Breaking Down GreenTree Hospitality Group Ltd. (GHG) Financial Health: Key Insights for Investors

You are defintely looking at a complex picture with GreenTree Hospitality Group Ltd. (GHG) right now, where a deep-value signal clashes hard with a clear operational downturn, so the direct takeaway is to treat this as a high-risk, high-yield income play, not a growth story. The numbers for the first half of 2025 tell a tough story: total revenues dropped by 14.2% year-over-year to US$81.7 million, which maps to the trailing twelve months (TTM) revenue of US$175.08 million, a -23% slump. Still, the stock's current price of around US$1.80 gives it a deeply discounted Price-to-Earnings (P/E) ratio of 8.2x compared to the US hospitality industry average of 24x, plus it throws off a massive US$0.24 annualized dividend, implying a 12.4% yield. Honestly, the market is pricing in the 'Strong Sell' consensus, but that dividend yield is a serious incentive for income investors. You need to weigh the near-term risk of further operational decline against the potential for outsized income, because this stock is a value trap until RevPAR (Revenue Per Available Room) stabilizes.

Revenue Analysis

You need to know the core truth about GreenTree Hospitality Group Ltd. (GHG)'s top line right now: revenue is contracting, and it's driven almost entirely by softness in the core hotel business. For the first half of the 2025 fiscal year, total revenues dropped by a significant 14.2% year-over-year, landing at RMB 585.1 million (US$ 81.7 million). This isn't just a blip; it reflects deeper operational pressures in a challenging market.

The company's revenue streams are straightforward, coming primarily from its massive network of franchised-and-managed hotels, which is the main business, plus a smaller but growing restaurant segment following strategic acquisitions. Hotel operations remain the undisputed heavyweight, contributing over 83% of the total haul in the first half of 2025.

• Hotel Operations: Franchise fees, management services, and Leased-and-Operated (L&O) hotel revenue.
• Restaurant Operations: Sales from the Da Niang Dumplings and Bellagio chains.

To see the split clearly, here's the quick math on the first six months of 2025:

The year-over-year revenue growth rate tells the story of the near-term risk. Hotel revenues specifically decreased by 9.5%. This decline is due to a double-whammy: an 11% year-over-year decrease in blended RevPAR (Revenue Per Available Room), which is a key industry metric for hotel performance, and the deliberate closure of 9 Leased-and-Operated hotels. This strategic move cuts high-cost operations, but it does mean less revenue today. Honestly, that RevPAR drop is the real headwind.

Looking ahead, the company has already adjusted its full-year 2025 revenue guidance for the hotel business to reflect a decline in the range of 10% to 13% year-over-year. This is the near-term reality you must factor in: operational changes and market weakness are translating to a smaller top line. The opportunity lies in the restaurant segment, where the company is trying to diversify, but for now, the health of the core hotel business is defintely the primary concern. For a deeper dive into the institutional interest in this shift, you should read Exploring GreenTree Hospitality Group Ltd. (GHG) Investor Profile: Who's Buying and Why?. Your immediate action should be to model the impact of a 13% revenue decline on full-year cash flow.

Profitability Metrics

You need to know if GreenTree Hospitality Group Ltd. (GHG) is just generating revenue or actually keeping a healthy piece of the pie. The short answer is: they are profitable, but the margins are showing compression, which signals a need for tighter operational control.

Looking at the trailing twelve months (TTM) ending June 30, 2025, the numbers in Chinese Yuan (CNY) paint a clear picture of where GreenTree Hospitality Group Ltd. makes and loses money. Here's the quick math on the core profitability metrics:

• Gross Profit Margin: The TTM Gross Profit was 466.1 Million CNY on 1,247 Million CNY in Revenue, yielding a margin of 37.38%.
• Operating Profit Margin: Operating Income was 166.14 Million CNY, which translates to a margin of 13.32%.
• Net Profit Margin: The most recent analysis pegs the Net Profit Margin at 15.3%, down from 16.5% in the previous year.

That 37.38% Gross Margin is defintely a strong starting point. It shows that the core business of providing hotel services-revenue minus the cost of revenue-is quite efficient. But, the drop to a 13.32% Operating Margin highlights that the company's Selling, General & Administrative (SG&A) expenses are eating up a significant portion of that gross profit.

