared to RMB1,291.0 million as of June 30, 2021. The decrease from the prior quarter was primarily attributable to acquisition costs of our L&O hotels, loans to franchisees and property investments, offset by drawing down of bank facilities.

COVID-19 Update

During the third quarter, RevPAR decreased in July due to the worsened Covid-19 situation in Nanjing city and in Jiangsu Province. Fortunately, RevPAR rebounded quickly to around 100% of the 2019 level in the middle of September. But due to the outbreak of cases in different cities nationwide, it dropped to about 81.3% of its 2019 level during the first week of November but then recovered gradually to about 98.5% of its 2019 level in the last week of December thanks to the resilience of our business model, well-segmented and robust brand portfolio and the loyalty and stickiness of our members.

Guidance

Assuming the recent resurgence of COVID-19 outbreaks remains under control in China in the coming quarters, the Company expects an increase in total revenues of 25%-30% for the full year 2021, compared to 2020 and an increase in total revenues of 7%-12% for the full year 2021, compared to 2019.

The guidance set forth above reflects the Company’s current and preliminary views based on our recovery speed and may not be indicative of the final financial results for future interim periods and the full year.

Conference Call

GreenTree’s management will hold an earnings conference call at 8:00 PM U.S. Eastern Time on January 12, 2022 (9:00 AM Beijing/Hong Kong Time on January 13, 2022).

Dial-in numbers for the live conference call are as follows:

International 

1-412-902-4272 

Mainland China

4001-201-203 

US 

1-888-346-8982 

Hong Kong 

800-905-945 or 852-3018-4992 

Singapore

800-120-6157 

Participants should ask to join the GreenTree call, please dial in approximately 10 minutes before the scheduled time of the call.

A telephone replay of the conference call will be available after the conclusion of the live conference call until January 19, 2022.

Dial-in numbers for the replay are as follows:

International Dial-in 

1-412-317-0088

U.S. Toll Free 

1-877-344-7529

Canada Toll Free

855-669-9658

Passcode:

6891497

Additionally, a live and archived webcast of this conference call will be available at http://ir.998.com.

Use of Non-GAAP Financial Measures

We believe that Adjusted EBITDA and core net income, as we present it, is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions, income taxes and certain non-core and non-recurring items in our financial statements.

The presentation of Adjusted EBITDA and core net income should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business.

The use of Adjusted EBITDA and core net income has certain limitations because it does not reflect all items of income and expenses that affect our operations. Items excluded from Adjusted EBITDA and core net income are significant components in understanding and assessing our operating and financial performance. Depreciation and amortization expense for various long-term assets, income tax and share-based compensation have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, Adjusted EBITDA and core net income does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest expense/income, gains/losses from investments in equity securities, income tax expenses, share-based compensation, share of loss in equity investees, government subsidies and other relevant items both in our reconciliations to the corresponding U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

The term Adjusted EBITDA and core net income is not defined under U.S. GAAP, and Adjusted EBITDA and core net income is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider this data in isolation or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our Adjusted EBITDA and core net income may not be comparable to Adjusted EBITDA and core net income or similarly titled measures utilized by other companies since such other companies may not calculate Adjusted EBITDA and core net income in the same manner as we do.

Reconciliations of the Company’s non-GAAP financial measures, including Adjusted EBITDA and core net income, to the consolidated statement of operations information are included at the end of this press release.

About GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company") (NYSE: GHG) is a leading hospitality management group in China. As of September 30, 2021, GreenTree had a total number of 4,626 hotels. In 2020, HOTELS magazine ranked GreenTree Top 12 Ranking among 225 largest global hotel groups in terms of number of hotels in its annual HOTELS’ 225. GreenTree was also the fourth largest hospitality company in China in 2020 based on the statistics issued by the China Hospitality Association.

GreenTree has a broad portfolio of diverse brands spanning from the economy to mid-scale, up-scale and luxury segments of the hospitality industry mainly in China. Through its strong membership base, expansive booking network, superior system management with moderate charges, and fully supported by its operating departments including Decoration, Engineering, Purchasing, Operation, IT and Finance, GreenTree aims to keep closer relationships with all of its clients and partners by providing a diverse brand portfolio that features comfort, style and value.

