On 27 March 2024, Fosun International (HKEX: 0656) announced its
2023 annual results. During the Reporting Period, Fosun's total
revenue amounted to RMB198.2 billion, representing a year-on-year
increase of 8.6%; profit attributable to owners of the parent was
RMB1.38 billion, representing a significant year-on-year
growth.
Guo Guangchang, Chairman of Fosun International, said in the annual
results conference on 28 March, "For Fosun, these results
performance did not come easily. Over the past year, despite the
fluctuations in the external economic environment, our industrial
operational capabilities have not only withstood the test, but have
also improved significantly. Thanks to our focus on core
businesses, we have yielded gratifying results."
Over the past three years, globalization headwinds caused by the
COVID-19 pandemic, slow economic recovery and geopolitical factors,
have put pressure on Chinese companies, including Fosun. Fosun
resolutely implemented the business streamlining strategy and
focused on its core businesses, successively divesting a number of
non-core assets and focusing on the household consumption sector to
pursue high quality development growth.
With the implementation of the business streamlining strategy,
Fosun divested some non-core businesses that had previously
provided stable cash flows. The subsequent improvement in cash flow
has brought market attention to how Fosun will sustain stable
profit growth as it did over the past decade.
At the results conference, Guo Guangchang said, "We will push
forward with innovation-driven development and global operations.
Fosun used to 'explore and mine' (which means exploring
opportunities and establishing a presence in various industries)
globally to look for suitable projects. Now we already have
sufficient 'good mines' (which means businesses with established
presence), we will gradually shift towards 'deep mining' (which
means focusing on the development of our core industries) and
'developing good mines' (which means tapping into industries with
high value-added development and growth potential), focusing on
building businesses that can sustainably, predictably, and stably
generate profits. We will continue to develop the industries where
we boast clear competitive advantages, enhancing certainty and
making stable profit growth as the core objective of Fosun's future
operations to gradually increase dividends."
"Deep mining" to deepen advantageous industries
The results announcement shows that Fosun's focus on its core
businesses in the household consumption sector has gradually
yielded results. In 2023, Fosun's four core subsidiaries, namely
Yuyuan, Fosun Pharma, Fosun Tourism Group (FTG), and Fosun
Insurance Portugal, demonstrated steady revenue, contributing 72%
of Fosun's revenue.
Specifically, Yuyuan Jewlery & Fashion Group achieved a revenue
of RMB36.727 billion, representing a year-on-year growth of 11.05%.
Shanghai Henlius, a subsidiary of Fosun Pharma, achieved full-year
profits for the first time and an operating income of RMB5.3949
billion, representing a year-on-year growth of 67.8%. Club Med, a
subsidiary of FTG, achieved record-breaking performance, with a
business volume reaching RMB15.12 billion in 2023, representing a
year-on-year increase of 19.2%; Atlantis Sanya's business volume
surged 90.9% year-on-year to RMB1.67 billion. Through providing
high-quality services, Fosun Insurance Portugal maintained a 30%
market share in Portugal, securing its leading position.
For Fosun, these achievements are the results of its continuous
strategic evolution. Over the past ten years, Fosun has continued
to expand its business presence globally, "prospecting" and
"exploration" across various industries, and has rapidly developed
into a global enterprise with total assets exceeding RMB800.0
billion and businesses across various industries.
In recent years, faced with the complex and volatile economic
landscape and pandemic situation, Fosun decisively focused on
family consumers, implemented industry-focused strategies in the
three major segments of Health, Happiness, and Wealth, "deep
mining" to further develop advantageous industries and secure more
stable cash flow and profit growth.
Today's Fosun is more focused and its business structure is more
streamlined and healthier.
Looking at the financial indicators, Fosun achieved growth in both
revenue and profit in 2023, further optimized its capital and asset
structure, and maintained sufficient liquidity. As at the end of
the Reporting Period, the consolidated interest-bearing debt
decreased by RMB15 billion as compared with the end of 2022,
interest-bearing debt at the group level decreased by RMB9.2
billion as compared with the end of 2022, total debt continued to
reduce both at consolidated statements of the Group and at the
Group level. The total debt-to-asset ratio at the consolidated
statements of the Group stood at 50.4%, representing a decrease of
2.9 percentage points from 31 December 2022. Cash and bank balances
and term deposits reached RMB92.46 billion.
