 All right, let's talk about the hotel hospitality industry in China. China is growing very fast, so if you own a hotel in China at the best locations, you'll do well over the very long term. The fact is just that we have to find such a hotel at a fair price. Let's look at the details, let's look at devil's details and see whether China lodging company that changed its name into Huanzu is a company to buy, whether it's undervalued or overvalued. Let's start. So as said, Chinese travel market is growing at a faster pace than the Chinese retail market. At China is entering into its second stage of growth, a more service-oriented growth. Travel, tourism will grow at a faster rate and even increase its growth rate. As you can see, the bottom was reached in 2015 and now it's growing faster. Therefore, a company you want to own would be Huanzu that focuses on hotel. They have monetized and franchised hotels. What are monetized hotels? They are referred as French disease, either leasing on owning their hotels and investing in their renovation to CLG, Huanzu changed the name from China lodging group. Standards for these hotels, they charge a lump sum franchise fee of 3,000 RMB per room, perhaps that change that is a little bit older description. And 5% of the annual revenues. They are required to pay the salary of the hotel manager who is appointed by Huanzu. So what is Huanzu? Focusing on fast expansion of mid-scale hotels, growth in revenue per available room, true quality improvements, so upper scale, innovation in upscale segment. All their numbers worked perfectly in the last year. Revenue per available room, up net revenues and growth up 26%. EBITDA growth 45%, operating income and margin up 53%. Adjusted EBITDA, adjusted net income up 40%, 39% and margins also net margin grew from 20% to 21%. This record grow comes from these franchised and monetized hotels, but also from acquisitions. They acquired crystal orange and they are implementing that into the consolidation of the Chinese hotel mid-scale hotel market. They are doing more acquisition, acquired blossom hill hotels and resorts, another acquisition into the growth of the story. However, they also did some deals that I wouldn't say are smart. They bought 4.5% of the French company Accor hotels on the market for about 600 million. In order to get to the Mercur, EBIS and all those brands, to improve their brand ship in China. But they acquired that at market rates, which pays the company, the stock pays a 2% dividend and they probably took a loan that I'm sure costed more than 2%. So purchases of long-term investment, 604 million dollars here, that's what they paid for 4.5% of Accor. And they took a long-term loan for 550 million. So they take a loan to invest in stocks. I wonder if it could be done differently than owning that, or that the 550 million could have been spent investing in China, not in France or Europe. Revenue growth in the past 5 years has been 20% for a year, the per year, the current growth is 26% per year, the net margin is 21%. Okay, if I compare it to Hilton, 15%, Meriot, just 6%, MTN, 20%. Okay, possible. Valuation, price earnings ratio 51.58 forward 27, it means the market expects double the growth in earnings. There is a small dividend, price to book 10, price to sell 7.84. So very stretched valuations. If the company grows at 20% per year in the next 5 years, I put a PE ratio of 15 there, then the present value of the stock price would be 12. At a stock price of 24 in 2023. So the current stock price is 44, this is a screaming overvalued stock. However, if the growth rate of earnings is 50%, then the present value is above the current stock price, which makes this undervalued. Will they grow earnings at 50%, that's the question you have to use when comparing to other investments, potential investments in China, and whether this fits your portfolio. But let's put this into another perspective and compare it to a competitor. Shanghai Yinyang International Hotel Group, one of the biggest and most focused competitors for Huazhou, their growth is a little bit slower, 16% last year, but the dividend yield is 4.47% and the price earnings ratio is just 14.22% in Hong Kong. So the growth is here, the exposure to the market is here, but the price earnings ratio is here and the price to book value is 1.7%, not 10%. Perhaps a different business model, but their pipeline seems strong too. They're announcing 2,700 new hotels and 290,000 new rooms on their 680,000 guest rooms already existing and 6,794 hotels existing. So another growth story, perhaps if you're interested into the hospitality you should, industry in China, you should really check this out and compare to all other opportunities you have there. The company, this competitor Yinyang has 47% of revenues coming from Mainline China 9.7% from full service hotel and just 20% from operated hotels overseas. In addition, I have found JLL's report on the Chinese hotel destinations and I have found a few interesting things. The occupancy rate in some cities is very low, 45% in Chengdu. They expect oversupply in some cities, some cities less oversupplied, but this makes everything very risky. 45% occupancy is very low, especially with all the hotels that are coming, which means they are betting really on growth, but I think that there will also be competition and with the internet you can really pick the cheapest ones. So those margins might contract in the next five years and because the next five years are what you need for these growth stocks to deliver. So there can be a lot of things that can happen in the next five years from a relative perspective, this stock is overvalued compared to the competitor. And if I put everything into a model, growth rate at 15% valuation at 15%, the present value of the company is 9.75. Seems a lot, but just two years ago, the stock was trading at 9.75, so now it's trading much higher, but I would even go so far and call this a potential short for a well-positioned short portfolio in China. Especially if you follow the margins, perhaps it will be a great short in the next few years. If you follow the margin, the competition is increasing, so the prices will have to go down, especially with the very low occupancies that you can see in the JLL report. So I will not dig deeper much into this company. For me, it's one potential short. I'm currently not looking at shorts, especially not shorting anything in China, but if you have short exposure to China looking for, this might be a good long-term short, as the price might go to the real business value for the stock. Thank you for watching. Looking forward to your comments. I'm sorry if you own this. You might disagree with me, but I'm an absolute investor, not a relative investor, and I'm not buying the five years constant growth. Business is business. If there are earnings, competition will come. Thank you for watching. I'll see you in the next video.