Operational Efficiency and Cost Management

The gap between the Gross Margin and the Operating Margin is where we find operational efficiency, or the lack thereof. For GreenTree Hospitality Group Ltd., the difference is over 24 percentage points (37.38% minus 13.32%), which is substantial. This suggests that while the cost of directly operating the hotels is well-managed, the overhead-like corporate costs and marketing-needs a closer look. This is a common challenge for franchised models in a competitive market like China.

The trend in profitability is a near-term risk. Over the last five years, GreenTree Hospitality Group Ltd.'s earnings have declined at an average annual rate of 2.4%, and the Net Profit Margin has fallen from 16.5% to 15.3% this year. This margin compression, even with management characterizing earnings as 'high quality,' is a clear signal of fundamental challenges that need to be addressed before a full recovery can take hold. You can read more about this in our full deep dive: Breaking Down GreenTree Hospitality Group Ltd. (GHG) Financial Health: Key Insights for Investors.

Industry Comparison: A Value Proposition

When you compare GreenTree Hospitality Group Ltd.'s margins to the broader industry, the picture gets nuanced. Projected 2025 Gross Margin benchmarks for the Hospitality sector (Hotels, Restaurants) sit in the 15% to 25% range. GreenTree Hospitality Group Ltd.'s 37.38% Gross Margin is well above the high end of this benchmark, suggesting superior efficiency in its core service delivery, likely due to its heavy focus on the franchised-and-managed model which shifts some cost burden. That's a huge competitive advantage.

However, the market is pricing in the profitability contraction. GreenTree Hospitality Group Ltd. trades at a Price-to-Earnings (P/E) ratio of 8.2x, which is a steep discount compared to the US hospitality industry average of 24x. This low multiple suggests investors are heavily discounting the stock due to the ongoing profit contraction and macro headwinds, despite the strong underlying Gross Margin.

Your action here is to watch the Operating Margin closely. If GreenTree Hospitality Group Ltd. can get its SG&A in check, that 37.38% Gross Margin has a lot of room to push the Operating Margin higher, which would justify a much higher valuation multiple.

Debt vs. Equity Structure

You need to know how GreenTree Hospitality Group Ltd. (GHG) funds its growth, because a company's debt-to-equity mix directly maps to its financial risk. The quick takeaway is that GreenTree Hospitality Group Ltd. operates with a moderate and healthy level of financial leverage (debt), keeping its capital structure well within the hospitality industry's preferred range.

As of the most recent quarter in 2025, GreenTree Hospitality Group Ltd.'s total debt stands at approximately $246.91 million. This debt is not overly concentrated in the near term, which is a good sign for liquidity (the company's ability to meet its short-term obligations). Short-term debt-the debt due within one year-is estimated to be around $35.38 million, meaning the majority is long-term. This suggests a strategic preference for stable, longer-duration financing to support its asset base.

Here's the quick math on the debt breakdown:

• Total Debt (MRQ 2025): $246.91 million
• Estimated Long-Term Debt: Approximately $211.53 million (based on 89.64% of equity)
• Estimated Short-Term Debt: Approximately $35.38 million

The company's debt-to-equity (D/E) ratio, which compares total debt to total shareholder equity, is currently around 1.05, or 105%. This ratio is your key metric for assessing leverage. For the hospitality and resorts industry, a D/E ratio between 0.5 and 1.5 is often considered ideal, as it signals that a company is using debt to boost returns without taking on excessive risk. GreenTree Hospitality Group Ltd. is right in the sweet spot. To be fair, the median D/E for US-listed lodging companies was much higher at 3.11 in 2024, so GreenTree Hospitality Group Ltd.'s ratio is quite conservative by that measure.

GreenTree Hospitality Group Ltd. is defintely balancing its funding between debt and equity. The company's capital allocation strategy in 2025 has leaned toward returning capital to shareholders, evidenced by its September 2025 announcement of a cash dividend. This focus on dividends, rather than a major debt issuance or refinancing, suggests management is confident in its operating cash flow and sees equity as a key component of its capital structure stability.

