HONG KONG - Fosun International Limited (HKEX stock code: 00656, together with its subsidiaries 'Fosun' or the 'Group') today announced its financial results for the year ended 31 December 2019 (the 'Reporting Period').
Total revenue increased by 31% year-on-year (y-o-y) to RMB142.98 billion.
Profit attributable to owners of the parent increased by 10% y-o-y to RMB14.80 billion, maintaining growth for 8 consecutive years and hitting a new record high.
The Board recommends a final dividend of HKD0.27 per share. Together with the interim dividend, the total dividend for the year was HKD0.40 per share, representing a dividend payout ratio of 20.3%. From 2015 to 2019, compound growth rate of the dividend per share reached 24%.
Continuously enhance core business competitiveness with strategic focus
During the 28 years of development, Fosun experienced the industrial entrepreneurship stage from 1992 to 2010, which was dominated by pharmaceutical, real estate and manufacturing industries, followed by the global consumption industry deployment stage from 2010 to 2019, which focused on the upgrading of Chinese consumption. In the second half of 2019, Fosun formally defined the new positioning of 'innovation-driven consumer group' and put forward the 'Focus' strategy for the first time in early 2020. It indicated that Fosun has basically completed the preliminary industrial and regional expansion deployment. The next strategic focus will be on strengthening Fosun's existing industries and regional operations, and continue to enhance the competitiveness and operational efficiency of its industry operations.
Reviewing the business development in 2019, in the Health business, Fosun Pharma persisted in innovative and international development. With continuous effort in optimizing its pharmaceutical R&D system that integrates biosimilars and innovative drugs, Fosun Pharma has established numerous platforms across the world which focus on research and development of small-molecule innovative medicine, high-value generic medicine, biological medicine and cell therapy. In 2019, the revenue of Fosun Pharma was RMB28.39 billion, increased by 15% y-o-y, accounting for 20% of the Group's total revenue. Profit attributable to the owners of the parent was RMB3.32 billion, increased by 23% y-o-y. Investment in research and development (R&D) amounted to RMB3.46 billion, increased by 38% y-o-y. In addition, based on Fosun's Health ecosystem and leveraged its intelligent medical/internet technology capabilities, Fosun has established various ecological products including Medical Care + Insurance, Senior Care + Insurance, Health products + Insurance, etc.
In the Happiness business, Yuyuan upheld the '1+1+1' development strategy of 'happy consumption industry + offline industrial landmark + online membership platform'. The revenue was RMB42.91 billion in 2019, increased by 26% y-o-y, accounting for 30% of the Group's total revenue. Net profit attributable to owners of the parent was RMB3.21 billion, representing an increase of 6%. Its operational efficiency was further enhanced, with its comprehensive gross profit margin reached 21.8%, representing an increase of 0.7 percentage point. The brand refresh of jewelry and fashion business produced great results, with the revenue up approximately 23% y-o-y, the number of sales outlets increased by 669 to 2,759 by the end of the year.
Fosun Tourism Group (FTG) further consolidated its leading position in the resort industry and enhanced its FOLIDAY ecosystem in 2019. Revenue of FTG in 2019 was RMB17.34 billion, increased by 7% y-o-y, accounting for 12% of the Group's total revenue. The net profit reached RMB609 million, almost doubled in 2019. Club Med opened four new resorts, steadily improved the performance. The business volume of Atlantis Sanya recorded a rapid growth of 74.2% y-o-y to RMB1.31 billion, with the adjusted EBITDA ratio reached 43%, and the number of visiting customers up by 62.5% as compared to the same period last year. The construction of the resorts developed by FTG, namely Lijiang FOLIDAY Town and Taicang FOLIDAY Town will be completed in phases by the end of 2020 or the beginning of 2021.
Lastly, in the Wealth business, the revenue of Fosun Insurance Portugal surged by 40% y-o-y in 2019. While being one of the leaders in the Portuguese market, it actively expanded its international business, of which the international business revenue outside of Portugal surged by 259% y-o-y. It also successfully tapped into Bolivia and Paraguay markets through the acquisition of La Positiva, a leading player in the Peruvian insurance market.
