Fosun Group

Fosun targets health care after 21.4pc jump in first-half profit

Chairman Guo Guangchang criticises China’s P2P industry as ‘by and large a fraud’

PUBLISHED : Wednesday, 31 August, 2016, 11:52am
UPDATED : Wednesday, 31 August, 2016, 11:28pm

Guo Guangchang, known as China’s Warren Buffett, said on Wednesday that his conglomerate Fosun International is putting health care higher up on its business agenda while slamming the country’s burgeoning peer-to-peer lending industry as “by and large a fraud”.

“My recent trip to the US reinforced my belief that one should strive to live longer,” he told investors and the press in a post-earnings question-and-answer session in Hong Kong. “Since the first half [of the year], we have placed a particular emphasis on health care as we aim to build an integrated system in China.”

Fosun, China’s largest non-state-owned conglomerate, posted a 21.4 per cent jump in first-half net profit to 4.39 billion yuan as its investments in medical and tourism-related businesses such as Club Méditerranée bore fruit.

Guo, Fosun’s co-founder and chairman and also China’s 19th-wealthiest person this year, according to Forbes, has taken the business on a worldwide shopping spree of late, pouring money in assets including US insurance broker Ironshore, Indian drugmaker Gland Pharma, French resort operator Club Med and English football club Wolverhampton Wanderers.

Fosun has roughly finished its investments in developed markets, and is now turning to emerging markets, as indicated in our acquisitions of assets in Russia and Brazil
Guo Guangchang, chairman, Fosun

Wednesday’s briefing, where participants were required to write their questions on a piece of paper should they intend to raise any to the management, has been Guo’s second high-profile appearance in the city since he briefly vanished last year.

Guo went missing for four days in December while assisting the Chinese authorities in a judicial probe, which triggered a record plunge in Fosun’s shares in Hong Kong.

The self-fashioned Buffett disciple also criticised China’s P2P industry when asked if Fosun had any investments in the sector.

“I’ve never been optimistic about P2P ... Most, if not all, of them are a fraud,” he said, adding that their most serious flaw was their failure to price in risks.

His remarks came only days China’s banking regulators imposed a cap on P2P loans in a move to curb systemic risks posed by the proliferating shadow banking sector.

Guo said he viewed emerging markets as where juicy returns rested as Fosun was about to call an end to its buying spree in developed nations.

“Fosun has roughly finished its investments in developed markets and is now turning to emerging markets, as indicated in our acquisitions of assets in Russia and Brazil,” he said.

He believed the downside risks from the depreciation of some emerging-market currencies, which added inflationary pressure, and plunging commodity prices “are about to subside”.

This year, Fosun ramped up its finance, health and lifestyle operations, which now account for a combined 80 per cent of its assets, up from 75 per cent a year earlier. These businesses raked in 5.07 billion yuan in net profit in the first half, an 18.3 per cent surge year on year.

“Fosun is now setting its sights particularly on sectors such as health care, leisure and tourism that are better positioned to cater to China’s middle-class consumers,” said Sam Chi-yung, a senior strategist with South China Financial Holdings, ahead of the earnings announcement.

In July alone, the company agreed to buy Brazilian fund manager Rio Bravo Investimentos and English football club Wolverhampton in a £45 million deal. It also revealed an interest in taking a major stake in Portuguese lender BCP.

Its drugmaker offshoot, Fosun Pharma, said in the same month that it planned to take over Gland Pharma for up to US$1.26 billion in the country’s largest acquisition.