HONG KONG SAR - Media OutReach - 2 February 2023 - On 30 January 2023, HSBC Global Research ("HSBC") published a report pointing out that Fosun International Limited ("Fosun International" or the "Company") (HKEX: 00656) is recovering vigorously. HSBC maintained "Buy" rating on Fosun International and raised the target price to HK$11.50.

HSBC pointed out that Fosun's secured RMB12 billion syndicated loan is the largest private enterprise loan led by five major state-owned banks in cooperation with policy banks and joint-stock banks since the Central Economic Work Conference explicitly proposed in December 2022 to encourage and support the development of the private economy and private enterprises. HSBC expects the official landing of the loan to be of great relief to Fosun's cash crunch; it should also serve as a catalyst to rekindle market confidence in the Company's operating stability.

As of the end of July 2022, Fosun had repurchased or purchased overseas bonds with an equivalent par value of USD366 million prior to maturity, partially replaced by low-yield loans to reduce interest payments. HSBC emphasized in the report that Fosun has demonstrated its active debt management and it is expected that the Company's liquidity and earnings this year will improve with debt optimization.

HSBC believes that although Fosun International recently issued a profit warning on the Hong Kong Stock Exchange, overall speaking, the negative impacts will be gone gradually. The bank believes that the worst has passed. With debt optimization and consumption recovery, Fosun International's subsidiaries are well-positioned to capture post-pandemic travel, retail, and medical demand, so should post strong earnings this year.

In addition to HSBC, Morgan Stanley earlier expressed its optimistic view on Fosun International and reiterated its "Overweight" rating. According to Morgan Stanley, Fosun's syndicated loan can further improve its liquidity, significantly helping lift market confidence in Fosun's stability. The firm believes that after several months of active deleveraging efforts, Fosun's liquidity risk has been greatly reduced. Looking ahead, the reopening of China will help boost fundamentals, especially in businesses such as tourism, retail, and investment.

It is worth mentioning that the recovery trend has been reflected in Fosun's recent business operations in the tourism, health and other sectors. Regarding the tourism sector, the 2023 Yuyuan Garden Lantern Festival being held in the Grand Yuyuan has attracted many citizens and tourists; Club Med's bookings in the first half of 2023 have greatly exceeded the same period in 2019 before the COVID-19 pandemic. During the Spring Festival holiday, the occupancy rate of Club Med resorts in China continued to rise. As one of the preferred destinations for domestic travel, Atlantis Sanya, a benchmark project of Fosun Tourism Group, has continued to be in high demand since the beginning of 2023. During the New Year holiday period, the average occupancy rate reached 97.4%, the total reception was about 37,000 person-times, and the business volume exceeded the pre-pandemic level.

Regarding the Health segment, as the COMIRNATY� BNT162b2 vaccine and COMIRNATY� bivalent vaccine was officially registered as a drug/product (biological product) in Hong Kong SAR and was approved as a regular imported vaccine in Macao SAR, Mainland Chinese residents visiting Hong Kong SAR and Macao SAR to receive COMIRNATY� vaccination has recently attracted great attention, the number of inquiries and appointments have increased significantly during the Spring Festival holiday. As regards Azvudine, the oral medication for COVID-19, it is now included in the medical insurance scheme in 31 provinces, autonomous regions, and direct-administered municipalities across the country and is available in primary healthcare institutions in many provinces. The accessibility of Azvudine has been greatly enhanced. In addition, in the global consumer market, Fosun's 48 overseas brands in the Health, Happiness, and Wealth segments are also developing steadily and gradually recovering in their respective fields.

The robust recovery and steady development of various businesses of Fosun signal an upward development trend. With the strong support from the government, the optimization of epidemic prevention and control measures, and the consumption recovery, Fosun, which is financially stable and has abundant cash flow, has ushered in a new growth point. As HSBC mentioned in the report, "The worst is now behind Fosun and 2023 is looking better."

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