With the profound development of Fosun's industry operations, the income distribution of the Group presented a centralized trend. In 2019, the revenue from Yuyuan, Fosun Pharma, Fosun Insurance Portugal, FTG and Peak Reinsurance accounted for 81% of the total revenue with a y-o-y average increase of 22%, forming the core driving forces of the industry operations growth for Fosun International.
In view of the asset allocation, fundamental and high-growth assets accounted for approximately 80% of the Group's total net asset value (NAV). Of which, the fundamental asset is rather safe and solid, contributing to a sustainable profit and cash-flow. The high-growth asset has been continuing to grow rapidly, contributing to the resilience of the results performance. The remaining 20% of NAV are mainly innovation-driven assets consisting of Fosun United Health Insurance, AItrox, Dongjia and MYbank, etc. They are one of the main focuses of Fosun's future development.
Meanwhile, with a view to better responding to the growing uncertainties over the global economy, Fosun will vigorously enhance the quality of its industry operations and maintain a balanced investment portfolio, optimize the balance sheet and implement the 'Focus' strategy we proposed early this year.
Guo Guangchang, Chairman of Fosun International, said, 'Over the past decade, Fosun carried out a number of expansions and explorations in different regions, investment areas and industries. Now, we will enter into a new phase of development, which is the optimization of our asset allocation and focusing on core industries, in order to establish Fosun as the top-notch enterprise that achieves industry-leading positions in all of our core businesses.'
Anti-epidemic operations stimulated the wartime morale of the organization
Grasping global industrial opportunities in the post-outbreak era
On the Chinese New Year eve of 2020, COVID-19 pneumonia broke out unexpectedly. At this critical moment, Fosun immediately acted globally to fight the epidemic in the early stage of the outbreak, utilizing its global resources advantage to not only support China on the fight against the outbreak, but also the world proactively when the epidemic has spread globally. As at 31 March, Fosun deployed 2.523 million medical supplies including masks, protective suits, nucleic acid detection kits, etc., to overseas countries with rapid epidemic outbreak, including Italy, the United States, France, Germany, the United Kingdom, Portugal, Japan, South Korea and India, etc.
In addition to the allocation and delivery of medical supplies, various subordinates of Fosun have also joined the fight against the epidemic with their professional capabilities. Medical staff from 27 hospitals under Fosun, including Wuhan Jihe Hospital, stood on the frontline during Chinese New Year holiday, recording zero infection from medical workers and zero death among patients while 515 recovered patients discharged. Fosun Pharma received approval from BioNTech SE over the rights to exclusively develop and commercialize the vaccine for novel coronavirus in China based on its specialized mRNA technology platform. The nucleic acid detection kit of Long March Medical Science of Fosun Pharma was approved by European Union and China's National Medical Products Administration. Foshan Chancheng Central Hospital offered online voluntary medical consultation while fighting against the epidemic. Others products created by our segments dedicated to fighting against the virus include the negative pressure ambulances produced by Beijing Beiling, Breas' ventilators, the logistics supply chain system deployed by Stater, etc.
Guo Guangchang, Chairman of Fosun International, said, 'Fosun's undertaking of global responsibility and its global capability demonstrated in the battle against the epidemic have been highly recognized by the society. At the same time, our operations against the epidemic has also served as a good training opportunity for our organization, allowing us to gain a better understanding of our advantages in globalization, organization and resource integration, and showing us the extent of strength Fosun is able to unlock under the wartime mechanism.'
The Company completed the organizational evolution last month. The new core management team will put greater emphasis on the strategic growth drivers, and will also help strengthen the Company's overall industry operational capability. The Company has also launched the job rotation mechanism for the senior executives for the first time, with a view to building an elite management team directed by Fosun's cultural values, equipped with profound industrial capability and global vision, and always maintaining wartime morale to stay alert to work.'
Now, with the domestic crisis gradually subsiding and the outbreak of overseas epidemic, Fosun's future strategies will be divided into two parts: at home and abroad. In China, as the community gradually returns to normal, and the consumption momentum starts to accelerate, the Company will make every effort to quickly bring the domestic business back to the right track, so as to seize the opportunity of consumption rebound after the epidemic. On the other hand, as the outbreak has brought changes to people's lifestyle and consumption habits, the Company will take advantage of the situation to propose three strategic directions, namely 'family', 'healthcare' and 'online', aiming to turn crisis into opportunities and speed up the transformation and upgrading of its products in terms of marketing, innovation, supply chain and digitalization.