While reducing its debts, Fosun also enhanced its asset-light
operational capabilities.
Developing a more flexible and efficient asset-light operational
capabilities have become part of Fosun's strategic adjustments. In
March this year, Fosun Pharma, together with seven investors
including Shenzhen FoF planned to jointly establish a RMB5.0
billion biopharmaceutical fund, with the entire raised funds to be
invested in fields of biopharmaceuticals, cells, and genes.
Shanghai Fujian Equity Investment Fund Management Co., Ltd., a
subsidiary of Fosun Pharma, won the bid through the public
selection process in Shenzhen to exclusively manage the fund.
Since the second half of last year, Guo Guangchang has publicly
stated several times that Fosun will continue to reduce debt,
maintain asset-light operation, focus on research and development
and innovation, and allocate its competitive resources to its
advantageous industries to reap high-quality growth. At the results
conference, he also expressed that in the future, Fosun will remain
committed to the strategy of further reducing the proportion of
heavy assets and enhancing its asset-light operational
capabilities.
Fosun leverages its profound innovation and industrial operational
capabilities to cooperate with local governments to jointly promote
technology innovation and commercialize the scientific research
achievement, which has become Fosun's new approach to asset-light
operations. With the establishment of the RMB5.0 billion target
fund, Fosun is poised to leverage Shenzhen as a platform to expand
its presence in the domestic and global biopharmaceutical and
healthcare industries. Fosun will focus on strengthening its
research and development efforts and business presence in
innovative products and technologies.
In 2023, FTG's tourism operation accounted for 93% of its revenue,
demonstrating a further improvement in asset-light operational
capabilities. For example, Club Med's resorts that adopt the
leasing and management model accounted for 85%, while the
proportion of self-owned resorts dropped to 15%. In October 2023,
Club Med opened its first urban resort - Club Med Urban Oasis
Nanjing Xianlin Resort, opening up the new field of urban
vacations; in November, Taicang Alps Resort, dedicated to providing
ice and snow vacations, also opened with great success, creating a
pure Alpine ice and snow vacation experience.
Strengthen innovation and globalization advantages
Leveraging on the two core growth drivers of innovation and
globalization, Fosun has continued to deepen its efforts in
advantageous industries and reap more stable profits.
Fosun has integrated innovation into its corporate DNA since the
development of hepatitis B PCR reagents at its establishment. Over
the years, Fosun has continued to increase its investment in
innovation year by year. In 2023, Fosun's investment in technology
innovation for the year reached RMB7.4 billion.
In recent years, Fosun's innovation strategy has continued to bear
fruit, with a number of new products and new indications approved
for marketing. Shanghai Henlius' independently developed
HANSIZHUANG (serplulimab injection), the world's first anti-PD-1
monoclonal antibody approved for first-line treatment of small cell
lung cancer (SCLC), has obtained approvals for four indications,
benefiting more patients and becoming a "star product" in the
domestic biopharmaceutical industry. Its independently developed
HANQUYOU (trastuzumab injection), used for the treatment of breast
cancer, is expected to become the first domestic-produced
biosimilar drug approved for marketing in China, the European Union
and the United States.
Since its establishment in 2010, Shanghai Henlius has adhered to
the path of independent research and development. With 13 years of
continuous investment in funds, talent, and technology, as of the
end of 2023, Shanghai Henlius had 5 products launched in China, 2
launched in overseas markets, marking a historic turning point in
its business performance as the first profitable Hong Kong-listed
"18A" biopharmaceutical company.
In addition, Fosun Pharma's subsidiary Guilin Pharma's
second-generation artesunate for injection became the first
injectable artesunate presented with a single solvent system
approved by the World Health Organization (WHO-PQ); since its
launch more than two years ago, Yi Kai Da, China's first CAR-T cell
therapy product developed by Fosun Kite has been used to treat
hundreds of patients with relapsed or refractory large B-cell
lymphoma (r/r DLBC) and has received conditional approval from the
National Medical Products Administration (NMPA) for a new
second-line indication.
