HONG KONG, September 18, 2022 /PRNewswire/ — Fosun International Limited (HKEX Stock Code: 00656, “Fosun International”) announced that major international investment bank Morgan Stanley has affirmed Fosun International’s “overweight” rating with a target price of 11.4 Hong Kong dollars.
In the first half of 2022, Fosun achieved steady revenue growth, with total revenue of 82.89 billion yuanwhich represents an increase of 17.7% compared to the same period in 2021. The company noted that entering the second half of the year, thanks to the Group’s long-term commitment to deep industry performance, the companies’ financial and operating performance in several segments quickly showed signs of a sustained recovery.
Fosun’s actual debt is just that 100 billion yuanCorresponding to the total amount of assets 270 billion yuan
The market is concerned about Fosun International’s debt situation and believes that Fosun is under pressure 650 billion yuan debt According to Fosun International’s interim results for 2022, its total assets amounted to 849.7 billion yuan and general obligations have been made 651.3 billion yuan as of June 30, 2022. However, market perception 650 billion yuan debt is actually a confusing statement.
this 650 billion yuan the figure represents the consolidated total liabilities of Fosun International and its subsidiaries, including liabilities of financial institutions such as insurance companies, banks, etc. However, liabilities of financial institutions and the commonly referred to interest-bearing corporate debt are two different concepts. Fosun International’s actual consolidated interest-bearing debt is approx 260 billion yuan only, which also consists of the debts of its consolidated subsidiaries such as Yuyuan and Fosun Pharma, etc. Obligations for the repayment of these debts are borne independently by the respective exchange companies. In other words, the actual debt incurred by Fosun International is only approximate 100 billion yuanwhich corresponds to the total assets 270 yuan billion and a net asset value (NAV) of approx 20 yuan for the action. From this point of view, Fosun does not feel significant pressure to repay the debt.
Morgan Stanley reiterated their Overweight rating on Fosun International with a price target 11.4 Hong Kong dollars for the third time
On Sept. 16, Morgan Stanley issued a research report that said most of Fosun’s consolidated debt reported in its recent interim earnings announcement consisted of loans to Fosun’s operating subsidiaries. The firm estimated that the holding company’s debt, including domestic, offshore and bank loans, is significantly lower. From a cash perspective, with the tightening of the credit market, it is clear that the company needs to take quick steps to convert liquid assets into cash. Cash from recent asset sales, along with cash on hand, is believed to be close to being able to pay off its near-term debt obligations. Therefore, Morgan Stanley reaffirmed their Overweight rating on Fosun International with a price target 11.4 Hong Kong dollars.