For overseas business, on the one hand, the Company will continue to fulfill its global responsibility to protect its overseas employees and customers, while leveraging its global supply chain to support the world to fight against the epidemic. On the other hand, the Company's core strategies underpinned by twin drivers of 'industry operations + industrial investment' and 'Glocalization (Global + Local)' will remain unchanged. The Company will leverage the diversified financing channels, ample cash reserves and outstanding global investment team to capture the value investing opportunities amid the cycle of asset price downturn.
It is worth mentioning that during the epidemic, from January to March 2020, Fosun and its subsidiaries successfully issued bonds of RMB15.46 billion in the market, with an average financing cost (excluding FTG's CMBS) of 3.87%, which provided sufficient financial support for dealing with the epidemic.
Guo Guangchang, Chairman of Fosun International, said, 'During the 28 years of operation since its establishment, Fosun has always stayed vigilant in peacetime and made stable yet bold progress for sustainable growth. Facing the global crisis, we believe that Fosun can deal with all possible issues calmly and even turn crisis into opportunity by stepping up innovations, fostering evolution and enhancing our capability. As an enterprise with global vision, Fosun will be able to leverage its worldwide resources to identify more opportunities in this crisis. It will also actively pursue asset optimization and integration of its businesses, with a view to developing into a world-class consumer group and creating more values for shareholders.'
Financial Highlights Review
In 2019, annual results of the Group hit the new record high. Revenue reached RMB142.98 billion, representing a y-o-y increase of 31%, of which 55% contributed by Chinese Mainland and 45% contributed by overseas countries and regions. Profit attributable to owners of the parent reached RMB14.8 billion, representing a y-o-y increase of 10%. Profit attributable to owners of the parent from Happiness business recorded a significant increase of 24% as compared to the previous year. Industrial operating profit was RMB11.13 billion, up by 21% y-o-y. Over the past 8 years, the compound annual growth rate of profit attributable to owners of the parent reached 23% and that of the Group's book value per share was 16%.
The revenue of the top 5 enterprises accounted for 81% of the total revenue with an average y-o-y increase of 22%. Among which, Yuyuan (30% of total revenue) rose 26% y-o-y, Fosun Pharma (20% of total revenue) increased 15% y-o-y, Fosun Insurance Portugal (13% of total revenue) up 40% y-o-y, FTG (12% of total revenue) increased 7% y-o-y, and Peak Reinsurance (6% of total revenue) up 31% y-o-y.
As at the end of the reporting period, the ratio of total debt to total capital was 53.5%, compared with 53.7% as of 31 December 2018. During the Reporting Period, the Group's average cost of debt was 5.06%.
As at the end of the Reporting Period, the Group's ROE was 12.8%, flat compared to that in 2018. The average ROE was 13.3% from 2014 to 2019.
In light of strong financial results for the year of 2019, the Board resolved to propose a final dividend of HKD0.27 per ordinary share for the year ended 31 December 2019. With interim dividend, the total dividend of the year was HKD0.40 per share, representing a dividend payout ratio of 20.3%. Calculation based on the share price as of 30 March 2020, dividend yield reached 4.58%.
Fosun was founded in 1992. Fosun International Limited is an innovation-driven consumer group that has been listed on the main board of the Hong Kong Stock Exchange (00656.HK) since 2007, with total assets over RMB715.7 billion (c.US$102.6 billion) as of 31 December 2019 and total revenue of RMB143.0 billion (c.US$20.7 billion) in 2019. Fosun's mission is to provide high-quality products and services for families around the world in health, happiness and wealth segments. Fosun International ranks No.416 on the 2019 Forbes Global 2000 List.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements. All statements, other than statements of historical facts, that address activities, events or developments that Fosun International Limited (the 'Company') expects or anticipates will or may occur in the future (including but not limited to projections, targets, estimates and business plans) are forward-looking statements. The Company's actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, and other risks and factors beyond our control. In addition, the Company makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.
Ms. Betty Li