Fosun’s debt amounts to RMB 100 billion, corresponding to total assets of RMB 270 billion


HONG KONG, September 19, 2022 /PRNewswire/ — Fosun International Limited (HKEX stock code: 00656, “Fosun International”) said a major international investment bank, Morgan Stanley, has reiterated its “overweight” rating on Fosun International with a target of during HK$11.4.

In the first half of 2022, Fosun achieved sustainable revenue growth, with total revenue of RMB82.89 billionan increase of 17.7% compared to the same period in 2021. The company pointed out that after entering the second half of the year, thanks to the Group’s long-term adherence to deep sector operations, financial indicators and operational businesses across multiple segments quickly showed signs of steady recovery.

Fosun’s actual debt is only 100 billion RMBcorresponding to the total assets of 270 billion RMB

The market is concerned about Fosun International’s debt situation and believes that Fosun is under pressure from 650 billion RMB debt. According to Fosun International’s 2022 interim results, its total assets stood at 849.7 billion RMB and the total liabilities amounted to 651.3 billion RMB of the June 30, 2022. However, market perception of 650 billion RMB debt is actually a confusing statement.

This 650 billion RMB The figure is the total consolidated liabilities of Fosun International and its subsidiaries, including the liabilities of its financial institutions such as insurance companies, banks, etc. However, liabilities of financial institutions and commonly referred to as interest-bearing corporate debt are two different concepts. Indeed, the interest-bearing consolidated debt of Fosun International amounts to approximately 260 billion RMB only, which also includes debts of its consolidated listed subsidiaries such as Yuyuan and Fosun Pharma, etc. The obligations to reimburse these debts are borne independently by the corresponding listed companies. In other words, the actual debt borne by Fosun International is only about 100 billion RMBcorresponding to total assets of RMB270 billion and a net asset value (NAV) of approximately RMB20 per share. From this perspective, Fosun is not under significant pressure to repay its debt.

Morgan Stanley reiterated its “overweight” rating on Fosun International with a price target of HK$11.4 for the third time

Morgan Stanley released a research report on September 16, the report said the bulk of Fosun’s debt at the consolidated level reported in its recent interim results announcement consists of loans by Fosun’s operating subsidiaries. The company estimated that the holding company’s debt, including onshore debt, offshore debt and bank loans, is much lower. In terms of liquidity, with a tightening credit market, it is understandable that the company needs to act quickly to convert its cash into cash. The cash generated from its recent asset sales, together with its available cash, is estimated to be approaching the ability to repay its short-term debt. Morgan Stanley therefore reiterated its “Overweight” rating on Fosun International with a price target of HK$11.4.



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