Fosun Group

China’s Fosun says future expansion will be in line with new government rules

Company says it has no sense that it is under any regulatory scrutiny after Beijing imposed new restrictions on overseas investments

PUBLISHED : Thursday, 31 August, 2017, 3:27pm
UPDATED : Thursday, 31 August, 2017, 10:48pm

Fosun International, the Chinese conglomerate which owns holiday firms Club Med and Thomas Cook Group, has played down the impact of Beijing’s latest controls on overseas deal making, saying that it would continue its expansion in its core businesses such as health care, technology and innovation.

Beijing has imposed a series of measures and policies recently to tighten up on the movement of capital out of the country, and has begun subjecting companies that have made significant overseas investments to regulatory scrutiny. Fosun, one of the more aggressive of the mainland’s deal makers, said it has not felt any repercussions from the new rules.

“We have not sensed that we are under investigation, we have not been informed that we are being investigated by the regulators,” chief executive Wang Qunbin told a media conference the day after the company announced first-half results.

“It is normal practice for Chinese regulators to conduct regular checks on mainland enterprises,” Wang said.

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Fosun reported a record 5.86 billion yuan (US$888 million) net profit for the first half of the year, an increase of 33.6 per cent from the same period last year. Turnover rose 11.6 per cent to 36.27 billion yuan, with an adjusted book value per share of HK$30.23. It saw an improved balance sheet, even after recent expansion, with net gearing falling from 60.3 per cent at the end of last year to 47.4 per cent as of June 30.

Its shares closed up 7.91 per cent at HK$13.64 in morning trade on Thursday.

Wang said the company’s investments are in line with regulations, and it would continue its expansion in the core health care, tourism and entertainment, wealth-related and technology businesses.

“We support the government’s guidelines,” he said.

The guidelines, announced on August 18 by the State Council, require Chinese investors to get special approval from Beijing to put their money into overseas property, sports clubs and hotels. The film industry and other forms of entertainment were also on the restricted list, as were applications by companies to set up overseas equity funds or investment vehicles not tied to specific projects.

They came two months after authorities launched a campaign to curb what they called “irrational” overseas investment, which saw other aggressive deal makers including Anbang Insurance Group, Dalian Wanda Group and HNA Group, come under scrutiny.

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Chen Qiyu, executive director and chairman of Fosun Pharmaceutical, the group’s other listed unit besides Fosun International, hinted that the group as a whole was in no rush to offload assets, saying that if any overseas businesses did not meet expectations, the company would try to improve them before considering any disposals.