As a representative H-share listed company, Fosun's every move is the focus of market attention.
At the recent results meeting, the 32-year-old Fosun handed over its 2023 annual report card, highlighting its steady and steadfastness: during the reporting period, the total revenue and net profit both increased, with a total revenue of RMB 198.2 billion, a year-on-year increase of 8.6%, achieving continuous growth for three consecutive years, and the net profit attributable to the parent company was RMB 1.38 billion, with profitability stabilizing and rebounding, and performing well among comprehensive listed companies. At the same time, the cash dividend reached HK$310 million, the dividend payout ratio remained stable at 20%, and the cumulative cash dividend reached HK$25.6 billion in the 17 years since its listing.
"In the face of the complex and volatile external environment, Fosun maintained its strategic focus and continued to firmly promote 'slimming and fitness'. On the one hand, it has stepped up efforts to withdraw from some non-core and non-strategic assets, continued to reduce debt, consolidated the capital safety cushion, and built up momentum for a new round of growth. On the other hand, we will further focus on the main business of household consumption and increase the layout of advantageous industries. Guo Guangchang, Chairman of Fosun International, said in the letter to shareholders and at the results conference, "We are more clear that we should focus on building sustainable, predictable and stable profitable enterprises, and the core is to focus on enterprises that have formed advantages." ”
Analysts noted that as of the end of 2023, Fosun International's adjusted NAV was HK$19 per share, a significant discount from the current stock price, "focusing on competitive core businesses, which can bring higher quality profits, and the firm implementation of the strategy has also given investors a clearer expectation of Fosun's 'sustained and stable profitability' in the future, and it is expected that with the gradual recovery of the economy, the company will usher in significant value recovery." ”
There is a mine at home, "dig deep, dig well"
From the annual performance data, it can be seen that Fosun has achieved remarkable results in the strategic layout of "family consumption main business", focusing on "digging deeper" into industries that have formed advantages, and constantly improving the layout to provide global families with a healthy, happy and prosperous life experience.
The solid construction of the four major business segments has formed a strong business support system. In 2023, Fosun's four core subsidiaries, Yuyuan Co., Ltd., Fosun Pharma, Fosun Portugal Insurance and Fosun Tourism, achieved a total revenue of RMB142.69 billion, an increase of 8% year-on-year, accounting for 72% of total revenue.
Specifically, the four core subsidiaries all contain high-grade "minerals" and have become the "core of the core" of Fosun's main business. In 2023, Yuyuan's jewelry and fashion segment performed well, with revenue of RMB 36.7 billion, a year-on-year increase of 11%.
Henlius, Fosun Pharma's biopharmaceutical platform, achieved its first full-year profit, with operating income of RMB5.39 billion, representing a year-on-year increase of 67.8%. Among them, the flagship product Hanqu You has been approved for marketing in more than 40 countries and regions, becoming the domestic biosimilar with the most approved countries and regions.
Club Med, a leading global resort brand, achieved record sales of RMB15.12 billion in 2023, up 19% year-on-year, while Atlantis Sanya achieved a significant increase of 91% year-on-year to RMB1.68 billion.
On April 22, Fosun Tourism announced its operating performance for the first quarter of 2024. Benefiting from the further recovery of the global tourism market and the effective implementation of the Company's strategy, the tourism operating revenue in the first quarter reached RMB7,158 million, representing a year-on-year increase of 15.8%, and the unaudited net profit attributable to the parent company increased steadily compared to the same period in 2023.
Fosun Portugal continued to expand its presence in South America, Africa and other foreign markets, with a total premium of 1.7 billion euros in international business, up 11% year-on-year, while maintaining a 30% share in the Portuguese market, firmly maintaining its leading position.
Guo Guangchang said: "After more than ten years of hard work, Fosun has gradually completed its global expansion and industrial layout, anchoring the main track of the family consumption industry. Fosun's industrial operation strategy has also gradually changed from 'prospecting' and 'prospecting' in various industries around the world to 'deep mining' and 'good mining', and it will continue to deepen its cultivation and enhance certainty in the proven industries, and take stable profit growth as the core goal of Fosun's future operations. ”
For future development, Guo Guangchang said that he will continue to focus on core industries, strengthen capacity building, practice internal skills based on its own characteristics, and actively invest and expand in advantageous industries, make forward-looking layouts, and deeply explore the capabilities and values of Fosun's ecosystem.
