Fosun to step up sales of non-core businesses

Conglomerate to keep pursuing turnaround after posting net profit of 1.38b yuan for 2023

Fosun International, one of China’s largest private conglomerates, will hasten its exit from non-core businesses to lower indebtedness and focus on cash-flow-generating assets in a bid to sustain its turnaround.

The firm, whose businesses span tourism, pharmaceuticals, property, and financial services, aimed to cut debts by 10 billion yuan (HK$10.8 billion) annually in the next two to three years and improve its financial profile, co-chairman Wang Qunbin told an earnings briefing yesterday.

“We will exit some non-core businesses while focusing on assets that are sustainable and predictable,” he said. “Fosun plans to develop itself into a more [financially healthy] and sustainable company.”

He did not elaborate on what the Shanghai-based firm planned to divest, but added key assets must be cash-flow-positive.

Wang’s statement came after Fosun reduced its interestbearing debts, such as bank loans and corporate bonds, by 15 billion yuan to 211.9 billion yuan in the 12 months to December 2023.

Fosun posted a net profit of 1.38 billion yuan for 2023 after a net loss of 831.8 million yuan a year earlier. Revenue grew by 8.6 per cent to 198.2 billion yuan.

Co-founder and chairman Guo Guangchang told the briefing the conglomerate would expand profitable businesses such as medical services even amid the deleveraging campaign.

“We are still taking an active attitude [towards business expansion],” the billionaire entrepreneur said. “We just want to let our investors know that by doing so, we need to have high risk awareness and to be enterprising.”

Fosun’s healthcare segment reported net income of 580 million yuan in 2023, down by 57 per cent on the year.

China’s economy expanded by 5.2 per cent last year. Excluding the pandemic years, when the country was virtually closed, that pace was the slowest annual rate since 1990.

“Fosun is giving priority to the medical and consumer segments since they are expected to maintain rapid growth in a slowing economy,” said Ivan Li, a fund manager at Loyal Wealth Management in Shanghai.

“Price remains an issue as the conglomerate looks to sell part of its assets at a time when investors’ buying appetite appears to be low.”