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Jinjiang International Hotels Development Co. Ltd.

Public (SHA: 600754)

Company Facts:

Shanghai Jinjiang International Hotels Development Co. Ltd. (Jinjiang Hotels) belongs to Shanghai Jinjiang Hotel Group, and is one of the most well-known leading companies in hotel and restaurant industry in China (mainland). The company was referred to as Shanghai Xinya (Group) corporation. On June, 1993, the company transferred into limited company and listed in Shanghai Stock Exchange. Consequently, Jinjiang Hotels B shares also launched to the public at the end of year 1994.

Jinjiang Hotels has four segments in its business: hotel investment, hotel management, economical chain-Inn, and KFC restaurants in Shanghai, and its neighboring cities: Hangzhou, Wuxi, and Suzhou.

There are 85 hotels (3-star and above) were invested or under the management of Jinjiang Hotels, most of them located in the heart of Shanghai downtown, the profit margin of the company’s hotel investment and hotel management was 81.9% and 91.7% separately in year 2007. Moreover, the company’s relatively new business, economical chain-inn, namely ‘Jinjiang Star’, has expanded rapidly, over 38,000 rooms in 280 locations country-wide, and achieved total income of RMB 414 million Yuan in year 2007. In addition, KFC restaurants also had outstanding performance in last year, for example, KFC in Shanghai’s income has increased 19% and contributed RMB 80 million investment return in year 2007.

Financial Overview

Related companies: (Name, relationship, and percentage of ownership/rights & interests):

Wuxi KFC Co. Ltd. Shareholding Company, percentage of ownership: 8%

Suzhou KFC Co. Ltd. Shareholding Company, percentage of ownership: 8%

Shanghai Yoshinoya Fast food Co. Ltd. Shareholding Company, percentage of ownership: 40%

Shanghai Jing’an Bakery Co. Ltd. Shareholding Company, percentage of ownership: 30%

Australian Xinya Dabao Fast food (chain) Co. Ltd. Shareholding Company, percentage of ownership: 55%

Hangzhou KFC Co. Ltd. Shareholding Company, percentage of ownership: 8%

Shanghai Xinya Furama Restaurant Co. Ltd.   Shareholding Company, percentage of ownership: 41%
Hotel Inter-Continental Pudong Shanghai, Collaboration

Wuhan Jinjiang International Grand Hotel Co. Ltd. Collaboration

Shanghai Jinjiang-Del Interactive Co. Ltd. Collaboration, percentage of rights and interests: 50%

Shanghai Jinjiang International Investment Management Co. Ltd. Indirect shareholder, percentage of rights and interests: 3.48%

Shanghai Jinjiang International Hotels (Group) Co. Ltd. Holding Company, percentage of rights and interests: 50.31%

Shanghai Food & Drink Servicing Set-equipment Co. Ltd. Shareholding subsidiaries, percentage of ownership: 100%

Shanghai Jianguo Hotel Co. Ltd. Shareholding subsidiaries, percentage of ownership: 65%

Shanghai Jinjiang Tongle Food & Drink Management Co, Ltd. Shareholding subsidiaries.

Shanghai Jinjiang International Institute of Management. Shareholding subsidiaries, percentage of ownership: 100%

Shanghai Jinjiang International Hotel Products Co. Ltd. Shareholding subsidiaries.

Shanghai Minhang Restaurant Co. Ltd. Holding subsidiaries, percentage of ownership: 98%.

Shanghai Xinya Food Co, Ltd. Holding subsidiaries, percentage of ownership: 5%

Shanghai Jinjiang International Food & Drink Investment Management Co. Ltd. Holding subsidiaries, percentage of ownership: 90%

Shanghai Hailun Hotel Co. Ltd. Holding subsidiaries, percentage of ownership: 66.67%

Shanghai Xinya Food & Drink Management Limited Liability Company, Holding subsidiaries, percentage of rights and interests: 90%

Jinjiang International Hotel Management Co. Ltd. Holding Subsidiaries, percentage of rights and interests: 99%

Jinjiang (Northern) Management Co. Ltd. Holding subsidiaries,

Jinjiang Star Inn Co. Ltd. Collaboration, percentage of rights and interests: 20%

Shanghai Jinjiang International Hotel Investment Co. Ltd. Collaboration, percentage of rights and interests: 20%

Shanghai Yangzi-river Grand Hotel Co. Ltd. Collaboration,

Shanghai Xinya Dajiale Food & Drink Co. Ltd. Collaboration, percentage of rights and interests: 50%

Shanghai Jinjiang Real Estate Management Co. Ltd. Other related company.

Jinjiang International (Group) Co. Ltd. Actual Controller, percentage of ownership: 100%

Stock Health:

As on 29 July, 2008

Open: 12.92    High: 13.00   Low: 12.69   Close: 12.49   Vol.:  24,825,090                 

Business Performance:

     Unite: RMB 10,000

Comparison

Shanghai Jinjiang Hotels Co. Ltd. vs. Chinese Hotel & Restaurant industry’ average

                                                                                                 Unit: RMB 1 billion Yuan

Daily Stats (last one month):

From the lights of the above, in the past 6 trading sessions, the volumes have been notably enlarged, started on 21 July, the capital inflow has undoubtedly made its move towards Jinjiang Hotels. Interestingly, the trading volume has enlarged by more than 10 times corresponding to 20 July, while the stock price also jump from RMB 11.83 Yuan to RMB 13.12 Yuan per share. It shows the strength and ambitious of the capital inflow. Continuously, in the following 5 trading sessions, the stock has been smoothly moving upwards. Although, it shows turbulence on 28 July, there is no evidence showing the capital inflow has been withdrawn. In my opinion, existing shareholders should pay close attention in this couple of days, and make quick money before the main players left.

Recently, I have notice that influenced by such rumors as Disney going to open new theme park in Shanghai, related stocks in transportations, accommodations, tourism, as well as retailing have shown aggressive boosting; it left Jinjiang Hotels no exception. It has been assumed that if Shanghai Disney opened, Jinjiang Hotels will have its net profit margin growth marginally by 15%. I believe, although the news has not officially published, Disney’s launch in Shanghai is just matter of time. Therefore, investors are suggested to pay attention to the progress in this affair as it will immediately stimulate the stock price and also will positively affect the middle-term business performance of Jinjiang Hotels.

There is certain positive news as well, 2010 Shanghai Exhibition will definitely bring up the hotel and restaurant, transportation, and tourism industry in Shanghai. Seeing this ever great opportunity, 60 on-going premium hotel projects will start operation by year 2010, which will contribute more than 21000 rooms. Together with existing 27200 rooms (4-star & 5-star) in Shanghai, the hotel market will be facing even more competition.

However, I think Jinjiang Hotels will be the winner in this competition, because the company has substantial competitive advantages lying in its rich hotel management experiences, matured brandings, strong management teams, and sophisticate networks, which are the core strength of a company and it, will lead the Jinjiang Hotels from a Chinese hotel leading company to an international-wide player. Personally, I believe, this stock is a preferable choice for investors for middle to long term investment.