Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  Fosun International Limited    0656   HK0656038673

FOSUN INTERNATIONAL LIMITED

(0656)
  Report  
SummaryChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsOfficial PublicationsSector newsAnalyst Recommendations

Thomas Cook enlists China's Fosun to salvage oldest travel firm

share with twitter share with LinkedIn share with facebook
share via e-mail
0
07/12/2019 | 10:12am EDT
Illustration photo of a Thomas Cook logo

HONG KONG/LONDON (Reuters) - Thomas Cook is negotiating a 750 million pound ($941 million) rescue that will give Fosun Tourism, its biggest investor, control of the indebted British group's package-tour business, in a blow to other shareholders.

The company's shares fell more than 45% to their lowest-ever level on news of the proposal, which would give Club Med owner Fosun a minority stake in Thomas Cook's airline business.

"This comes at a cost, with a significant dilution for existing shareholders," Chief Executive Peter Fankhauser said, adding it was a "pragmatic and responsible solution to secure the future of the Thomas Cook business and brand".

Fosun International, co-founded by billionaire Guo Guangchang and one of China's biggest conglomerates, has spent billions of dollars over the past decade on healthcare, tourism and fashion companies in the United States and Europe.

"We are committed investors, with a proven track record of turning around iconic brands including Club Med and Wolverhampton Wanderers FC," Hong Kong-listed Fosun, which already owns an 18% stake in Thomas Cook, told Reuters.

Thomas Cook said that the cash from the proposed deal, which would mark one of the most significant purchases of a British company by a Chinese group in years, would be enough for it to trade over the winter season and give it flexibility to invest.

The world's oldest travel company, which has been hit by fading demand for its package holidays, high debt and a hot 2018 summer in Europe, has also been weighing approaches for its airline business and Nordic operations.

Fankhauser said the sale of the airline business was paused while Thomas Cook focused on the refinancing, adding it was "too early to speculate on what will happen on the airline review".

The proposal, which is subject to due diligence and further talks, will see a significant amount of Thomas Cook's debt, which Refinitiv data shows stands at 1.8 billion pounds, converted into equity, almost wiping out existing shareholders.

Fankhauser said the proposed deal with Fosun and lenders would put the firm on a "totally different financial footing" with "massively reduced debt levels".

Analysts said Thomas Cook's predicament showed how businesses needed to be careful with their balance sheets, particularly in sectors with unpredictable costs and earnings.

Fankhauser said the group had paid 1.2 billion pounds in interest and refinancing costs on around 1.6 billion pounds of debt since 2012. "Every year we have to sell 3 million holidays before we have our interest burden paid," he told reporters.

Other tour operators are also facing challenges and in May Anglo-German rival TUI reported deeper first-half losses due to airline overcapacity for Spain and the grounding of its Boeing 737 MAX planes.

Shares in Thomas Cook were trading down 46% at 7.1 pence on Friday, valuing its equity at 109 million pounds ($137 million).

The 178-year-old company had seen its market value drop from around $4 billion when it made its debut on the London market in June 2007, as weak demand led to increased promotional activity and earlier discounting than usual.

DEAL DETAILS

The British holiday company's tour business had 11 million customers in 2018 and produced 7.4 billion pounds in revenue. Its higher-margin airline business - which includes German holiday carrier Condor - had revenue of 3.5 billion pounds.

Thomas Cook said summer bookings in its tour operations business were down 9%, while those at its airline business are down 3%, likely leading to operating profit in the second half of the year coming in lower than the year-ago period.

The proposal comes a month after it said it was in talks with Fosun following a preliminary approach.

Tourism is viewed as key to China's shift towards a more consumption-driven economic model from an investment and export-led one, but buyers like HNA Group and Fosun have faced scrutiny from Beijing for debt-fuelled, big-ticket foreign deals.

Fosun said earlier this year that it will adopt an asset-light strategy and run under management contracts the Club Med resorts it plans to launch in China and other countries.

($1 = 0.7977 pounds)

(Reporting by Donny Kwok in Hong Kong and Pushkala Aripaka in Bengaluru; Additional reporting by Philip George and Sathvik N in Bengaluru; Paul Sandle and Georgina Prodhan in London; Writing by Sayantani Ghosh; Editing by Christopher Cushing, Stephen Coates and Alexander Smith)

By Donny Kwok and Paul Sandle

Stocks mentioned in the article
ChangeLast1st jan.
FOSUN INTERNATIONAL LIMITED 1.32% 10.74 End-of-day quote.-6.12%
FOSUN TOURISM GROUP End-of-day quote.
THOMAS COOK GROUP -1.46% 4.627 Delayed Quote.-84.67%
TUI 3.69% 9.278 Delayed Quote.-27.32%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on FOSUN INTERNATIONAL LIMITE
07/16FOSUN INTERNATIONAL : Billion euro hole found in jeweller Folli's 2017 sales
RE
07/12Thomas Cook enlists China's Fosun to salvage oldest travel firm
RE
07/12THOMAS COOK : in rescue talks with Chinese investors
AQ
07/12Thomas Cook rescue plan to give China's Fosun control of tour business
RE
07/12FOSUN TOURISM : Thomas Cook close to rescue deal with Fosun
AQ
07/03FOSUN INTERNATIONAL : Launches Fourth Edition of Its Acceleration Program "Prote..
AQ
07/03FOSUN : Launches Fourth Edition of Its Acceleration Program "Protechting"
PR
07/01FOSUN INTERNATIONAL : Talk With the New Trend
PU
06/20CLUB MED : splits APAC operation into two specialised business units
AQ
06/18Fosun Eyeing Move for Bayer Animal-Health Business -Bloomberg
DJ
More news
Financials (CNY)
Sales 2019 118 B
EBIT 2019 26 126 M
Net income 2019 15 115 M
Debt 2019 83 507 M
Yield 2019 3,83%
P/E ratio 2019 5,29x
P/E ratio 2020 4,91x
EV / Sales2019 1,40x
EV / Sales2020 1,31x
Capitalization 80 862 M
Chart FOSUN INTERNATIONAL LIMITED
Duration : Period :
Fosun International Limited Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends FOSUN INTERNATIONAL LIMITE
Short TermMid-TermLong Term
TrendsBullishBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 11
Average target price 14,93  CNY
Last Close Price 9,47  CNY
Spread / Highest target 80,8%
Spread / Average Target 57,8%
Spread / Lowest Target 44,5%
EPS Revisions
Managers
NameTitle
Qun Bin Wang Chief Executive Officer & Executive Director
Qi Yu Chen Co-President & Executive Director
Xiao Liang Xu Co-President & Executive Director
Guang Chang Guo Chairman
Can Wang Chief Financial Officer, Executive Director & SVP
Sector and Competitors
1st jan.Capitalization (M$)
FOSUN INTERNATIONAL LIMITED-6.12%11 754
ALLIANZ SE23.16%100 988
CHUBB LTD14.79%67 893
ZURICH INSURANCE GROUP19.07%52 321
MARSH & MCLENNAN COMPANIES26.14%51 441
AMERICAN INTERNATIONAL GROUP INC41.94%48 654