Net Profit Increases 28% to RMB13.16 Billion
2017 FINANCIAL RESULTS HIGHLIGHTS:
Revenue increases 19% to RMB 88.03bn, net profit jumps 28% to RMB13.16bn
Strong results driven by core operations, turnaround success and disciplined asset allocation
>100 investments, >50 divestments and 10 IPOs
Adjusted Net Asset Value jumps 28% to HK$33.28 per share
Deleveraging continues with net gearing now 49.7% from 60.3% in 2016
Board recommends increasing dividend to HK$0.35 per share, up 67% from 2016
SHANGHAI and HONG KONG, March 27, 2018 /PRNewswire/ — Fosun International Limited (SEHK stock code: 00656) and its subsidiaries ("Fosun" or the "Group") today announced its financial results for the year ending 31 December, 2017.
Mr Guo Guangchang, Chairman of Fosun International said, ‘2017 marked our 25th anniversary and our strongest financial year ever. Over these years, being a global company with Chinese roots, we have enhanced our core industrial operations, focused our strategy on building family-focused ecosystems and hired some of the very best global talent to execute our customer-to-maker (C2M) strategy. Today, I am very proud to share our record financial results and pleased to announce that the Board has recommended an increase in our dividend this year to HK$0.35 per share.
‘Our strong results are a combination of improving core operations and disciplined asset allocation. In 2017, we saw significant growth in core operations including Fosun Pharma, Club Med, Yuyuan, Millennium BCP and Nanjing Nangang. Furthermore, we executed our C2M strategy and maintained a disciplined asset allocation strategy, including investments in over 100 new exciting projects balanced with over 50 accretive divestments and 10 successful IPOs.
‘We are fully confident that through Fosun’s core operations, innovative technologies and ONE Fosun ecosystem spanning over 35 million families, our C2M strategy will help further improve customer experiences while improving the products they have access to. Our ultimate vision is therefore to significantly enhance the value of any company or product that enters our C2M ecosystem, such as through our newly launched Youle customer loyalty program ("youlè"), helping them gain insights into customers’ behavior through data analysis and greater access to customers while improving their products and services. We believe youlè will become a ‘helping hand’ in enhancing products and service satisfaction for ONE Fosun customers.
‘Finally, I want to thank our shareholders for your continuous support over the past quarter century. Fosun has built its success with stability and consistency and I am proud to announce that over the past five years, we have managed to grow our profit on average by nearly 30% every year. I am however, even more excited about what the future holds, as we continue to pursue our C2M strategy, to grow our core operations, to develop our pioneering technology and innovation platform so we can become not just a global company with Chinese roots, but a global operator of world-class products and services. 2017 was a great year, but the future will be even better.’
Board recommends 67% increase in dividend to HK$0.35/share following strong financial year
In 2017, Gross Revenue reached RMB 88.03 billion, up 19% from the previous year. Net profit attributable to the owners of the parent stood at a record RMB 13.16 billion, up 28% from the previous year. Earnings per share is RMB 1.53 (HK$1.77), an increase of 29% from the previous year and represents a 5-year CAGR of 21%.
Adjusted Net Asset Value (Adj. NAV) as at 31 December, 2017 was HK$33.28 per share, an increase of 28% from HK$26.01 as at 31 December, 2016. Adjusted NAV includes market value of listed investments held by the Group, fair value of unlisted investments utilizing recent transactions or comparable companies method minus the Group’s net debt.
Over the past five years, the Group has focused on strengthening its balance sheet and continued to optimize its financial position. At the end of 2017, the Group’s net gearing ratio had optimized to 49.7% from 86.0% in 2013. The Group’s average cost of funding was 4.72% and in January 2018, Moody’s acknowledged Fosun’s improvements by raising its rating to Ba2 Stable from Ba3 Positive.
In line with the strong financial results the Company achieved in 2017, the Board recommends the dividend per share for 2017 to be increased to HK$0.35, up 67% from 2016.
Stronger core operations, turnaround success and disciplined asset allocation
The Group saw stronger growth from its core operations and achieved successes in several turnaround companies such as Club Med, Tom Tailor, H&A and Fidelidade. The Group has been increasingly disciplined in its asset allocation by balancing capital investments with capital realization. In 2017, Fosun executed over 100 investments matched with over 50 divestments, including the disposal of Ironshore to Liberty Mutual for US$2.94 billion. The Group also took part in 10 IPOs in global exchanges. Other major highlights in the Group’s three ecosystems include:
The health ecosystem accounting for 10.4% of net profit attributable to the owners of the parent saw year on year growth of 32.1%, the fastest growing ecosystem.
