Incident: On May 30, S&P confirmed Fosun International Limited's long-term issuer and issuer credit rating as “BB-”, maintaining Fosun's long-term issuer credit rating and its secured senior unsecured debt rating.
(1) The Group's credit level is stable. Fosun International's overall credit situation continues to stabilize due to improved financing channels, bank support for refinancing, and Fosun International's continued monetization of non-core assets.
Asset sales of over RMB 25 billion, combined with China's more favorable macroeconomic environment, have further stabilized Fosun International's credit quality over the past year.
(2) Improvement of the Group's financing channels. Currently, 70% of Fosun Group's debt comes from bank deposits, which has greatly improved the stability of funding sources. The significant increase in offshore syndicated loan refinancing completed by Fosun International in early May reflects an improvement in the company's refinancing conditions. The improvement in refinancing conditions has expanded from the onshore capital market to the offshore capital market. S&P expects this trend to continue. Fosun International will manage its debt within the next one to two years through bank support and proceeds from asset sales. It is expected that the company will continue to revitalize its assets over the next 12-18 months to further reduce the holding company's debt and expand financial buffer space.
(3) The quality of the Group's assets remains stable. S&P expects that the asset quality of Fosun International's portfolio will remain generally stable over the next 6 to 12 months, and that a steady credit situation will offset the impact of the macroeconomic environment and unfavorable factors in the industry, such as the downturn in the real estate industry.
Profit forecasting and valuation: The company has long been adhering to the two core growth engines of “innovation” and “globalization”. It is one of the few domestic enterprises that have accumulated deep technological and innovation capabilities, as well as global operation and investment capabilities. As each business segment of the company is gradually adjusted and optimized, and along with the gradual recovery of the economy, we expect that each sector of the company will gradually recover in terms of revenue and net profit. The consolidated net profit for 2024-2025 is estimated to be 4.115 billion yuan/5.946 billion yuan, corresponding to the current approximately 9x/6x PE, raising the target price from 6.36 yuan to HK$7.00.
Risk warning: Consumption recovery falls short of expectations, risk of overseas business fluctuations, risk of exchange rate fluctuations