Fosun International (HKG: 0656) has recently received bullish recommendations from multiple investment banks after announcing its 2023 annual results. On 12 April 2024, Goldman Sachs (GS) issued a research report stating that Fosun’s industrial operation profit reached RMB4.9 billion, up by approximately 20% year-on-year compared to 2022; profit attributable to shareholders of the parent company reached RMB1.38 billion. Goldman Sachs gave Fosun International a target price of HK$4.90, representing an upside of over 13%. Fosun International’s businesses in Health, Happiness and Wealth segments are expected to keep on growing steadily in the future. Goldman Sachs pointed out that although Fosun Pharma was affected by the decline in Covid-related business revenue last year, it expected a sales growth recovery in 2024; Fosun Tourism Group’s attributable profit in 2024 is expected to further improve to RMB321 million on better performance from resort operation and tourism services business; it further pointed out that the insurance business posted a net profit of RMB790 million and the profit from BCP is expected to remain strong in 2024 on elevated interest rate spread.
In its research report published at the end of March, UBS was also optimistic about Fosun International’s strategy of focusing on its core businesses, pointing out that in the future Fosun will continue to execute its disposal plans of exiting non-core assets and concentrate resources on sustainable, predictable and stable core businesses, striving to achieve more efficient resource allocation and profit growth in those areas. UBS believed that with the execution of these disposal plans, Fosun International’s profitability is expected to further improve, based on which it gave a target price of HK$6.30. With the momentum in China’s economy pick up, the execution of streamlining operations and the increasing dividends to shareholders in the future, the valuation of Fosun International will further improve.
Citi Research also issued a report in which it expressed its optimistic views about Fosun International’s market outlook. Citi Research believed that Fosun International’s profitability in 2023 was attributable to an increase in operating profit from the insurance business, a 19.2% year-on-year growth in Club Med’s business volume that exceeded expectations, and better performance in the Asset Management Division which was driven by improvement in the Group’s asset portfolio profitability. The report pointed out that Fosun will continue to look for appropriate opportunities to sell non-core and non-strategic assets and promote future development through synergies amongst subsidiaries. Citi Research gave Fosun a “Buy” rating, with a target price of HK$ 6.30, an expected increase of approximately 57%.