For more information on GreenTree, please visit http://ir.998.com

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995.  In some cases, these forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," "confident," "future," or other similar expressions. GreenTree may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about or based on GreenTree’s current beliefs, expectations, assumptions, estimates and projections about us and our industry, are forward-looking statements that involve known and unknown factors, risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such factors and risks include, but not limited to the following: GreenTree’s goals and growth strategies; its future business development, financial condition and results of operations; trends in the hospitality industry in China and globally; competition in our industry; fluctuations in general economic and business conditions in China and other regions where we operate; the regulatory environment in which we and our franchisees operate; and assumptions underlying or related to any of the foregoing. You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the U.S. Securities and Exchange Commission. All information provided, including the forward-looking statements made, in this press release are current as of the date of the press release. Except as required by law, GreenTree undertakes no obligation to update any such information or forward-looking statements to reflect events or circumstances after the date on which the information is provided or statements are made, or to reflect the occurrence of unanticipated events.

Financial Tables and Operational Data Follow

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets

December 31,

September 30,

September 30,

2020

2021

2021

RMB

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

611,358,209

198,989,361

30,882,665

Short-term investments

301,983,182

518,915,595

80,534,438

Investments in equity securities

242,378,696

243,135,861

37,734,094

Accounts receivable, net of allowance

101,511,057

106,600,534

16,544,143

Amounts due from related parties

9,770,871

146,685,649

22,765,256

Prepaid rent

13,597,867

19,120,240

2,967,415

Inventories

3,804,680

2,259,917

350,734

Other current assets

77,649,794

176,685,447

27,421,150

Loans receivable, net

222,244,629

320,772,059

49,783,043

Total current assets

1,584,298,985

1,733,164,663

268,982,938

Non-current assets:

Restricted cash

22,369,900

22,299,900

3,460,890

Long-term time deposits

490,000,000

160,000,000

24,831,611

Loans receivable, net

145,703,988

335,166,679

52,017,053

Property and equipment, net

668,605,661

992,679,468

154,061,438

Intangible assets, net

491,513,073

539,647,424

83,751,967

Goodwill

100,231,487

105,397,148

16,357,381

Long-term investments

369,525,917

184,034,186

28,561,658

Other assets

66,635,394

286,179,925

44,414,427

Deferred tax assets

156,070,112

142,433,816

22,105,382

 TOTAL ASSETS

4,094,954,517

4,501,003,209

698,544,745

LIABILITIES AND EQUITY

Current liabilities:

Short-term bank loans

150,000,000

240,000,000

37,247,416

Accounts payable

19,606,344

20,287,040

3,148,499

Advance from customers

34,305,508

26,037,866

4,041,013

Amounts due to related parties

3,198,253

5,114,422

793,746

Salary and welfare payable

51,567,587

57,101,423

8,862,002

Deferred rent

1,356,132

1,400,795

217,400

Deferred revenue

221,314,997

231,325,052

35,901,085

Accrued expenses and other current liabilities

300,696,673

369,967,995

57,418,133

Income tax payable

87,483,970

66,955,205

10,391,285

Total current liabilities

869,529,464

1,018,189,798

158,020,579

Deferred rent

28,642,973

56,737,678

8,805,550

Deferred revenue

361,901,369

326,029,164

50,598,933

Other long-term liabilities

115,862,713

135,523,772

21,032,959

Deferred tax liabilities

178,413,413

176,422,515

27,380,345

Unrecognized tax benefits

290,679,902

314,534,332

48,814,963

 TOTAL LIABILITIES

1,845,029,834

2,027,437,259

314,653,329

Shareholders’ equity:

Class A ordinary shares

222,587,070

222,587,070

34,544,972

Class B ordinary shares

115,534,210

115,534,210

17,930,628

Additional paid-in capital

1,149,280,404

1,150,764,901

178,595,912

Retained earnings

570,042,924

755,706,412

117,283,796

Accumulated other comprehensive income

45,586,647

45,487,996

7,059,626

Total GreenTree Hospitality Group Ltd.
shareholders’ equity

2,103,031,255

2,290,080,589

355,414,934

Non-controlling interests

146,893,428

183,485,361

28,476,482

Total shareholders’ equity

2,249,924,683

2,473,565,950

383,891,416

TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY

4,094,954,517

4,501,003,209

698,544,745

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

Nine Months Ended

 September
30, 2020

 September
30, 2021

 September
30, 2021

 September
30, 2020

 September
30, 2021

 September
30, 2021

RMB

RMB

US$

RMB

RMB

US$

Revenues

Leased-and-
operated hotels

66,823,544

106,518,761

16,531,452

150,961,027

279,514,243

43,379,930

Franchised-and-
managed hotels

194,060,899

194,002,860

30,108,772

470,258,096

589,609,423

91,505,948

Others

5,983,132

9,922,553

1,539,956

19,034,407

29,589,847

4,592,272

Total revenues

266,867,575

310,444,174

48,180,180

640,253,530

898,713,513

139,478,150

Operating
costs and
expenses

Hotel operating
costs

(108,025,295)

(172,797,324)

(26,817,724)

(292,705,145)

(459,464,624)

(71,307,792)

Selling and
marketing
expenses

(21,273,500)

(16,450,435)

(2,553,067)

(51,114,478)

(56,271,856)

(8,733,255)

General and
administrative
expenses

(44,782,915)

(68,776,812)

(10,673,994)

(121,672,457)

(195,778,639)

(30,384,368)

Other operating
expenses

(434,792)

(760,850)

(118,083)

(1,633,064)

(4,907,140)

(761,576)

Total operating
costs and
expenses

(174,516,502)

(258,785,421)

(40,162,868)

(467,125,144)

(716,422,259)

(111,186,991)

Other operating
income

8,577,445

3,225,248

500,551

27,671,358

23,278,837

3,612,819

Income from
operations

100,928,518

54,884,001

8,517,863

200,799,744

205,570,091

31,903,978

Interest income
and other, net

23,140,692

15,797,161

2,451,680

47,861,876

45,079,808

6,996,276

Interest expense

(203,604)

(2,485,865)

(385,800)

(2,941,850)

(9,963,790)

(1,546,356)

Gains (losses)
from investment
in equity
securities

2,905,553

(16,729,522)

(2,596,381)

(9,734,782)

27,143,814

4,212,654

Other income,
net

517,981

3,495,891

542,555

517,981

3,495,891

542,554

Income before
income taxes

127,289,140

54,961,666

8,529,917

236,502,969

271,325,814

42,109,106

Income tax expense

(41,821,938)

(22,507,756)

(3,493,149)

(72,398,501)

(93,047,550)

(14,440,753)

Income before
share of gains in
equity
investees

85,467,202

32,453,910

5,036,768

164,104,468

178,278,264

27,668,353

Share of gains in
equity investees,
net of tax

170,211

543,250

84,311

1,118,542

1,007,147

156,306

Net income

85,637,413

32,997,160

5,121,079

165,223,010

179,285,411

27,824,659

Net
loss/(income)
attributable to
non-controlling
interests

(2,347,248)

1,438,345

223,228

10,563,167

6,378,077

989,863

Net income
attributable to
ordinary shareholders

83,290,165

34,435,505

5,344,307

175,786,177

185,663,488

28,814,522

Net earnings
per share

Class A ordinary
share-basic and
diluted

0.81

0.33

0.05

1.71

1.80

0.28

Class B ordinary
share-basic and
diluted

0.81

0.33

0.05

1.71

1.80

0.28

Net earnings
per ADS

Class A ordinary
share-basic and
diluted

0.81

0.33

0.05

1.71

1.80

0.28

Class B ordinary
share-basic and
diluted

0.81

0.33

0.05

1.71

1.80

0.28

Weighted
average shares
outstanding

Class A ordinary
share-basic and
diluted

68,286,954

68,286,954

68,286,954

68,286,954

68,286,954

68,286,954

Class B ordinary
share-basic and
diluted

34,762,909

34,762,909

34,762,909

34,762,909

34,762,909

34,762,909

Other
comprehensive
income, net of
tax

Foreign currency
translation
adjustments

(11,616,690)

1,275,061

197,886

(7,800,682)

(98,651)

(15,311)

Unrecognized
gain on an
available-for-
sale

6,750,000

6,750,000

Comprehensive
income, net of
tax

80,770,723

34,272,221

5,318,965

164,172,328

179,186,760

27,809,348

Comprehensive
loss/(income)
attributable to
non-controlling
interests

(2,347,248)

