Proactively Strengthen the Three Growth Engines: Industrial Operations, Investments and Asset Management
Consistently Connect Quality Capital and Promote Asset Management and Insurance Business Segments
HONG KONG, March 28, 2012 /PRNewswire-Asia/ -- Fosun International Limited ("Fosun" or the "Company", together with its subsidiaries, the "Group", HKEx stock code: 00656) today announces its annual results for the year ended 31 December 2011 (the "Year"). As at the end of 2011, the Group's book value reached record high of RMB31.8 billion while net portfolio value amounted to RMB35.0 billion, representing 7-year compound annual growth rates (CAGRs) of 55.3% and 21.1%, respectively. In the area of promoting public listings of investments, the Group successfully helped 7 invested enterprises to launch their initial public share offerings in 2011, boosting the total since inception to 20.
In 2011, the global economy was faced with a new round of challenges. The United States of America, traditionally an economic superpower, experienced hiccups on its way to economic recovery in wake of downgrading of its sovereign debt rating while the sovereign debt crisis in Europe deepened. On the other hand, businesses in China were faced with a rash of difficulties as the country's growths of exports and investments slowed down as well as the austerity measures promulgated by the Central Government. In face of the harsh global economic conditions, Fosun met the challenges proactively and went through hurdles after hurdles. By optimising management and operations, the Group strengthened its development model with its growth engines of industrial operations, investments and asset management, and steadily making inroads to establish itself as "a premium investment group with a focus on China's growth momentum".
Growth Engine 1: Earnings from Industrial Profits Reached Record High
In the past 20 years since its establishment, Fosun has built a nation-wide presence with a deep foundation in industrial operations and development of business connections over the years. For years, Fosun's industrial investments have performed well against a backdrop of the volatile global economy, with 7-year CAGR of 27.0% in profit, bringing stable cash returns to the Group. In 2011, the Group continued its growth with earnings from industrial operations reached a record high at RMB3.17 billion, representing a year-on-year growth of 18.9%.
By industry segments, pharmaceuticals and healthcare segment performed well with a year-on-year growth of 85.2%. Mining business segment also reported satisfactory performance with growth in net profit during the Year. Although the austerity measures led to corrections in the country's property sector, Shanghai Forte Land Co., Ltd., the Group's main property flagship, reported net profit of RMB1.62 billion in 2011, thanks to its "rapid sales" strategy adopted two years ago. At the same time, the Group capitalised on an opportunity adjustment in sector and expanded its land reserves at lower prices.
Growth Engine 2: Investment Model Re-examined
During the course of Fosun's development, the Group learned that its core capability lies in its investment skills. Therefore, Fosun defined in more precision its development positioning as an investment group. Despite the adverse impact of the sovereign debt crisis in Europe on the global economy in 2011, it brought about an investment opportunity to Fosun that is best in "combining China's growth momentum with global resources". As a result of the economic crisis, some of the global brands, which have Europe as their major market, experienced declines in valuation as they encountered gridlocks in furthering growth. On the other hand, there is enormous potential in the market in China in the industries of which these enterprises operate. As Fosun identified and invested in the industry leaders that plan to tap the market in China, it helped these enterprises to achieve rapid growth in China, thereby enhancing values of their global franchises by leveraging the Group's solid foundation in industrial operations and business connections. This development model, which has been widely recognised, continued its success in 2011.
After its successful investment in Club Med in 2010, the world's largest leisure resort hotel chain operator, Fosun made another successful investment in Folli Follie, a renowned stylish brand in Greece, in May 2011. The post-investment financial performance of both enterprises validated Fosun's success in these investments. Club Med's revenue in 2011 grew by 5.2%. It turned around from a loss to a profit with a growth of 312.5% in net income before non-recurring items. After Yabuli Ski Resort commenced operation, Club Med plans to commence operation of its second leisure resort in Guilin, China, this year. It also plans to expand the total number of its leisure resorts in China to the amount of five by 2015, making China their second largest market after France. As for Folli Follie, its number of stores in China rose significantly. Folli Follie's businesses in China also saw significant growth in 2011. These achievements illustrated the effectiveness of the investment model adopted by Fosun. In the future, Fosun will accelerate its investment strategy that "combining China's growth momentum with global resources", targeting mainly at industries such as consumption upgrading, financial services and manufacturing upgrading.
