Core earnings growth range in line with DBe

We reiterate our BUY rating on BTG and price target of RMB 35.0 unchanged.BTG announced its preliminary forecasting 2017 result yesterday. BTG guided thatits core earnings growth will be in the range of 289-323% yoy, which is in-linewith our estimates. (We estimate core earnings of RMB 613 million, yoy growthof 322%).

Growth driven by hotel recovery and tourist site in Sanya

Hotel: BTG guided that both occupancy rate and ADR have increased in2017. This is the key driver for earnings growth of hotel segment.

Tourist site: BTG's Nanshan Park in Sanya saw significant visitors growthyoy, which has driven the profit growth.

Integration of HomeInns makes the yoy comparison base different.

To recap on comparison base difference: HomeInns was consolidated in April2016. As a result, from a comparison perspective, 2016 HomeInns only had 8months of operation while 2017 had full year operation. In addition, from April toSeptember, 2016, BTG only controlled 66.1% stake of HomeInns and BTG furtherincreased its stake to 100% after October 2016.

DB's take, we have seen accelerated revpar growth and new hotel additions

We have seen improving revpar growth for BTG. In our DB Access Chinaconference, management disclosed that blended RevPAR yoy growth acceleratedduring 4Q17 (RevPAR yoy growth: Dec > Nov >Oct). Management was confidentabout fulfilling their target of adding 400-450 hotels in 2017 (guided at thebeginning of 2017) and also guided that the company intends to add c.500 hotelsevery year over the next 4-5 years. The company guided that c.40% of additionswill be mid-scale hotels. They expect there will be c.1,000 mid-scale hotels by theend of 2019, which accounts for c.20% of total hotels. We will have more updateand review our model once the full year result has been announced.

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