HONG KONG SAR - Media OutReach - 18 January 2023 - At the beginning of 2023, S&P Global Ratings ("S&P") and a number of international investment banks including Morgan Stanley and Daiwa Capital Markets have issued reports respectively, expressing their optimism on the RMB12 billion syndicated loan secured by Fosun High Technology, the domestic operating entity of Fosun International Limited ("Fosun International" or the "Company", HKEX: 00656) to further enhance the Company's liquidity. Morgan Stanley and Daiwa Capital Markets reiterated their "Overweight"/"Buy" rating on Fosun International.

According to S&P's report, Fosun's newly signed syndicate loan will largely cover onshore bonds due within a year. S&P believes that Fosun International's total debt at the holdco level could drop by 15%-25% in 2023 as the Company continues to dispose of assets and pay down matured bonds, thereby further improving its liquidity.

S&P also noted that Fosun's successful issuance of the RMB1 billion 180-day commercial paper backed by credit risk mitigant warrants provided by Bank of Shanghai on 13 January was Fosun's first issuance in the onshore market after a nine-month hiatus, marking a first baby step and indicating a recovery of the public bond market access.

Market analyst pointed out that the successful issuance of the super & short-term commercial paper and the smooth completion of more than RMB10 billion syndicated loan reflect financial institutions and investors' confidence in the stabilization of Fosun's capital and their endorsement of Fosun's strategy of streamlining the organization and focusing on its core businesses. Daiwa Capital Markets pointed out that Fosun has showed its commitment to repay maturing debt, the accumulated cash through ongoing asset sales and syndicated loans seems close enough to pay back the short-term debt. In fact, over the past six months or so, Fosun's series of divestment actions in the capital market have gained widespread attention. During the period, companies under Fosun significantly reduced their shareholdings in Nanjing Iron and Steel United, Jianlong, Zhaojin Mining, Tsingtao Brewery, Jinhui Liquor, Zhongshan Public Utilities, Sanyuan, and COFCO Engineering & Technology. According to incomplete statistics, Fosun's accumulative return of capital has reached tens of billions of yuan. In addition to this syndicated loan and the super & short-term commercial paper, Fosun's capital has been further consolidated.

Morgan Stanley mentioned in the report that Fosun High Technology has signed a syndicated RMB12 billion loan agreement with eight banks (Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, and Bank of Communications as joint lead banks, and China Minsheng Bank, the Export-Import Bank of China, and Shanghai Pudong Development Bank as participating banks) to further improve the Company's liquidity, thereby significantly helping lift market confidence in Fosun's stability. Morgan Stanley believes that after several months of proactive deleveraging efforts, Fosun's liquidity risks have been reduced substantially. Looking ahead, China's reopening will help with fundamentals, particularly tourist, retail, and investment businesses.

In fact, Fosun's Happiness business has shown a strong recovery momentum. Taking Fosun Tourism Group as an example, on the New Year's Day this year, Atlantis Sanya, FOLIDAY Town Lijiang and other businesses have all performed better than the same period before the COVID-19 epidemic, and many Club Med resorts in China recorded close to 100% occupancy. In the global market, Club Med's bookings in the first half of 2023 have greatly exceeded the same period in 2019 before the COVID-19 epidemic.

Taking Fosun Pharma in the Health segment as another example, its anti-epidemic vaccine and drug continue to attract great attention. COMIRNATY�, including the monovalent COVID-19 mRNA vaccine (BNT162b2) and the bivalent vaccine which can protect against the Omicron variant, was officially registered as a drug/product (biological product) in Hong Kong SAR on 20 December 2022. Self-paid vaccination service for bivalent COVID-19 vaccine COMIRNATY� is officially provided in Hong Kong SAR, offering more vaccine options for people in need.

As regards Azvudine, the oral medication for COVID-19, it is now included in the medical insurance scheme in 31 provinces, municipalities, and autonomous regions across the country, and is available in grassroots medical institutions in many provinces. The accessibility of Azvudine has been greatly enhanced. In recent years, Fosun proposed to position itself as a global innovation-driven consumer group. In the past six months or so, Fosun has significantly accelerated its pace of focusing on its core businesses in the family-oriented consumer sector.

Based on Fosun's solid financial performance and strong potential for rebound, domestic and overseas securities firms have recently issued research reports, assigning Fosun International an "Overweight"/"Buy" rating. On 12 January, Nomura Orient International Securities published a research report and mentioned that Fosun International currently has sufficient cash flow, the short-term liquidity problem has been resolved, the future leverage ratio is expected to be reduced, and the capital structure will continue to be optimized; at the operational level, Fosun will firmly focus on its core businesses in the family-oriented consumer sector. With the continuous optimization of China's epidemic prevention policy, the firm expects Fosun to achieve better performance.

In addition, China International Capital Corporation (CICC) and China Industrial Securities have published research reports successively and expressed their optimism on Fosun's strategy of streamlining the organization and focusing on its core businesses. CICC mentioned in the research report that in the medium and long term, the firm believes that the valuation method of Fosun International is expected to gradually shift from using the NAV of the group to using the PE of the large consumer company. As a result, Fosun is expected to usher in a rise in the central level of long-term valuation.

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