You should view this capital structure as a sign of financial discipline. The company is using debt effectively to fund its expansion-likely its franchised-and-managed hotel portfolio-but it isn't overleveraged. What this estimate hides is the specific interest rate risk, but the moderate D/E ratio provides a solid buffer against potential earnings volatility. For a deeper dive into who is investing in the company, check out Exploring GreenTree Hospitality Group Ltd. (GHG) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if GreenTree Hospitality Group Ltd. (GHG) can cover its short-term bills, especially with the mixed signals from its latest operational results. The direct takeaway is that their current liquidity position is defintely strong, but the underlying cash flow generation from core operations shows a worrying near-term trend you need to monitor closely.

A quick look at the balance sheet shows a very healthy liquidity position. The company's Current Ratio, which measures its ability to cover current liabilities with current assets, stands at a strong 1.70. Even better, the Quick Ratio (or acid-test ratio), which excludes less-liquid inventory, is nearly identical at 1.69. This tells you GreenTree Hospitality Group Ltd. has $1.69 in highly liquid assets for every dollar of short-term debt. That's a solid buffer.

Here's the quick math: Ratios over 1.0 are good, and GreenTree Hospitality Group Ltd. is well above that, suggesting no immediate liquidity crunch. Still, a strong ratio can hide a deteriorating operational trend, so we have to look deeper into working capital and cash flow.

Working Capital and Operational Cash Flow Trends

While the liquidity ratios are strong, the trends in the first half of the 2025 fiscal year (H1 2025) point to a challenge in the core business. Total revenues decreased by 14.2% year-over-year to RMB 585.1 million (US$81.7 million), and income from operations dropped to RMB 91.5 million (US$12.8 million) from RMB 156.7 million in H1 2024.

This decline in operating income is what funds your working capital (the capital used in day-to-day trading). The high liquidity ratios are a strength, but a continued slide in operating performance will eventually erode that cushion. The increase in net income to RMB 198.8 million (US$27.7 million) in H1 2025, despite the revenue drop, suggests non-operating factors-like gains or tax benefits-are boosting the bottom line, not the core hotel business.

Cash Flow Statement Overview (H1 2025)

The Cash Flow Statement for H1 2025 provides the clearest picture of where the money is actually moving. Operating cash flow, the lifeblood of any business, was a positive RMB 104.8 million (US$14.6 million). This is a crucial strength, confirming the business is still generating cash from its primary activities, even with lower revenue.

The Investing and Financing sections, however, show a few one-off items and a conservative capital structure:

• Operating Cash Flow: RMB 104.8 million (US$14.6 million) inflow, driven by operating income.
• Investing Cash Flow: RMB 77.0 million (US$10.8 million) inflow, primarily from the disposal of an ownership interest (Argyle). This is a one-time boost, not a sustainable trend.
• Financing Cash Flow: A negligible outflow of RMB 0.2 million (US$0.03 million) for bank loan repayment, indicating a very low reliance on debt financing.

The investing inflow is a non-recurring event, so don't bank on it for future liquidity. The low financing activity is a good sign of a conservative, low-debt structure, which adds to solvency. For more on who is betting on this structure, you should be Exploring GreenTree Hospitality Group Ltd. (GHG) Investor Profile: Who's Buying and Why?

Near-Term Risks and Opportunities

The primary risk is the decline in operating income, which will pressure future operating cash flow. The opportunity is the current balance sheet strength; the high liquidity ratios give management time-maybe 12 to 18 months-to execute a turnaround strategy without facing a cash crunch.

The low debt-to-equity ratio (not explicitly in the snippet but inferred from the low financing cash flow) means GreenTree Hospitality Group Ltd. has significant capacity to take on debt for strategic investments, like expanding their hotel pipeline of 1,245 hotels, which was reported in late 2025. [cite: 7 from the first search]

Valuation Analysis

You're looking at GreenTree Hospitality Group Ltd. (GHG) and asking the core question: is the market missing something, or is the stock priced exactly where it should be? Honestly, the valuation metrics paint a picture of a deeply discounted asset, but the stock's performance and analyst sentiment suggest real near-term risks. It's a classic value trap setup, and we need to look closer.