Valuation renewal, "slimming" for "fitness"
For a long time, the market has thought that value investing is all about buying and not selling. It is an important ability of value investing to observe the investment path of great companies and sell good assets at a better price.
Fosun, which has continued to expand globally in the past few years, has also made up for its "selling" homework in recent years.
In 2023, Fosun accelerated its exit from non-strategic non-core assets, including Nanjing Iron and Steel, Jianlong Co., Ltd., Pan Asia Shipping, ATG and a series of real estate projects, and achieved cash return of approximately RMB40 billion at the consolidated statement level.
On April 14 this year, Fosun International announced the sale of its stake in Ageas, Belgium's largest insurance company, to BNP Paribas in three tranches. Upon completion of the transaction, Fosun expects to achieve an unaudited profit before tax of approximately EUR 60 million to EUR 65 million.
Based on Fosun's strategic positioning as an innovation-driven global household consumption industry group in recent years, it can be found that one of the main goals of focusing on the main track of the household consumption industry is to achieve predictable and stable profitability by improving operational capabilities.
After the release of the 2023 annual results, Xu Xiaoliang, co-CEO of Fosun International, made it clear that the purpose of Fosun's insistence on "slimming down" is to "keep fit", that is, to continuously strengthen its industrial operation capabilities for core tracks. And "slimming" also has two dimensions: industry and assets.
Xu Xiaoliang further pointed out that Fosun clearly focuses on the household consumption industry, and should consider strategic alignment, that is, the consumer industry that can form concentric circles with strong alliances. If it deviates from this core goal, even if it is a profitable business, it is not what Fosun wants.
Accurately grasp the opportunity, do something and do nothing, and Fosun's debt structure is also continuously optimized. As of the end of 2023, the Group's interest-bearing liabilities at the consolidated statement level decreased by RMB15 billion year-on-year, and the total debt-to-total capital ratio was 50.4%, a decrease of 2.9 percentage points from the end of 2022.
In fact, since the second half of last year, Guo Guangchang has repeatedly publicly stated that Fosun will continue to reduce debt, maintain asset-light operation, focus funds on R&D and innovation, and invest superior resources in its advantageous industries to harvest high-quality growth.
Based on the optimization of the debt structure, the international rating agency Standard & Poor's upgraded Fosun's rating outlook to "stable". Wang Qunbin, co-chairman of Fosun International, said at the annual results conference that Fosun aims to upgrade its rating to S&P "investment". To this end, Fosun needs to exit some non-core and non-strategic heavy assets, and second, it needs to focus on the development of advantageous and sustainable businesses, especially those with cash flow and profit growth.
Wang Qunbin once detailed Fosun's debt reduction target for the next two to three years, and Fosun International will reduce its debt by about 10 billion yuan per year on average. "In this way, the company's rating can be improved better and faster, the company will be healthier, more sustainable, and more predictable in its main business around the world." ”
Looking at the great companies in history, being able to do a good job of "subtraction" can be of great benefit to the company's valuation.
"Ford Motor Co., Ltd. has focused on its core business through the 'one Ford' strategy, and the market reacted very quickly at the time, and Ford's stock price has risen sevenfold in two years. A private equity fund manager analyzed.
Analysts at Founder Securities believe that with the gradual adjustment and optimization of various business segments and the gradual recovery of the economy, Fosun is expected to recover faster in terms of revenue and net profit.
Set sail on a light boat, scientific and technological innovation, globalization
The underlying logic of Fosun is optimistic about Fosun, which comes from its long-term accumulation of innovation and globalization capabilities.
