Fosun Receives UBS Report: Believes Fosun can Effectively Manage Financing Risks

Rhea-AI Summary

UBS has assigned a 12-month target price of HK$9.1 for Fosun International, representing a 26% increase from its closing price of HK$7.25 on June 30. UBS believes Fosun can manage near-term refinancing risks through reduced investments and increased asset disposals. The company has successfully refinanced its bonds, and UBS notes that non-core investments can cover refinancing needs in the next year. Moreover, S&P Global Ratings maintains a 'BB Stable' credit rating for Fosun, highlighting its strong debt management. Fosun reported a total debt to capital ratio of 53.8% and historically low debt costs.

Positive

• UBS sets a target price of HK$9.1, indicating a potential 26% upside.
• Successful bond refinancing through asset disposals demonstrates effective liquidity management.
• S&P Global Ratings affirms a 'BB Stable' rating, reflecting confidence in Fosun's debt management.
• Fosun's total debt to total capital ratio improved to 53.8%, indicating better financial health.
• Cash, bank balances, and deposits reached RMB96.78 billion, supporting liquidity.

Negative

• Trading at a 63% discount to net asset value due to macro concerns in China.

UBS Sets a Target Price of HK$9.1 for Fosun

HONG KONG, July 4, 2022 /PRNewswire/ -- Fosun International Limited (HKEX stock code: 00656, "Fosun International") said that UBS has recently published a report on Fosun International. UBS believes that Fosun can effectively manage near-term financing risks and assigned Fosun a "neutral" rating with a 12-month target price of HK$9.1.

UBS pointed out that while refinancing risks are rising on China macro concerns, it believes Fosun should be able to effectively manage near-term refinancing risks through a slowdown in investments and an increase in asset disposals. Fosun has been able to refinance its onshore bonds with short term commercial papers and an offshore bond with asset disposals. UBS estimates that Fosun's non-core listed investments can cover its bond refinancing needs in the next 12 months; Fosun's execution in monetizing both listed and unlisted assets should alleviate market concerns on its liquidity position.

UBS sees that Fosun is currently trading at a 63% discount to its net asset value (NAV), which is largely attributed to China's macro concerns. UBS assigned Fosun International a 12-month target price of HK$9.1, representing an increase of approximately 26% compared to its closing price at HK$7.25 on 30 June.

In fact, S&P Global Ratings published a report in early June, maintaining "BB Stable" credit rating to Fosun amid the recent volatile market environment, demonstrating its affirmation on Fosun's efforts in debt management and endogenous growth strategy. On 23 June, S&P Global Ratings published another report, stating that Fosun has adequate resources to meet its upcoming debt maturities over the next six to 12 months. It believes the company could rely on asset monetization and stable banking relationships to manage its liquidity.

According to Fosun International's 2021 annual report, Fosun International is in a sound and healthy financial position. As of the end of 2021, the total debt to total capital ratio dropped to 53.8%; the average cost of debt was at a historically low of 4.6%; cash, bank balances and term deposits reached RMB96.78 billion. In terms of cash and debt management, Fosun has always adhered to the principle of proactive management of maturing debts and continuous optimization of debt structure, and has built financing capabilities with diversified financing channels and wide recognition from the market. The Group and its subsidiaries have established partnerships with more than 100 Chinese and foreign banks around the world and have signed strategic cooperation agreements with many international banks and multiple Chinese banks. Facing the volatility of the public market, Fosun made full use of its diversified financing channels to maintain stable liquidity. 

Fosun has been steadfastly fulfilling its mission of "creating happier lives for families worldwide", strengthening its presence in four business segments: Health, Happiness, Wealth and Intelligent Manufacturing. It is also one of the few companies in China which has global operation and investment capabilities and has built up a solid technology and innovation capabilities. In the face of the volatile epidemic situation and many external uncertainties, Fosun maintained a stable leverage ratio, high risk tolerance with its multi-currency debts and stable debt maturity, maintaining a healthy financial position.

In the future, Fosun will protect itself against market risk with a diversified business portfolio, a global asset presence, and the "Profound Industry Operations + Industrial Investment" strategy, and will continue to adhere to strict financial and capital management systems, further consolidate the Company's capital foundation, and grasp opportunities amid global market fluctuations and changes, thereby making solid yet bold progress for its growth and development.

About Fosun

Founded in 1992, Fosun is a global innovation-driven consumer group dedicated to providing high-quality products and services for families around the world in Health, Happiness, Wealth, and Intelligent Manufacturing segments. In 2007, Fosun International Limited was listed on the main board of the Hong Kong Stock Exchange (stock code: 00656.HK). In 2021, Fosun International's total revenue was RMB161.3 billion and total assets amounted to RMB806.4 billion. Fosun International ranks No.589 on the 2022 Forbes Global 2000 List, with a MSCI ESG rating of AA.

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SOURCE Fosun

FAQ

What is the target price UBS set for Fosun International (FOSUY)?

UBS set a 12-month target price of HK$9.1 for Fosun International.

What does UBS say about Fosun's refinancing risks?

UBS believes Fosun can effectively manage near-term refinancing risks through reduced investments and asset disposals.

What credit rating did S&P Global give Fosun International?

S&P Global Ratings maintains a 'BB Stable' credit rating for Fosun.

What was Fosun's total debt to capital ratio as of the end of 2021?

Fosun's total debt to total capital ratio was 53.8% as of the end of 2021.

How much cash and deposits does Fosun International have?

Fosun reported cash, bank balances, and term deposits of RMB96.78 billion.