The Da Vinci Surgical Robot, a star product at previous China
International Import Expos (CIIEs), has also successfully achieved
localization. Intuitive Fosun's domestically-produced Da Vinci Xi
Surgical System was successfully approved by the NMPA and
officially commenced production, truly realizing "made in China,
joint R&D and global sales". At present, more than 360 units of
Da Vinci Surgical Robot have been installed in China, benefiting
more than 420,000 patients to date.
"Globalization" serves as another core competitive advantage of
Fosun and is a significant attribute linked to its external
recognition. Since Fosun International's listing in 2007, Fosun's
globalization journey has spanned nearly 17 years. It has now
established business presence in over 35 countries and regions, and
its "global organization + local operation" model has become
increasingly mature.
In 2023, Fosun International's overseas revenue amounted to RMB89.2
billion, representing a year-on-year increase of 6%, accounting for
45% of total revenue. Many products of Fosun have entered overseas
markets. For example, Shanghai Henlius's independently developed
HANQUYOU (trastuzumab injection) has been approved for marketing in
more than 40 countries and regions worldwide, making it the
domestically-produced biosimilar drug with the highest number of
market approvals; in December 2023, Shanghai Henlius' first
innovative drug HANSIZHUANG (serplulimab injection) was approved
for marketing in Indonesia, becoming the first
domestically-produced anti-PD-1 monoclonal antibody successfully
approved for marketing in a Southeast Asian country.
In the tourism sector, which naturally boasts "globalization
genes", Club Med, a subsidiary of FTG, witnessed growth in its
global business in 2023. In particular, Club Med's business volume
in the Americas increased by 24% compared with the same period in
2022; with the recovery of tourism market in Brazil, Brazil became
the second worldwide sales market in terms of business volume; the
business volume of Club Med's Europe, the Middle East and Africa
(EMEA) region grew 7% and 11% in 2023 compared to that of 2022 and
2019 respectively.
Shede Spirits, a subsidiary of Fosun, has also accelerated its
overseas expansion, with overseas revenue increasing by 86.94% in
2023 and significant breakthroughs in both overseas distribution
channels and duty-free channels. It has entered 31 countries and
regions and established its presence in 45 duty-free shops.
Fosun's globalization means more than just "two-way engagement"
between the global and Chinese markets. It also encourages Fosun's
overseas subsidiaries to actively expand their businesses in local
and overseas markets. For example, Fosun Insurance Portugal has
continued to expand its presence in overseas markets such as South
America and Africa. In 2023, its international business reported an
overall gross written premiums of EUR1,703 million, representing a
year-on-year growth of 10.6%. Hainan Mining completed its
investment in KOD and KMUK, and obtained a controlling stake in the
lithium mine asset of Bougouni in Mali, Africa, marking a critical
step in its new energy industry layout and internationalization
strategy.
In addition to the "hard power" of its businesses, Fosun's "soft
power" accumulated in its globalization journey is equally
invaluable. From late 2023 to early 2024, the Yuyuan Garden Lantern
Festival, a national intangible cultural heritage, made its
overseas debut. Designated as part of the opening festivities
celebrating the 60th anniversary of the establishment of diplomatic
relations between China and France, as well as the China-France
Year of Culture and Tourism, the Festival Dragons et Lanternes held
in Paris, France for 72 days attracted nearly 200,000 local
visitors.
By continuing to promote innovation and globalization strategies,
Fosun is building a moat of competitive advantages in multiple
industries such as healthcare and tourism to ensure stable profit
growth in the future.
In the letter to shareholders, Guo Guangchang expressed that, "In
the future, we will continue to focus on core businesses,
leveraging our unique strengths to enhance our capabilities and
strengthen our foundation, and actively invest and expand in
advantageous sectors. Through forward-looking planning, we will
deeply explore the capabilities and value of the Fosun ecosystem,
endeavoring to create more good products and services for one
billion families worldwide."
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