Fosun International says annual net profit climbs 17.3 per cent, pledges more investment in Brazil, Russia and India

PUBLISHED : Thursday, 31 March, 2016, 8:01pm
UPDATED : Thursday, 31 March, 2016, 8:01pm

Fosun International, the Chinese mainland based conglomerate chaired by billionaire Guo Guangchang, reported 2015 net profit grew 17.3 per cent on year, and pledged this year to continue expanding its global footprint to include new investments in Brazil, Russia and India.

Guo, founder and chairman of Fosun, discussed the results during a press conference in Hong Kong on Thursday, his first since he went out of contact in early December and later confirmed by his company to have been “assisting investigation” by Chinese authorities.

No details of the investigation have been made public.

“Our investment had been mainly focused in Europe and the US in the past few years, while we believe opportunities are emerging in Brazil, Russia and India, with their weakening currency rates,” he said.

“We will also look for acquisition targets which enable synergies with existing insurance companies and whose products can supplement ours,” he said.

Fosun last year acquired diversified assets including US-based insurers, a UK-based property manager and food producer, and a Japanese resort operator.

Hong Hao, managing director of Bocom International, said Fosun had been successful in acquiring good-quality insurers, which provided long-term investable capital with low cost.

“Its challenge is to realise profit of its investments quickly, especially some acquisition had been made with high premiums,” he said.

Fosun said net profit totalled 8.04 billion yuan (HK$9.66 billion), while revenue increased by 27.6 per cent to 78.80 billion yuan. The company’s net gearing ratio decreased to 69.3 per cent from 73.3 per cent in 2014. The average funding cost declined to 4.97 per cent from 5.61 per cent in 2014. The company declared a dividend of 17 HK cents per share.

Fosun’s shares closed 1.6 per cent lower at HK$11.04 on Thursday following the annual results release.

A CEO of a New York-listed financial company who attended the results announcement and asked to remain anonymous, expressed some doubts about the company’s strategy.

“Its profit margin seems too low. Fosun’s investments are too dispersed and it has yet to convince me with strong earnings outlook,” he said.

The resources segment under Fosun saw a decrease in profit in 2015, mainly due to a fall in Hainan Mining’s profit and the loss suffered by ROC, the Australia based upstream oil and gas company acquired by Fosun last January.

In 2015, ROC realised recorded net loss of US$ 31.3 million on revenue of US$130.5 million, .

“It seems we made the move into the oil sector too early. But personally, I believe commodities will offer good investment opportunities this year,” said Guo.