Technological innovation is an important engine for enterprises to achieve rapid development, and it can be seen from the annual data that Fosun continues to increase its investment in science and technology, with an investment of RMB 7.4 billion in science and technology innovation in 2023, a year-on-year increase of 14%. The long-term investment in science and technology innovation is continuously transforming into a strong driving force for the quality improvement and development of Fosun's various industries. The results show that Fosun's innovation strategy continues to enter the harvest period.
The world's first anti-PD-1 monoclonal antibody independently developed by Henlius for the first-line treatment of small cell lung cancer (SCC) has been approved for four indications, benefiting more patients and becoming a "star product" of biomedicine in China.
By the end of 2023, Henlius has launched five products in China and two products globally, driving a historic turning point in its operating performance – becoming the first Hong Kong-listed "18A" biopharmaceutical company to achieve profitability.
In addition, according to Chen Qiyu, co-CEO of Fosun International, in recent years, Fosun International's subsidiary Furui Zhixing has been focusing on product research and development such as autonomous driving of automobiles. The company has invested 300 million yuan in the early stage, of which more than 200 million yuan has been invested in the 4D millimeter-wave radar production line, and has recently completed a new round of external financing, hoping to accelerate the industrialization of Furui Zhixing's innovative products. ”
"Scientific and technological innovation is not only invested in the pharmaceutical and health sector, but also in the company's intelligent manufacturing, happy consumption and other sectors. Chen Qiyu said.
"Globalization" is another core competitiveness of Fosun. In 2023, Fosun's overseas revenue reached RMB89.2 billion, a year-on-year increase of 6%, accounting for 45% of total revenue, with a ten-year compound growth rate of 55%. At present, Fosun has an in-depth industrial layout in more than 35 countries and regions, and the "global organization + local operation" model is becoming increasingly mature.
During the two sessions of the National People's Congress this year, the "going overseas" of domestic innovative drugs has become a hot topic. Fosun's innovative products such as Han Qu You and Han Si Xiang have attracted wide attention.
In addition, Fosun is also deeply engaged in the cultural tourism industry with "globalization genes", and the global business of Club Med, a subsidiary of Fosun Tourism, will grow in 2023. Club Med's revenue in the Americas increased by 24% compared to the same period in 2022, Brazil became the world's second largest sales market by turnover, driven by the recovery of the Brazilian tourism market, and in EMEA and Europe, Africa and the Middle East, revenue increased by 7% and 11% in 2023 compared to 2022 and 2019, respectively.
By continuing to promote its innovation and globalization strategy, Fosun is building a moat of competitiveness in a number of advantageous industries such as healthcare, cultural tourism, and consumption, so as to ensure stable profit growth in the future.
The "stable earnings growth" will also be an important incision for investors to re-observe Fosun International's stock price and grasp investment opportunities in the coming stage.
Recently, Citibank, UBS, Goldman Sachs, Founder Securities, Kaiyuan Securities, Huaxi Securities and other domestic and foreign institutions have been optimistic about Fosun's future growth and have given "buy" or "recommended" ratings.
UBS said in the research report that as Fosun continues to implement the "slimming and fitness" strategy, its profitability is expected to further improve, and dividends to shareholders will continue to increase in the future, giving Fosun International a target price of HK$6.30, an expected increase of about 57%.
Unless otherwise specified, the data for the full year of 2023 are translated using the average exchange rate from January to December 2023 (USD/CNY= 7.04310, HKD/CNY= 0.89971, EUR/CNY=7.63524); The data at the end of the period are translated using the exchange rate as at December 31, 2023 (USD/CNY=7.08270, HKD/CNY=0.90620, EUR/CNY=7.85920).
Founded in 1992, after more than 30 years of development, Fosun has become an innovation-driven global household consumption industry group. Adhering to the mission of making the lives of families around the world happier, Fosun is committed to serving one billion family customers around the world, and strategically focuses on a healthy, happy and prosperous happiness ecosystem. In 2007, Fosun International was listed on the main board of the Hong Kong Stock Exchange (stock code: 00656.HK). As of December 31, 2023, the company's total assets reached RMB808.4 billion, with an MSCI ESG rating of AA, making it the only comprehensive enterprise in Greater China with an MSCI ESG rating of AA.
（CIS）