Fosun posts record 10.3b yuan profit, expects impact from CEO departure
Fosun International said its latest management reshuffle will have a short-term impact on the company but added that it will grow stronger longer term as it focuses on new technologies and emerging markets.
The largest private conglomerate in China said on Tuesday that its co-founder and chief executive Liang Xinjun had resigned due to health issues and senior vice-president Ding Guoqi stepped down for family reasons.
“Their departure has an impact on Fosun in the short run,” billionaire Guo Guangchang, chairman and co-founder of Fosun, said at a press conference on Wednesday.
“But such unexpected events force us to think more and give opportunities to young people. Our team is becoming stronger.”
Wang Qunbin, another Fosun co-founder, has taken over as chief executive officer.
The insurance-to-tourism conglomerate posted a record 10.3 billion yuan (US$1.5 billion) in net profit last year, up 27.7 per cent from 2015, boosted by solid growth in its financial, health and leisure businesses.
Its total asset value increased 19.5 per cent to 486.8 billion yuan, while total debts grew 9.7 per cent to 126.3 billion yuan.
Shares of Fosun closed 2.1 per cent higher at HK$11.7 on Wednesday following the announcement.
Fosun continued its global deal making in 2016 by agreeing to buy Indian drugmaker Gland Pharma and English football club Wolverhampton Wanderers, among other offshore assets it purchased.
Guo said the company will target emerging markets including India, Russia, Brazil and Southeastern Asia, but he denied Fosun has stopped investing in the European property market due to geopolitical concerns.
“We have a long-term commitment in Europe,” he said. “We need to think about some uncertain factors at the moment, but we will continue to invest there.”
The chairman added that China’s tighter capital controls are advantageous for Fosun which has more overseas fund-raising channels than other Chinese acquirers.
“It poses challenges for us, but also opportunities,” said chief financial officer Robin Wang. “With the restrictions, our competitors are finding it harder to make [overseas] investments.”
Fosun mainly uses capital from its Hong Kong-listed shares, US dollar bonds and overseas insurance assets to make foreign acquisitions, according to Guo.
Guo also pledged to boost investment at home to cash in on growing consumer demand and to spend more on new technologies such as artificial intelligence, big data and cloud computing.
Last year the conglomerate slowed its debt-fuelled buying in efforts to improve its credit profile.
In late 2016, Fosun agreed to sell its insurance unit Ironshore to US-based Liberty Mutual Group for nearly US$3 billion. It also announced plans to sell a 50 per cent stake in its Shanghai Bund Real Estate unit for 5.3 billion yuan.
The deals triggered a ratings upgrade by global credit agency Moody’s Investor Service, which in December revised the company’s outlook to positive from stable.
Fosun’s debt-to-capital ratio dropped to 50.7 per cent from 53.6 per cent in 2015. Average financing costs decreased from 5 per cent per year in 2015 to 4.5 per cent.
The company plans to offer a final dividend of 21 HK cents per share.