Fosun International Expects One-off Negative Impact to be Cleared and Businesses to Bound Back in 2023

January 21, 2023
HONG KONG, Jan 21, 2023 - (ACN Newswire via SEAPRWire.com) - On 20 January 2023, Fosun International Limited ("Fosun International" or "Fosun", HKEX: 00656) issued a profit warning announcement on the Hong Kong Stock Exchange, mentioning that based on the information available to the Board and the latest unaudited consolidated management accounts of the Group for the year ended 31 December 2022, Fosun International's revenue in 2022 is expected to increase by approximately 10% compared to that of 2021. However, due to the recurrent outbreak of COVID-19 pandemic in 2022 and the turmoil and downturn of the international capital markets, which resulted to an increase in business costs and an increase in floating losses in secondary capital market investment, Fosun International's overall industry operations and industrial investment have been affected to varying degrees, thus the profit attributable to owners of the parent in 2022 is expected to be not more than approximately RMB2 billion.The announcement also pointed out that with the gradual return to normalization of international trade and commerce in 2023, the Company's management expects to see recovery of its businesses. Looking ahead, the Company will further focus on the family-oriented consumer industry and continue to strengthen its global operations to provide quality products and services to families worldwide.Market analyst believes that as the "one-off" negative impact of the external environment clears, Fosun's continuous focus on the family-oriented consumer sector will usher in an important period of opportunity for business rebound in 2023. Since the beginning of the year, Fosun's main businesses centering on household consumption, such as Health, Happiness, and Wealth, have shown signs of strong recovery. It is worth noting that Fosun's forward-looking efforts in the anti-epidemic field have gradually borne fruit.The two flagships of Fosun's Happiness segment, Fosun Tourism Group and Yuyuan, and other businesses have shown strong signs of recovery. According to public information, when the domestic tourism industry suffered a huge setback in 2022, Fosun Tourism Group still stood firm to build global presence and opened seven new Club Med resorts throughout the year. According to market sources, Club Med's global bookings in the first half of 2023 have greatly exceeded the same period in 2019 before the pandemic. During the 2023 New Year holiday period, Atlantis Sanya, FOLIDAY Town Lijiang and other businesses in China all performed better than their respective pre-pandemic levels, and many Club Med resorts in China recorded close to 100% occupancy. During the 2023 New Year holiday period, the 2023 Yuyuan Garden Lantern Festival in the Grand Yuyuan attracted a large number of tourists. It is expected that the Spring Festival will further unleash consumption vitality.Taking the Health segment as another example, Fosun's anti-epidemic "vaccine and drug" products have attracted great attention from the market. On 19 December 2022, COMIRNATY(R), including the monovalent COVID-19 mRNA vaccine (BNT162b2) and the bivalent vaccine which can protect against the Omicron variant, was officially registered as a drug/product (biological product) in Hong Kong SAR. The self-paid vaccination service of COMIRNATY(R) bivalent vaccine was launched in Hong Kong SAR and vaccination is open to people including Mainland Chinese residents starting from 6 January 2023. After the self-paid vaccination service of COMIRNATY(R) monovalent COVID-19 mRNA vaccine has opened for non-local residents in Macau SAR last year, the COMIRNATY(R) bivalent vaccine was approved by Macao SAR as a regular imported vaccine on 20 January 2023, and people in need may receive a booster dose with prescription. As regards Azvudine, the oral medication for COVID-19, it is now included in the medical insurance scheme in 31 provinces, autonomous regions, and direct-administered municipalities across the country. In addition to tertiary hospitals and secondary hospitals, Azvudine has gradually covered grassroots medical institutions in many provinces. The accessibility of Azvudine has been greatly enhanced, helping the vast areas build a barrier against severe cases.As Guo Guangchang, Chairman of Fosun International, mentioned in his 2023 New Year's message, despite the headwinds of anti-globalization in 2022, Fosun is still a firm practitioner of globalization. In 2022, COMIRNATY(R) COVID-19 mRNA vaccine continued to provide an anti-epidemic barrier for Hong Kong SAR, Macao SAR and the Taiwan region; Club Med opened new resorts; Lanvin Group was successfully listed on the New York Stock Exchange. In the face of uncertainties, Fosun remained committed to technology and innovation in order to weather market cycles. HANQUYOU, independently developed by Henlius, was successfully launched in Australia after entering the European Union market; the registration application in the Chinese Mainland for the new indication of