1,438,345

223,228

10,563,167

6,378,077

989,862

Comprehensive
income
attributable to
ordinary
shareholders

78,423,475

35,710,566

5,542,193

174,735,495

185,564,837

28,799,211

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

 Quarter Ended

Nine Months Ended

 September
30, 2020

 September
30, 2021

 September
30, 2021

 September
30, 2020

 September
30, 2021

 September
30, 2021

RMB

RMB

US$

RMB

RMB

US$

Operating activities:

Net income

85,637,413

32,997,160

5,121,079

165,223,010

179,285,411

27,824,659

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

Depreciation and amortization

18,063,004

21,297,943

3,305,389

50,068,849

61,735,788

9,581,244

Share of (gains) in equity method
investments

(170,211)

(543,250)

(84,311)

(1,118,542)

(1,007,147)

(156,306)

Fair value change in returnable
consideration and contingent
consideration, net

(502,712)

(78,020)

Gains from disposal of a long-term
investment

(3,491,312)

(541,843)

(3,491,312)

(541,843)

Interest income

(2,217,211)

(2,695,728)

(418,370)

(7,059,071)

(6,550,758)

(1,016,662)

Bad debt expense

4,123,789

6,183,876

959,723

22,052,714

26,645,020

4,135,242

(Gains)losses from investments in
equity securities

(2,905,553)

18,728,741

2,906,655

9,734,782

(25,144,595)

(3,902,380)

Foreign exchange (gains) losses

(51,687)

(750,812)

(116,524)

(261,556)

1,756,830

272,656

Share-based compensation

537,492

83,417

232,558

1,845,357

286,395

Income tax expenses related to
dividend distribution or retained
profits

6,486,874

14,576,403

Contingent consideration included
in other current liabilities and other
assets

2,046,066

2,046,066

Changes in operating assets
and liabilities:

Accounts receivable

(4,658,499)

4,488,038

696,533

(43,356,590)

(28,358,558)

(4,401,179)

Prepaid rent

642,280

8,674,595

1,346,276

10,564,530

(5,522,373)

(857,059)

Inventories

(1,274,556)

(146,806)

(22,784)

(1,511,933)

1,533,638

238,017

Amounts due from related parties

8,625,331

3,274,808

508,242

10,135,528

(598,730)

(92,921)

Other current assets

(18,021,028)

12,185,993

1,891,236

(3,193,950)

(111,534,002)

(17,309,805)

Other assets

(8,142,812)

(10,374,644)

(1,610,120)

(17,157,334)

(18,159,564)

(2,818,320)

Accounts payable

4,598,670

2,194,915

340,645

7,487,666

680,702

105,643

Amounts due to related parties

521,868

(241,489)

(37,479)

(1,526,433)

1,916,169

297,385

Salary and welfare payable

8,405,275

264,466

41,044

9,778,026

5,533,836

858,838

Deferred revenue

6,439,785

(1,658,924)

(257,461)

(32,603,970)

(25,862,150)

(4,013,743)

Advance from customers

(339,768)

(1,678,033)

(260,427)

(8,097,688)

(8,122,664)

(1,260,618)

Accrued expenses and other
current liabilities

36,865,011

(1,709,467)

(265,305)

16,760,864

50,679,045

7,865,264

Income tax payable

15,896,890

15,513,591

2,407,672

(30,522,077)

(20,528,765)

(3,186,014)

Unrecognized tax benefits

16,917,849

2,454,572

380,944

13,707,938

23,854,430

3,702,149

Deferred rent

632,148

12,736,350

1,976,651

4,783,547

28,139,368

4,367,161

Other long-term liabilities

424,893

5,577,611

865,632

1,603,859

19,811,059

3,074,628

Deferred taxes

(3,180,335)

(7,044,162)

(1,093,237)

(15,548,950)

11,645,398

1,807,337

Net cash provided by operating
activities

175,365,486

116,775,524

18,123,277

176,798,246

159,678,721

24,781,748

Investing activities:

Purchases of property and
equipment

(26,948,009)

(93,109,989)

(14,450,444)

(68,576,946)

(250,998,814)

(38,954,405)

Purchases of intangible assets

(201,746)

(31,310)

(9,075)

(201,746)

(31,310)

Proceeds from disposal of
property and equipment

60,262

71,387

Payment for acquisition of minority
equity

(868,388)

(134,772)

Acquisitions, net of cash received

(6,660,000)

(4,112,459)