The Group continued to make progress in the innovation and globalization of world-class health services and products, including approved IND applications for 6 new products of 11 indications, among which 3 projects entered into the 3rd stage of clinical tests. In 2017, Fosun Kite initiated the manufacturing of Kite Pharma’s FDA-approved CAR-T cancer treatment in China. The Company also developed its own proprietary health technology platforms, achieving new records in cancer diagnostic imaging by Fosun’s FONOVA and the creation of a new AI medical imaging company called Proxima.
The Company announced over 40 health investments including the acquisition of stakes in leading French health food company St Hubert through the Group and the acquisition of controlling stakes in India’s largest generics company Gland Pharma through Fosun Pharma.
In 2017, the happiness ecosystem accounted for 3.8% of net profit attributable to the owners of the parent and saw year on year growth of 6.1%. Club Med and Yuyuan recorded a significant profit growth as operations improved.
In Club Med, new village openings include Grand Massif Samoëns Morillon in France, Tomamu Hokkaido in Japan and a new concept brand in China, Joyview with two new resorts opening in Anji and Beidaihe in Jan 2018.
In fashion, German fashion house Tom Tailor successfully turned around its business and announced net income increasing to EUR 17.1 million in 2017. At the beginning of 2018, the Group also announced the acquisition of a controlling stake in French fashion house Lanvin and investment into Austrian fashion house Wolford. Both deals are pending completion.
The Yuyuan restructuring has been conditionally approved by CSRC, which upon completion will increase the Group’s stake in Yuyuan from 26.45% to 68.25%.
At the Company’s Atlantis resort in Sanya, construction completed during the year. The Atlantis hotel soft launched in February 2018 and will officially open in the first half of 2018.
Other key investments include a HK$6.6 billion investment by the Group and a fund managed by it into Tsingtao Brewery for a 17.99% stake in December 2017. The transaction was completed in March 2018.
The Group divides the wealth ecosystem into three segments: insurance and finance, investment and hive property. In terms of net profit attributable to the owners of the parent, insurance and finance accounted for RM3.90 billion, investment accounted for RMB5.22 billion and hive property accounted for RMB2.17 billion. This represented year on year growth of 59.9%, 22.9% and 4.6% respectively.
Benefiting from the "insurance + investment" strategy, the Portuguese insurer, Fidelidade also reported a total investment yield at 3.6%, which is above market average. Millennium BCP announced a recovery from a loss in the previous year to a net profit of EUR186 million. It has also improved its overall business position with a total of 5.4 million active customers, representing an increase of more than 6% over the previous year, and 2.5 million digital customers, representing an increase of 16% from the previous years.
Financial Results Summary
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(1)Note:Adjusted NAV includes market value of listed investments held by the Group, fair value of unlisted investments utilizing recent transactions or comparable companies method minus the Group’s net debt.
2017 Financial Results Meeting and Presentation
Full details of the Group’s 2017 financial results can be found on the company’s website www.fosun.com and on the Hong Kong Stock Exchange.
The Group’s management will present its key financial results and strategic outlook in Hong Kong on 28 March, 2018 at 10am. A live-video feed of the presentation is available via the following link (ENGLISH) / (CHINESE). A copy of the latest Investor Relations presentation can also be downloaded from the website.
English live-video link: http://e.vhall.com/745631824
Chinese live-video link: http://e.vhall.com/978456019
Fosun International Limited is a family focused multinational company that has been listed on the main board of the Hong Kong Stock Exchange (00656:HK) since 2007. Founded in 1992, Fosun’s total assets exceed RMB500 billion (c.US$75 billion). With its roots in China, and through technology and innovation, Fosun’s mission is to create customer-to-maker (C2M) ecosystems in health, happiness and wealth, providing high-quality products and services for families around the world.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements. All statements, other than statements of historical facts, that address activities, events or developments that Fosun International Limited (the "Company") expects or anticipates will or may occur in the future (including but not limited to projections, targets, estimates and business plans) are forward-looking statements. The Company’s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, and other risks and factors beyond our control. In addition, the Company makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements. The financial figures in this press release are calculated using the average exchange rate for the reporting period January 2017 to December 2017 (USD/CNY= 6.7423 HKD/CNY= 0.8650), and period-end exchange rate as of 2017/12/31 (USD/CNY=6.5342 HKD/CNY=0.8359), unless otherwise stated.