Yi Kai Da, China's first CAR-T cell therapy was officially accepted. Fosun attaches great importance to its development. No matter how policies and markets change, Fosun will always devote its best efforts.Fosun's solid fundamentals and recovery potential have been widely recognized by financial institutions and investors. On 16 January 2023, Shanghai Fosun High Technology (Group) Co., Ltd. ("Fosun High Technology"), the domestic operating entity of Fosun International, received a RMB12 billion syndicated loan from eight domestic banks. This is the largest private enterprise loan led by five major state-owned banks in cooperation with policy banks and joint-stock banks since the Central Economic Work Conference explicitly proposed in December 2022 to encourage and support the development of the private economy and private enterprises. Moreover, Fosun High Technology successfully completed bookbuilding for the RMB1 billion super & short-term commercial paper on 13 January 2023.Fosun's financing channels have been further expanded, and the financing costs have been further reduced, consolidating liquidity support for its business recovery. Recently, international rating agency S&P Global Ratings, and investment banks including Morgan Stanley and Daiwa Capital Markets have published research reports, expressing their optimism on Fosun.On 17 January 2023, S&P Global Ratings pointed out in a report that Fosun International's newly signed syndicate loan will largely cover onshore bonds due within a year. Fosun International's total debt at the holding company level could drop by 15%-25% in 2023 as the company continues to dispose assets and pay down matured bonds, thereby further improving its liquidity. S&P Global Ratings also noted that Fosun High Technology's successful issuance of the super & short-term commercial paper was Fosun's first issuance in the onshore market after a nine-month hiatus, marking a first baby step and indicating a recovery of the public bond market access. According to incomplete statistics, Fosun's return of capital from its asset reduction in 2022 has reached tens of billions of yuan, further consolidating its capital.On the same day, Morgan Stanley also issued a report commenting that Fosun's syndicated loan can further improve its liquidity, significantly helping lift market confidence in Fosun's stability. The firm believes that after several months of active deleveraging efforts, Fosun's liquidity risk has been greatly reduced. Looking ahead, the reopening of China will help boost fundamentals, especially in businesses such as tourism, retail, and investment.Previously, Nomura Orient International Securities, China Industrial Securities, and China International Capital Corporation (CICC) have published research reports, expressing their optimism about Fosun's strategy of streamlining the organization and focusing on its core businesses. Nomura Orient International Securities pointed out that Fosun has firmly promoted and focused on its core businesses in the family-oriented sector at the operational level. With the continuous optimization of China's epidemic prevention and control measures, the firm expects Fosun to achieve better performance. CICC believes that in the medium and long term, the valuation method of Fosun International is expected to gradually shift from using the NAV of the group to using the PE of the large consumer company. As a result, Fosun is expected to usher in a rise in the central level of long-term valuation.Based on Fosun's solid financial performance and strong potential for rebound, Morgan Stanley and Daiwa Capital Markets reiterated their "Overweight"/"Buy" rating on Fosun International. Nomura Orient International Securities, China Industrial Securities, and CICC have assigned Fosun International an "Overweight"/"Outperform" rating. Copyright 2023 ACN Newswire. All rights reserved. (via SEAPRWire)
More

Fosun Receives RMB12 Billion Syndicated Loan to Consolidate Capital for Business Development

January 17, 2023
HONG KONG, Jan 17, 2023 - (ACN Newswire via SEAPRWire.com) - On 16 January 2023, Fosun High Technology, the domestic operating entity of Fosun International Limited ("Fosun International", HKEX: 00656), and eight domestic banks held a syndicated loan signing ceremony at the Bund Finance Center, Shanghai. According to the agreement, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, and Bank of Communications as joint lead banks, and China Minsheng Bank, the Export-Import Bank of China, and Shanghai Pudong Development Bank, and as participating banks will jointly form a syndicate to provide Fosun High Technology a loan totaling RMB12 billion.It is reported that this is the largest private enterprise loan led by five major state-owned banks in cooperation with policy banks and joint-stock banks since the Central Economic Work Conference explicitly proposed in mid-December last year to encourage and support the development of the private economy and private enterprises.The market is generally in the view that the syndicated loan is not only of great significance to Fosun, but it