Fosun International: Enhanced profitability focuses on core competitive advantages, which may boost both volume and price.
As the 2023 earnings season draws to a close, Fosun International (00656.HK)'s full-year performance has garnered sustained market attention. Major financial institutions such as UBS, Citigroup, Kaiyuan Securities, Huaxi Securities, Founder Securities, and Industrial Securities have released research reports affirming Fosun International's 2023 results, expressing optimism about its future growth under continued strategic execution and maintaining "Buy" or "Recommend" ratings.
What Does a Company Universally Endorsed by Major Brokerages Look Like?
First and foremost, it's undoubtedly about performance.
Fosun International's latest 2023 full-year results show steady progress in both operational and financial metrics. The company achieved total revenue of RMB 198.2 billion, up 8.6% year-on-year, while net profit attributable to shareholders surged to RMB 1.38 billion.
Second is robust cash flow and dividend performance, with further optimization of capital and asset structures and resilient liquidity.
Fosun International's 2023 results reveal public market financing of RMB 19.86 billion and cash, bank balances, and term deposits totaling RMB 92.46 billion. UBS's report notes that Fosun reduced interest-bearing debt by RMB 15 billion at the consolidated level and RMB 9.2 billion at the group level compared to end-2022. The consolidated total debt-to-capital ratio improved to 50.4%, down 2.9 percentage points, further optimizing its debt structure.
Concurrently, as profitability rebounded, Fosun significantly increased cash dividends to HKD 310 million. Founder Securities highlighted in an April 2 report that Fosun has maintained a stable 20% dividend payout ratio, with cumulative dividends reaching HKD 25.6 billion over its 17-year listing history. Citigroup expressed confidence in Fosun's ability to sustain dividend growth, while UBS projected further increases as China's economic momentum recovers and Fosun's "streamlining" strategy progresses.
Lastly, the strategic focus on core businesses through "streamlining," demonstrating decisive execution in advancing and retreating.
In recent years, Fosun has concentrated on family consumption industries while divesting non-strategic assets. In 2023, it exited steel sector investments like Nanjing Nangang and Jianlong Group, recouping RMB 27.3 billion in cash.
In April, Fosun announced the sale of up to 8.19% of its stake in Belgium's largest insurer, Ageas, to BNP Paribas, expected to generate €626–670 million and a pre-tax profit of €60–65 million (unaudited). This move enhances portfolio efficiency and core competitiveness. For a global group with 100,000 employees across 35+ countries, steadfast execution is critical.
Fosun's "focus" strategy isn't mere retreat but balanced advancement—exiting non-core assets while listing high-quality holdings. This "orderly adjustment" has fortified financial health and enabled deeper mining of core industries.
At the March 28 earnings call, Co-Chairman Wang Qunbin stated Fosun aims to reduce debt by ~RMB 10 billion annually over 2–3 years, "enhancing credit ratings, ensuring sustainable health, and predictable global expansion in core businesses."
Dual Drivers: "Innovation" and "Globalization," Continuously "Mining Deep" and "Mining Well"
Beyond solid fundamentals, innovation and globalization underpin Fosun's growth. In 2023, R&D investment rose 14% to RMB 7.4 billion, yielding breakthroughs in healthcare (e.g., Fosun Pharma's new drug approvals), digital insurance (Portugal), and smart manufacturing.
Overseas revenue hit 45% (RMB 89.2 billion), reflecting 17 years of global operations across 35+ markets. Founder Securities noted Fosun's rare dual strengths in tech innovation and global execution, anticipating further recovery as economies rebound.
On April 22, Fosun Tourism Group reported Q1 2024 revenue of RMB 7.158 billion (+15.8% YoY), with Club Med bookings up 13% YoY for H1 2024. Chairman Guo Guangchang emphasized transitioning from "global prospecting" to "deep mining" proven assets, prioritizing stable profit growth and dividends.
Stable Industrial Foundation, Strengthening Endogenous Momentum
Like Shenzhen—a hub of innovation—Fosun's partnership with the city (April 12 agreement) expands collaboration in biopharma, tourism, and consumer sectors. The deal validates Fosun's operational prowess (RMB 4.9 billion industrial operating profit, +20% YoY) and light-asset strategy (record tourism revenue), while synergies fuel long-term growth.
With adjusted NAV at HKD 19.0/share (historically low), Citigroup and UBS set a target price of HKD 6.30 (~57% upside). As financial stability and earnings converge, Fosun's "performance + valuation" re-rating may soon unfold.
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