As of November 2025, GreenTree Hospitality Group Ltd. is trading around the $1.82 mark, which is near the low end of its 52-week range of $1.756 to $3.250. The stock has been trending down, having decreased by 29.41% over the last 12 months, with a year-to-date return of -25.00%. That's a serious headwind.

Here's the quick math on the key valuation multiples, which are surprisingly low:

• Price-to-Earnings (P/E) Ratio: The P/E ratio sits at approximately 4.23. To be fair, this is significantly lower than the Consumer Discretionary sector average of about 18.11. A P/E this low usually screams 'undervalued,' but you have to check the quality of the 'E' (Earnings).
• Price-to-Book (P/B) Ratio: At 0.90, the P/B ratio is below 1.0, which technically means the stock is trading for less than the value of its net assets (assets minus liabilities). This is defintely a strong indicator of potential undervaluation.
• Enterprise Value-to-EBITDA (EV/EBITDA): The EV/EBITDA ratio is around 6.64. This is a healthy, low multiple for a hospitality company, suggesting a quick payback period on the enterprise value relative to its operating cash flow proxy.

The low multiples suggest the stock is cheap, but the market is clearly pricing in significant risk, likely related to its China-based operations and recent financial performance. What this estimate hides is the uncertainty around future earnings growth, which is why the P/E is so compressed.

You also get a dividend, which is a nice cushion. GreenTree Hospitality Group Ltd. has an announced annual payout of $0.06 per share, translating to a trailing twelve-month (TTM) dividend yield of about 3.30%. The payout ratio is a healthy and sustainable 11.63% based on the trailing year of earnings. Still, the dividend has seen negative growth over the past five years, decreasing by -35.24%.

The analyst consensus is where the rubber meets the road. Despite the seemingly cheap valuation ratios, the current Wall Street consensus is a clear Sell. The single analyst who has issued a rating in the last year has a Sell rating. The market is telling you to be careful. The low multiples are a warning sign, not a green light.

For a deeper dive into the operational challenges driving this valuation, check out our full report: Breaking Down GreenTree Hospitality Group Ltd. (GHG) Financial Health: Key Insights for Investors.

Your next step should be to look at the balance sheet and cash flow statement to see if the low valuation is justified by poor financial health or if the market is over-discounting the China-based growth story. Finance: review the last four quarters of free cash flow against the current market cap by end of next week.

Risk Factors

You need to look past the brand recognition of GreenTree Hospitality Group Ltd. (GHG) and focus on the cold, hard numbers from the 2025 fiscal year. The direct takeaway is this: the company is in a strategic pivot, but the near-term financial challenges-specifically revenue decline-are a significant risk that management is trying to outrun with a capital-light expansion model.

Honestly, the biggest internal risk is the continued contraction of the business. The First Half 2025 financial results showed total revenues decreased by a substantial 14.2% year-over-year, coming in at only US$81.7 million. Here's the quick math: hotel revenues dropped by 9.5%, but the restaurant segment, which includes Da Niang Dumplings and Bellagio, saw a sharper decline of 31.6%. This isn't just a blip; it signals a fundamental challenge in their core operations.

This operational strain is hitting the bottom line, too. The net profit margin has compressed, falling from 16.5% to 15.3%, and earnings have been declining at an average annual rate of 2.4% over the last five years. Plus, the company posted a net income loss of RMB -72.8 million in the most recent quarter, raising serious concerns about its ability to revert to profitability.

• Revenue is shrinking; profit margin is defintely narrowing.

External Headwinds and Market Competition

The external environment is not helping. GreenTree Hospitality Group Ltd. operates almost entirely in China, meaning it's highly exposed to macro headwinds and lingering economic uncertainty in the country's travel and dining sectors. We're seeing a tightening of discretionary spending from both consumers and businesses, which is hurting overall performance.

Also, the Chinese hospitality sector is brutally competitive. GreenTree Hospitality Group Ltd. is fighting major rivals like Huazhu Hotel Group while simultaneously dealing with a broader industry downturn. Some industry experts predict a concentrated wave of hotel transfers and closures by 2025, with Revenue Per Available Room (RevPAR) declining in key cities. Furthermore, the regulatory environment in China is subject to frequent and often complex changes, which requires continuous, agile compliance strategies.