also plays a positive role in improving public expectations and boosting confidence for development for private enterprises in Shanghai and even the entire country.According to the Company's official release, Guo Guangchang, Chairman of Fosun International said that this signing has further deepened the cooperation between Fosun and banks, broadened financing channels, and consolidated liquidity support for business development.Before the RMB12 billion syndicated loan was officially completed, on 13 January, Fosun High Technology successfully completed bookbuilding for the RMB1 billion super & short-term commercial paper "23 Fosun High Technology SCP001" with a term of 180 days and a coupon rate of 6.99% per annum. The super & short-term commercial paper is Fosun High Technology's first issuance since its return to the public market at the end of April 2022.Market analyst pointed out that the successful issuance of the super & short-term commercial paper and the smooth completion of more than RMB10 billion syndicates loan reflect financial institutions and investors' confidence in the stabilization of Fosun's capital and their endorsement of Fosun's strategy of streamlining the organization and focusing on its core businesses.Over the past six months or so, Fosun's series of divestment actions in the capital market have gained widespread attention. During the period, companies under Fosun significantly reduced their shareholdings in Nanjing Iron and Steel United, Jianlong, Zhaojin Mining, Tsingtao Brewery, Jinhui Liquor, Zhongshan Public Utilities, Sanyuan, and COFCO Engineering & Technology. According to incomplete statistics, Fosun's accumulative return of capital has reached tens of billions of yuan. In addition to this syndicated loan and the super & short-term commercial paper, Fosun's capital has been further consolidated.In recent years, Fosun proposed to position itself as a global innovation-driven consumer group. In the past six months or so, Fosun has significantly accelerated its pace of focusing on its core businesses in the family-oriented consumer sector. Based on recent positive news, it can be seen that this strategic adjustment has already achieved results, and Fosun's Health, Happiness, Wealth and other family-oriented consumer sectors have shown a strong recovery momentum.Taking Fosun Tourism Group in the Happiness segment as an example, on the New Year's Day this year, Atlantis Sanya, FOLIDAY Town Lijiang and other businesses have all performed better than the same period in 2022, and many Club Med resorts in China recorded close to 100% occupancy. In the global market, Club Med's bookings in the first half of 2023 have greatly exceeded the same period in 2019 before the COVID-19 epidemic.Regarding Fosun Pharma in the Health segment, its anti-epidemic vaccine and drug continue to attract great attention. COMIRNATY, including the monovalent COVID-19 mRNA vaccine (BNT162b2) and the bivalent vaccine which can protect against the Omicron variant, was officially registered as a drug/product (biological product) in Hong Kong SAR on 20 December 2022. Fosun Pharma has also opened up vaccinations to people including Mainland Chinese residents. As regards Azvudine, the oral medication for COVID-19, it is now included in the medical insurance scheme in 31 provinces, municipalities, and autonomous regions across the country, and is available in grassroots medical institutions in many provinces. The accessibility of Azvudine has been greatly enhanced.Based on its solid financial performance and strong potential for rebound, domestic and overseas securities firms have recently issued research reports, assigning Fosun International an "overweight" rating. On 12 January, Nomura Orient International Securities published a research report and mentioned that Fosun International currently has sufficient cash flow, the short-term liquidity problem has been resolved, the future leverage ratio is expected to be reduced, and the capital structure will continue to be optimized; at the operational level, Fosun will firmly focus on its core businesses in the family-oriented consumer sector. With the continuous optimization of China's epidemic prevention policy, the firm expects Fosun to achieve better performance.Previously, China International Capital Corporation (CICC) and China Industrial Securities have published research reports successively and expressed optimism about Fosun's strategy of streamlining the organization and focusing on its core businesses."In the medium and long term, we believe that the valuation method of Fosun International is expected to gradually shift from using the NAV of the group to using the PE of the large consumer company. As a result, Fosun is expected to usher in a rise in the central level of long-term valuation," CICC mentioned in the research report. Copyright 2023 ACN Newswire. All rights reserved. (via SEAPRWire)
More

The Logic Behind Fosun’s “Weight-loss” Actions: To Focus on the Core Businesses and Deepen Innovation and Globalization

November 16, 2022