(638,244)

(7,915,807)

(177,241,084)

(27,507,385)

Advances for purchases of
property and equipment

(204,889,383)

(31,798,334)

Repayment of advances for
purchases of property and
equipment

22,400,000

3,476,425

22,400,000

3,476,425

Repayment of advances for
acquisitions

872,700

1,069,500

165,984

36,312,700

11,217,500

1,740,929

Purchases of short-term
investments

(610,180)

(61,635,884)

(9,565,739)

(148,300,207)

(199,922,194)

(31,027,438)

Proceeds from short-term
investments

8,817,211

42,805,509

6,643,311

407,451,316

399,540,539

62,007,719

Proceeds from sales of long-term
time deposits

50,000,000

7,759,878

Increase of long-term time
deposits

(30,000,000)

(130,000,000)

(20,175,684)

Proceeds from disposal of equity
securities and dividends received
from equity securities

5,345,656

7,886,074

211,307,112

32,794,350

Proceeds from disposal of equity
method investments

6,380,000

Loan to related parties

(119,400,000)

(52,546,988)

(8,155,165)

(304,766,500)

(284,292,548)

(44,121,512)

Repayment from related parties

111,100,000

1,750,000

271,596

297,256,179

150,415,500

23,344,120

Loan to third parties

(3,800,000)

(7,000,000)

(10,500,000)

(1,629,574)

Repayment of loan from third
parties

46,500,000

7,216,687

Loan to franchisees

(59,310,002)

(121,148,898)

(18,802,014)

(205,761,780)

(581,584,192)

(90,260,451)

Repayment from franchisees

35,586,060

93,467,363

14,505,907

70,801,095

277,141,562

43,011,696

Net cash (used in) provided by
investing activities

(54,946,302)

(171,263,592)

(26,579,693)

53,828,436

(671,976,136)

(104,289,061)

Financing activities:

Loan from non-controlling interest

2,792,853

433,444

Repayment of short-term
borrowings

(10,000,000)

(50,000,000)

(7,759,878)

(10,000,000)

(50,000,000)

(7,759,878)

Proceeds from short-term
borrowings

2,997,225

21,437,555

140,000,000

21,727,659

Capital contribution from
noncontrolling interest holders

2,884,202

1,650,000

256,076

6,262,589

8,681,000

1,347,270

Net cash provided by (used in)
financing activities

(4,118,573)

(48,350,000)

(7,503,802)

17,700,144

101,473,853

15,748,495

Effect of exchange rate changes
on cash and cash equivalents

(1,474,708)

(220,197)

(34,174)

(882,510)

(1,615,286)

(250,687)

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

114,825,903

(103,058,265)

(15,994,392)

247,444,316

(412,438,848)

(64,009,505)

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

474,778,636

324,347,526

50,337,947

342,160,223

633,728,109

98,353,060

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

589,604,539

221,289,261

34,343,555

589,604,539

221,289,261

34,343,555

 

 

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results

Quarter Ended

Nine Months Ended

 September
30, 2020

 September
30, 2021

 September
30, 2021

 September
30, 2020

 September
30, 2021

 September
30, 2021

RMB

RMB

US$

RMB

RMB

US$

Net income

85,637,413

32,997,160

5,121,079

165,223,010

179,285,411

27,824,659

Deduct:

Other operating income

8,577,445

3,225,248

500,551

27,671,358

23,278,837

3,612,819

Interest income and other,
net

23,140,692

15,797,161

2,451,681

47,861,876

45,079,808

6,996,276

Gains from investment in
equity securities

2,905,553

45,440,136

27,143,814

4,212,654

Share of gains in equity
investees, net of tax

170,211

543,250

84,311

1,118,542

1,007,147

156,307

Other income, net

517,981

3,495,891

542,554

517,981

3,495,891

542,554

Add:

Other operating expenses

434,792

760,850

118,082

1,633,064

4,907,140

761,576

Income tax expense

41,821,938

22,507,756

3,493,149

72,398,501

93,047,550

14,440,753

Interest expense

203,604

2,485,865

385,800

2,941,850

9,963,790

1,546,356

Depreciation and
amortization

18,063,004

21,297,943

3,305,389

50,068,849

61,735,788

9,581,244

Losses from investment in
equity securities

16,729,522

2,596,381

55,174,918

Adjusted EBITDA(Non-
GAAP)

