Fosun International's strategy to focus on core business has achieved remarkable results, and the growth of the core business is clear. In particular, Fosun Travel & Culture is growing strongly, so it reaffirms Fosun International's “gain” rating.
On April 30, Nomura Orient International Securities (“Nomura” for short) published a research report stating that Fosun International Limited (“Fosun International” or the “Company”) (Hong Kong Stock Code: 00656)'s strategy to focus on core business has achieved remarkable results, with clear core business growth. In particular, Fosun Travel & Entertainment is growing strongly, thus reaffirming Fosun International's “gain” rating.
Nomura pointed out that the company's four core businesses - Yuyuan Co., Ltd., Fosun Pharmaceuticals, Fosun Portugal Insurance, and Fosun Travel & Communications - contributed 72% to revenue. In particular, thanks to the growth of the jewelry and gold business under Yuyuan Co., Ltd., and the outstanding performance of Fosun Travel Club Med and Sanya Atlantis, the revenue of the four core businesses increased 8%, driving the steady growth of the company's revenue.
Nomura believes that there is a clear trend in consumer recovery, particularly in the travel and culture sector, which has performed well. Globally, Club Med ushered in a record year in 2023, with a turnover of RMB 15.1 billion, an increase of 19.2% over 2022, and reached 118.3% in 2019. The recovery of Atlantis Sanya was also strong, with a turnover of RMB 1.7 billion for the full year of 2023, an increase of 90.9% over the previous year. Through a series of industry-led international and diversified activities such as the “Night Tour Experience,” “Super Summer Vacation,” and “China Mermaid Open,” Atlantis Sanya maintained a high position with an average occupancy rate of 81.9% in 2023. In the first two months of 2024, benefiting from surging demand on holidays such as New Year's Day and Spring Festival, we recorded a turnover of RMB 500 million, an increase of 16.5% over the same period in 2023, and an average occupancy rate of 94.8%.
The recovery in consumption has also extended to other sectors. In 2023, the restaurant chain under Yuyuan Co., Ltd. accelerated. Currently, Songhelou Noodle Restaurant has 173 stores nationwide; in the second anniversary of the opening and operation of the Hangzhou-Taiwan High Speed Rail, transportation is safe, smooth and orderly, and the cumulative number of passengers has exceeded 20 million.
Nomura believes that Fosun International's business is developing well, with a target price of HK$5.59 and a potential upside of 19.85%, maintaining the “gain” rating.