Morgan Stanley Once Again Fully Recognizes Fosun International’s Solid Financing Capability and Reiterates "Overweight" Rating
Morgan Stanley issued a research report on Fosun International yesterday (7 September), pointing out that although Fosun International has recently announced a few small divestments in its core subsidiaries, which raised concerns about the company's near-term stability, Morgan Stanley has confidence in Fosun International's financing capability and believes the company can raise enough cash to handle its debts and withstand the recent market pressure, the company is deleveraging further to rebuild confidence.
Following Morgan Stanley's release of research report on Fosun International's interim results on 31 August, Morgan Stanley once again issued a research report within a short period of time to reiterate its "Overweight" rating on Fosun International. Morgan Stanley expressed that Fosun International's 2022 interim results was within expectation. The firm pointed out Fosun's financial position is solid, with ample and increased cash position. As at the end of the reporting period, the company's cash, bank balances and term deposits increased by approximately RMB21.0 billion to RMB117.65 billion, covering 45% of its total consolidated debt position; the debt to capital ratio was 56.8%. It believes that the Group's balance sheet still largely stable.
After Fosun International announced its 2022 interim results, in addition to Morgan Stanley, a number of investment banks including Goldman Sachs, Citi, Daiwa Capital Markets and CICC, issued research reports and unanimously assigned "Buy" or "Overweight/Outperform" ratings to Fosun International. Fosun's interim results showed that in the first half of the year, Fosun achieved sustainable growth in its revenue, continued to develop in technology and innovation and strengthen its globalization strategy, its funds remained stable, and its capital structure continued to be optimized, demonstrating the resilience of sustainable development, as well as the transparency of the financial strategy of balancing investment and divestment, which have been recognized by many major banks.
On 30 August, Fosun International announced its interim results. In the first half of 2022, against the backdrop of the complex and volatile external environment, Fosun demonstrated the resilience of sustainable development of its Health, Happiness, Wealth and Intelligent Manufacturing segments. During the reporting period, the Group's total revenue amounted to RMB82.89 billion, representing a year-on-year increase of 17.7%; enterprise operation profit amounted to RMB2.33 billion, representing a year-on-year increase of 35.5%.
Since 2020, the Group has continued to strike a balance between investment and divestment, and optimize its asset portfolio. Following the realization of an "investment-to-divestment ratio" of less than 1 in 2020 and 2021, the Group continued to achieve more divestments than investments in the first half of 2022. Under the premise of balancing investments and divestments at the Group level, the Group focuses more on industry operations and the development of subsidiaries. The Group supports subsidiaries to carry out strategic mergers and acquisitions with the goal of strengthening its development of industry operations. At the same time, the Group's financial strategy focuses on rating management, and plans to steadily and orderly reduce debt year by year from 2022 to 2025, while enriching cash on hand with asset divestments to consolidate liquidity buffer, steadily optimize its credit indicators, and further enhance the Group's ability to cope with external market fluctuations and navigate economic cycles.
Recently, Fosun International has continued to strengthen cooperation with domestic and foreign banks. Following the signing of the strategic cooperation agreement with ICBC on 19 July, Fosun International renewed its strategic cooperation agreement with HSBC China on 26 August, HSBC China will provide support for Fosun International and its subsidiaries in the aspects of global operation and investment capabilities, growth strategies, financial resources, etc. To date, Fosun 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 Chinese banks.
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 accumulated profound technology and innovation capabilities. Fosun maintained a stable leverage ratio, high risk tolerance with its multi-currency debts and stable debt maturity, and it is in a healthy financial position. At the interim results presentation held on 31 August, the management of Fosun International said that after entering the second half of the year, thanks to the Group's long-term adherence to profound industry operations, the financial and operational indicators of companies in multiple segments have rapidly shown signs of a steady recovery.
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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). As of 30 June 2022, Fosun International's total assets amounted to RMB849.7 billion. Fosun International ranks No.589 on the 2022 Forbes Global 2000 List, with a MSCI ESG rating of AA.