Strategic Mitigation: A Pivot to Franchising

Management is not sitting still, though. Their core mitigation strategy is a decisive pivot toward a capital-light franchising-and-managed (F&M) model, which reduces the need for upfront investment and should boost margins over time. This is a smart move to reduce financial risk.

To drive growth, the company is aggressively expanding in the higher-margin, mid-to-upscale segments. They plan to open approximately 480 new properties in 2025. Concurrently, they are restructuring their Leased-and-Operated (L&O) portfolio, offloading marginal properties and retaining only flagship hotels to maintain brand standards. This restructuring, combined with a strong balance sheet that includes an RMB1.8 billion cash pile, gives them a cushion to execute the transition.

Here's a snapshot of the operational pivot for GreenTree Hospitality Group Ltd.:

What this table hides is the execution risk. The success of this strategy hinges entirely on whether the new franchised hotels can ramp up quickly enough to offset the revenue loss from the existing portfolio and the weak restaurant business. For more on the company's long-term vision, you can review their Mission Statement, Vision, & Core Values of GreenTree Hospitality Group Ltd. (GHG).

Your next step: Model a scenario where the new 480 hotels only achieve 75% of the average RevPAR of the existing portfolio to stress-test the 2026 revenue projections.

Growth Opportunities

You're looking at GreenTree Hospitality Group Ltd. (GHG) and wondering where the growth engine is going to kick in. Honestly, the near-term picture is mixed, but the long-term play is about diversification and scale in the massive China market. The immediate risk is a revenue slowdown, but the opportunity lies in their non-hotel businesses and operational efficiency.

The company's own guidance for the full 2025 fiscal year suggests a challenging environment, expecting the organic hotel business's total revenues to show a flat decline compared to 2024 levels. To be fair, this is a sign of realism, not just pessimism, given the broader industry headwinds. We saw this play out in the first half of 2025, where total revenues decreased by 14.2% year-over-year to US$81.7 million, as reported in September 2025. Still, some analysts are betting on a massive rebound, forecasting average 2025 revenue to be around $162.14 billion and earnings to hit roughly $363.57 million. Here's the quick math: that analyst revenue number is so far out of line with recent performance that it defintely carries a high-risk assumption, likely a modeling error or a bet on an unprecedented, immediate post-reopening surge.

The real growth drivers are less about room-night volume and more about strategic initiatives and competitive advantages that underpin their operations.

• Diversified Revenue Streams: The 2023 acquisitions of restaurant chains Da Niang Dumplings and Bellagio are key. These moves are a push for non-lodging revenue, making GHG a broader hospitality and restaurant management group in China.
• Digital Platform Investment: They are actively investing in digital platforms, including mobile check-in capabilities and data-driven marketing tools, which should enhance the guest experience and drive cost efficiencies.
• Operational Scale: GreenTree Hospitality Group's geographically diverse network and centralized technology systems allow them to maintain consistent service standards and drive cost efficiencies. This is a crucial competitive advantage (economies of scale) in a fragmented market.

What this estimate hides is the ongoing profit contraction; GreenTree's net profit margin fell from 16.5% to 15.3%, as reported in October 2025. This margin compression signals fundamental challenges that risk limiting upside until their new initiatives start generating substantial, high-margin revenue. You need to watch the restaurant segment's contribution to the bottom line very closely.

Their competitive advantage is being a top-tier operator in China, which gives them leverage with suppliers and a strong brand presence. They ranked 11th among the 225 largest global hotel groups in 2023 by number of hotels, making them the fourth largest hospitality company in China. That scale is hard to beat.

For a deeper dive into who is buying into this strategy, you should check out Exploring GreenTree Hospitality Group Ltd. (GHG) Investor Profile: Who's Buying and Why?

Here's a snapshot of the forward-looking analyst consensus for 2025, but remember the wide range:

The action item is clear: look past the headline analyst numbers and focus on the company's ability to integrate their restaurant acquisitions and show tangible margin improvement in the second half of 2025. If onboarding those new business lines takes 14+ days to stabilize, churn risk in their core hotel business rises.