HONG KONG, Nov 16, 2022 - (ACN Newswire via SEAPRWire.com) - Over the past few months, successive "Weight-loss" actions by Fosun International (HKEX: 00656) have come under the spotlight in the capital market.On the evening of 6 November 2022, Yuyuan Inc., a subsidiary of Fosun International, announced its proposal to transfer 654 million shares, or a 20% equity stake, in Zhaojin Mining Industry Co., Ltd. ("Zhaojin Mining") to Jinshan (Hong Kong) International Mining Co., Ltd., a wholly owned subsidiary of Zijin Mining for a total consideration of HK$4.395 billion. In addition to Yuyuan Inc.'s previous stake reduction in Zhaojin Mining on the secondary market in September 2022, Yuyuan Inc.'s shareholding in Zhaojin Mining would be declined to 1.26%. On 19 October 2022, Fosun proposed to transfer 60% of the equity of Nanjing Iron & Steel United Co., Ltd. ("Nanjing Nangang") to Shagang Group at a total consideration of no more than RMB16 billion.Gearing up for Strategic TransformationAfter its investment in both Nanjing Nangang and Zhaojin Mining for a long period of time, the successive proposed disposals of its equity stakes in the two companies are expected to generate a total of RMB20 billion in return of funds. Considering the proceeds from the disposals and the dividends received from the two companies over the past 20 years, the divestments have proven quite successful in terms of return on investment. However, we cannot simply explain Fosun's recent disposal of its assets and partial equity stakes by an ordinary logic in investment.Fosun's divestments are aimed at effective debt control and enhanced capital security. Through an accelerating strategic business transformation and disposal of certain assets, Fosun is able to focus on its core business of fast-growing family consumption.The market has viewed Fosun's recent divestments favorably. A number of investment banks, including Morgan Stanley, Citi and Goldman Sachs, have issued research reports that support Fosun International in its recent moves and reiterated their "buy" ratings on the company. They expected Fosun's disposal of its non-core assets in an effort to decrease its debt-to-equity ratio, mitigate the concerns about its liquidity, streamline its asset portfolio and focus on its core businesses. Citi mentioned in its research report that after a number of mergers and acquisitions, spin-offs and disposals of non-core assets, Fosun has become a more diversified conglomerate with an asset-light business model that is well-positioned to benefit from the increasing discretionary spending by Generation X in China. In Citi's view, the successful disposal of shares in Nangang at the right price is the right thing to do as it will enable Fosun to redeploy its resources for better uses.Fosun's Successful Exit Strategy Creates "Win-Win"The Shagang Group's share price hike hit the limit to trigger suspension of trading on the stock market on the day when news about Fosun's disposal of shares in Nanjing Nangang was released. Zijin Mining's share price surge also hit the limit to trigger suspension of trading on the stock market when the word was out that it would acquire shares in Zhaojin Mining for a consideration of RMB4 billion. According to people closed to Fosun's disposal of Nanjing Nangang shares, there were nearly 20 prospective buyers who bid for the equity stake. Fosun gave preference to those potential partners who would facilitate the long-term development of Nanjing Nangang, hoping that the transaction would benefit all parties involved. In Zijin Mining's public statement about its acquisition of Zhaojin Mining, Zijin Mining said that after it became the second largest shareholder of Zhaojin Mining, the two parties would be able to give their respective advantages full play, further consolidating and enhancing both companies' positions in the global gold mining industry.After its "Weight-loss" actions, Fosun will continue to grow and strengthen its well-established business segments, including health, happiness and wealth. For instance, Fosun will concentrate more resources on the research and development of innovative drugs by Fosun Pharma, the development of "Grand Yuyuan" and the growth of Shede Spirits, etc. In the long run, there is huge room for growth in China's consumer market. Focusing on its main businesses and taking measures to consolidate its role in the real economy is undoubtedly a thoughtful decision made by Fosun on surmounting the volatility of an economic cycle.Recently, Fosun Pharma, Yuyuan Inc., Nanjing Iron & Steel and Hainan Mining, which are the four listed companies under Fosun, held a joint presentation of their third-quarter results for 2022 at the Shanghai Stock Exchange. Guo Guangchang, Chairman of Fosun International, attended the presentation through a video conference and said that technology innovation and China's opening-up to the global market at a higher level held the key to fostering a new development pattern. In order to grasp emerging opportunities, Fosun will "focus on its core businesses, deepen innovation and globalization". Copyright 2022 ACN Newswire. All rights reserved. (via SEAPRWire)
More