HSBC, Daiwa Capital Markets and Essence International Reiterate "Buy" Rating on Fosun International

HONG KONG SAR - Media OutReach - 20 September 2023 - Fosun International Limited (HKEX stock code: 00656, "Fosun International" or the "Company"), together with its subsidiaries ("Fosun" or the "Group"), announced its 2023 interim results at the end of August. After a number of investment banks such as Goldman Sachs and Citi assigned the Company a "Buy" rating, HSBC, Daiwa Capital Markets and Essence International have successively published research reports recently, reiterating their "Buy" rating on Fosun International. HSBC, Daiwa Capital Markets and Essence International have assigned the Company target prices of HK$8.1, HK$7.7, and HK$7.5 respectively, with approximately 60% upside or more.

HSBC expressed its bullish view on Fosun's steady core business recovery. With gold prices staying at a high price level and worldwide travel restrictions lifted, the firm expects Fosun Tourism Group under the Group's Happiness segment to see an extended earnings recovery within the year. Taking Club Med as an example, the firm pointed out that the occupancy rate of Club Med has returned to pre-COVID-19 levels. In the first half of 2023, the business volume of Club Med amounted to approximately RMB7.94 billion, representing a year-on-year increase of 32.2%, and reaching to 119.6% of that of the same period of 2019; the capacity of Club Med increased by approximately 13.4% as compared to that of the same period of 2022, and recovered to 99.2% of that of the same period of 2019.

In addition, HSBC is also optimistic about Fosun's profitability of the Health segment, especially Fosun Pharma saw its 2023 interim net profit up 15.7% year-on-year with its new products maintaining sales growth. The firm believes that the Health segment will continue on a stable growth pace. According to Fosun Pharma's press release, in the first half of 2023, a number of innovative products and indications self-developed and co-developed by Fosun Pharma were approved for launch, further expanding the innovative product portfolio, contributing to the continuous optimization of product structure and maintaining rapid growth of revenue from innovative products. Among them, revenue from HANSIZHUANG which was approved for launch in March 2022 achieved RMB556 million in the first half of 2023, entering the "speeding up period" of commercialization. Revenue from HANQUYOU increased by 57.1% period-on-period, while revenue from SUKEXIN increased by 32.7% period-on-period.

Essence International expressed its bullish views on Fosun's Health segment for its global expansion and innovation-driven strategies, as well as its strong recovery of Happiness segment. The firm also pointed out that the scale of Fosun's insurance business under the Wealth segment has been steadily expanding, with its investable assets remaining stable and profitability continuing to improve. In the first half of 2023, Fosun Insurance Portugal's total gross written premiums ("GWP") were approximately EUR2.65 billion, maintaining its leading position in the Portuguese market with a 30% market share in Portugal. Fosun Insurance Portugal also actively expanded its non-domestic businesses, resulting in rapid growth in its international business. In particular, it achieved substantial business growth in Latin America: premium income in Peru and Bolivia came in at RMB816 million and RMB200 million respectively, representing an increase of 61% and 43% compared to the same period of last year. German private bank HAL's gross income increased by 24% year-on-year to EUR224 million, with total assets reaching EUR13.3 billion, reflecting the high quality operation of the Group's Wealth segment.

It is worth noting that HSBC, Daiwa Capital Markets and Essence International unanimously pointed out that Fosun continued to optimize its capital and asset structure, put greater efforts in the disposal of non-strategy and non-core assets, and actively explored financing channels, thereby maintaining ample liquidity. In the first half of 2023, cash inflow from divestment amounted to more than RMB20.0 billion at the consolidated level. In January 2023, Fosun High Technology successfully entered into a syndicated loan agreement for an amount of RMB12 billion with eight domestic banks, attesting to the domestic banking institutions' firm support for the development of private enterprises. In the first half of 2023, the Group has navigated through the "maturity wall", as of 30 June 2023, the Group had no material offshore bonds due in one year.

Looking ahead to Fosun International's future performance, as major factors affecting the share price have already been reflected, the Company's current valuation is attractive, thus securities firms and investment banks have recommended investors to buy the Company's shares.

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20 Sep 2023



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