GreenTree Stock Rises 2% After Profit, Revenue Growth

GreenTree reported the addition of new hotels, increased revenue per available room and membership growth, despite a slowdown in China's domestic economy​.

Belinda Zhou
    May 24, 2019 10:45 AM  PT
GreenTree Stock Rises 2% After Profit, Revenue Growth
author: Belinda Zhou   

Shares of GreenTree Hospitality Group Ltd. (NYSE: GHG) were trading up 2 percent, at $12.95 apiece, intraday Friday after the hotel operator reported its first-quarter results amid a weakening of China's economy.

The Shanghai-based company said in a statement today its revenue totaled $35.1 million in the first quarter, representing an increase of 20 percent year-over-year. Its net income soared 59 percent to $20 million, or 20 cents per American depositary share, according to the report.

The company reported the addition of new hotels, increased revenue per available room and membership growth amid a slowdown in China's domestic economyGreenTree said it has expanded its hotel network across 292 cities in China, with 2,829 hotels and 225,757 hotel rooms in operation by the end of March 2019, compared with 2,757 hotels and 221,529 hotel rooms one year ago.

"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,"  Alex Xu, the chief executive officer of GreenTree, said in the statement.

The company focuses on a network of hotels of varying costs and amenity levels, targeting a wide variety of business and pleasure travelers. Among all the 102 newly-opened hotels, 44 hotels belong to the mid-scale segment,14 in the business to mid-to-up-scale segment and the other 44 in the economy segment. Regarding geographical coverage of the hotels opened, 6 hotels were in Tier 1 cities including Beijing, Shanghai, Shenzhen and Guangzhou, 20 in Tier 2 cities including 32 major cities, and the remaining 76 hotels in other cities in China.

"We are blessed to be based in China where there is such a huge consumer economy," Xu said in the interview with CapitalWatch in March.

The company completed a number of strategic initiatives during the first quarter. It invested in China Gingko Education Group Co. Ltd., reported a strategic investment with the Argyle hotel network, and announced an acquisition agreement Zhejiang New Century Hotel Management Co. Ltd., as well as Urban Hotel Group. 

GreenTree said it intends to develop more hotels under the Wumian and GreenTree Apartment brands to meet the demand of young business travelers. GreenTree Apartment provides long-term apartment rental services to urban white collars, especially newcomers to cities, with family-friendly living space and more community space.

Looking ahead, GreenTree said it expects revenue growth of between 20 and 25 percent for the full year 2019.