110,848,869

73,717,546

11,440,783

224,830,299

248,934,182

38,633,978

Quarter Ended

Nine Months Ended

 September
30, 2020

 September
30, 2021

 September
30, 2021

 September
30, 2020

 September
30, 2021

 September
30, 2021

RMB

RMB

US$

RMB

RMB

US$

Net income

85,637,413

32,997,160

5,121,079

165,223,010

179,285,411

27,824,659

Deduct:

Government subsidies (net
of 25% tax)

1,005,153

287,650

44,643

14,217,238

11,422,522

1,772,748

Gains from investment in
equity securities (net of
25% tax)

2,179,165

34,080,102

20,357,861

3,159,490

Other income (net of 25%
tax)

388,486

2,621,918

406,915

388,486

2,621,918

406,915

Add:

Share-based compensation

537,492

83,417

232,558

1,845,357

286,395

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

12,547,142

1,947,286

50,081,189

One-time fees and
expense

3,839,368

7,004,623

1,087,100

3,839,368

21,711,927

3,369,638

Asset impairment/Accrued
bad debt

9,501,082

4,523,574

702,048

Income tax expenses
related to dividend
distribution

6,486,874

14,576,403

 Core net income(Non-
GAAP)

92,390,851

50,176,849

7,787,325

194,767,784

172,963,968

26,843,587

Core net income per ADS
(Non-GAAP)

Class A ordinary share-

basic and diluted

0.90

0.49

0.08

1.89

1.68

0.26

Class B ordinary share-
basic and diluted

0.90

0.49

0.08

1.89

1.68

0.26

 

 

Operational Data  

2020 Q3

2021 Q3

 Total hotels in operation:

4,195

4,626

 Leased-and-owned hotels

37

62

 Franchised hotels

4,158

4,564

 Total hotel rooms in operation

305,125

334,162

 Leased-and-owned hotels

4,620

7,062

 Franchised hotels

300,505

327,100

 Number of cities

341

362

Quarter Ended

2020 Q3

 2021 Q3

 Occupancy rate (as a
percentage)

 Leased-and-owned
hotels

70.6%

65.2%

 Franchised hotels

79.3%

72.6%

 Blended

79.1%

72.4%

 Average daily rate (in
RMB)

 Leased-and-owned
hotels

171

223

 Franchised hotels

151

161

 Blended

151

163

RevPAR (in RMB)

 Leased-and-owned
hotels

121

146

 Franchised hotels

120

117

 Blended

120

118

 

 

Number of Hotels in Operation

Number of Hotel Rooms in
Operation

2020 Q3

 2021 Q3

2020 Q3

 2021 Q3

Luxury

20

30

4,042

5,974

Argyle

20

30

4,042

5,974

 Mid-to-up-scale

337

488

30,303

44,662

 GreenTree Eastern

137

189

14,305

20,283

 Deepsleep Hotel

3

6

221

417

 Gem

33

41

3,016

3,770

 Gya

39

59

3,340

5,030

 Vx

32

74

2,563

6,589

Ausotel

12

16

1,561

2,109

Urban Garden and
others[1]

81

103

5,297

6,464

 Mid-scale

2,684

2,912

217,922

229,632

 GreenTree Inn

2,113

2,147

178,179

177,770

 GT Alliance

321

513

24,560

36,534

 GreenTree Apartment

13

16

862

1,098

Vatica 

123

112

8,925

8,115

City 118 Selected and
others[1]

114

124

5,396

6,115

 Economy hotels

1,154

1,196

52,858

53,894

Shell

593

633

25,791

27,406

City 118 and others[1]

561

563

27,067

26,488

Total

4,195

4,626

305,125

334,162

 

For more information, please contact:

GreenTree

Ms. Selina Yang
Phone: +86-21-3617-4886 ext. 7999
E-mail: ir@998.com

Mr. Nicky Zheng
Phone: +86-21-3617-4886 ext. 6708
E-mail: ir@998.com 

Christensen

In Shanghai
Ms. Constance Zhang
Phone: +86-138-1645-1798
E-mail: czhang@christensenIR.com

In Hong Kong 
Ms. Karen Hui 
Phone: +852-9266-4140 
E-mail: khui@christensenIR.com

In US 
Ms. Linda Bergkamp 
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com

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