Growth Engine 3: Rapid Expansion in Asset Management
With Fosun's enhanced investment capabilities and expanded scale of investments in the recent years, its internally-generated capital, mainly accumulated from dividend incomes and direct profits, can no longer satisfy Fosun's investment needs. Therefore, the Group will leverage Fosun's edges in investments more effectively through expanding efforts in developing its asset management business in the next 10 years. This will enable the limited partners (LP) and shareholders of the Group to benefit from China's economic growth using Fosun's investment platform.
In 2011, Fosun's investment capabilities were widely recognised by the LPs in China and overseas, with its intensified efforts in developing its asset management business. The Group received support from Prudential Financial, Inc. ("Prudential"), which became Fosun's first international LP with US$500 million of investment, the largest single investment as an LP by Prudential in its 135-year history. As at the end of 2011, the value of assets under management by the Group was close to RMB13.3 billion, funds under the management included two USD-denominated funds and several RMB-denominated funds. During the Year, the Group's asset management business shared investment gain of RMB28.2 million.
From now on, Fosun will continue to develop its collaboration with high quality international long-term funds, including sovereign funds, retirement funds, university endowments and family offices. It will also expand the scale of assets under its management through provision of high-quality asset management services to international investors. Apart from targeting at high net worth individuals in China, the Group's RMB-denominated funds also focuses on enrolling institutional investors and large-scale enterprises to be the Group's LPs. At the same time, the Group will also continue to strengthen the capabilities of its investment team by expanding the range of its fund products and tapping further into investment opportunities in consumption upgrade, financial services, energy and resources, and manufacturing upgrade that come along with the transformation in the economy in China. In addition, Fosun seeks to strengthen the profitability of enterprises it invested in by opening to them the platform connects to its other businesses. Fosun will help its invested enterprises to seek public share listings and enhance capital utilisation efficiency by grasping the paces of investing and divesting.
Looking Forward: Dedicate Effort in Developing Insurance Business
In 2011, Fosun has intensified its effort in developing the insurance business. The Pramerica Fosun Life Insurance Co., Ltd., a joint venture with Prudential as well as the first insurance joint venture between a non-state owned enterprise in China and foreign enterprise, has received an approval to operate. It plans to commence operation during 2012. In addition, Yong'an Insurance continued a satisfactory growth trend, with total assets amounting to RMB10.03 billion, up 19.0% when compared with that of 2010.
In the future, Fosun will stay on resources with growth potential and identify opportunities to increase investments in financial sectors such as insurance and banking. Fosun will adhere to development trends of the financial services sector in China in order to achieve higher investment returns. Fosun will dedicate efforts to develop the insurance segment, as this represents an excellent way to connect Fosun's investment capabilities to long-term high-quality capital. Fosun will also nurture transformation of its investment style towards an insurance-centric one.
Facilitating the Rejuvenation of Chinese Economy and Culture
2012 is the 20th anniversary of Fosun's establishment. For the past 20 years, Fosun has not only pursued better value for its businesses but also actively contributed its efforts to improve the commercial and natural environments in China so as to support the rejuvenation of Chinese economy and culture, in order to showcase the world the vibrancy of Chinese enterprises and the charisma of Chinese culture. In 2011, the Group made donation to the frontline Fukushima rescue forces in Japan's nuclear crisis, held a large-scale brand event "Fosun Night" in the United States. Fosun also sponsored a cultural event in collaboration with the Musee du Louvre in France, supported intangible cultural assets such as Wu opera and the protection and promotion of Dongyang wood carving, as well as actively supported Chinese entrepreneurs, such as the collaborations with Youth Business China (YBC) and Ali Mini-Loan etc. During the 20 years of development, Fosun remains grateful and upholds its corporate values of "self-improvement, teamwork, performance and contribution to society", while sharing the Group's growth and development with its staff and the society. In 2011, Fosun's efforts received recognitions from the society. Fosun ranked 81st among the China 500 largest enterprises by Forbes Magazine in July 2011. In November 2011, Fosun received "Entrepreneurs for the World Award" in the World Entrepreneurship Forum in Singapore. In December 2011, the Group was awarded "2011 Top 100 Social Responsibilities among China's Non-state Owned Enterprises by Southern Weekend. In 2011, Fosun demonstrated its charisma in the world's arena and made an important leap in establishing itself as an internationalised enterprise by growing with the world and capitalising on China's growth opportunities.
