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

HONG KONG, September 18, 2022 /PRNewswire/ — Fosun International Limited (HKEX stock code: 00656, “Fosun International”) said a major international investment bank, Morgan Stanley, reiterated its “overweight” rating on Fosun International with a target price from HK$11.4.

In the first half of 2022, Fosun achieved sustainable revenue growth, with total revenue of RMB 82.89 billion, an increase of 17.7% over 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, the financial and operational indicators of companies in several segments quickly showed signs of steady recovery. .

Fosun’s actual debt is only RMB 100 billion, corresponding to total assets of RMB 270 billion.

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

This figure of RMB 650 billion 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, the liabilities of financial institutions and the interest-bearing debt of companies are two different things. Notions. In fact, Fosun International’s consolidated interest-bearing debt amounts to about RMB 260 billion 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. businesses. In other words, the actual debt borne by Fosun International is only about RMB 100 billion, which corresponds to total assets of RMB 270 billion and a net asset value (NAV) of about RMB 20. 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 target price 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 shown 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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