Deepen China advantage and expand global capabilities
Combine China’s growth momentums with global resources to create a world-class investment group 

(Hong Kong, 29 March 2011) Fosun International Limited (“Fosun” or the “Company”, together with subsidiaries, the “Group”, HKEx stock code: 00656) today announces its annual results for the 12 months ended 31 December 2010. Against a backdrop of slow recovery in the world economy and accelerating transformation of China’s economy in 2010, the Group adhered to its principle of “combining growth momentums of China with global resources” and reinforced its position as a China expert with global capabilities and implemented value investing. The Group achieved encouraging overall results with revenue reaching RMB44.64 billion and profit attributable to owners of the parent at RMB4.23 billion. Net value of its investment portfolio (note 1) reached RMB41.94 billion, up 16% year on year or representing a six-year compound annual growth rate of 28.8%. Fosun’s total shareholder equity reached RMB29.87 billion, up 22% year on year, representing a six-year compound annual growth rate of 65.3%.

Combining growth momentums of China with global resources

2010 marked the inaugural year when the Group took its first step towards globalization.  Mr. Guo Guangchang, Fosun’s Chairman said, “Leveraging our unique competitive edge, our deep-rooted industry investment background in China nurtured outstanding investment capabilities and helped us explore and successfully implement combination of growth momentums of China with global resources. This will evolve into a new sustainable growth model for the future.” In 2010 the Group continued to strengthen its global capabilities and proactively sought strategic co-operation opportunities with the world’s top-notch investment institutions and investors, including leading institutions like The Carlyle Group and Prudential Financial, Inc. The Group successfully invested in the world’s leading enterprises which benefit from China’s growth, including the world-class premium resort hotel chain operator Club Méditerranée SA (“Club Med”). To date, the Group has established a firm footing rested on its deep industry investment background in China, supported by numerous independent investment and asset management platforms. While stretching its muscles in the domestic market in China, the Group has put together a team in North America and is preparing for establishment of a global investment network connecting Europe, Japan and Australia. It has successfully established a mutually beneficial business model based on the principle of “combining growth momentums of China with global resources” during the course of its global expansion.

In June 2010, the Group successfully invested in the French world-class premium resort hotel chain operator Club Med and appointed to it two directors. Club Med’s global service products have enormous potential in the market in China. It had yet to open its first onshore resort in China. Fosun’s investment brought to the table proactive support to the management’s China strategy, leveraging the Group’s extensive government connections, branding and promotion resources, real estate business channels and capabilities, high-calibre talents, cross-sector, multi-regional edges, facilitating its accelerating development in China and recruitment of more middle to high-end customers. The Group officially opened its first resort in China in December 2010 and plans to open five more in the next five years. Thanks to the rapid growth in its business in China, the resort group’s number of customers in China in 2010 grew 42% year on year. The Group’s investment in Club Med has been widely recognized by the capital market and shareholders, resulting in significant rallies in its share price.

Focused on China growth momentums and achieved fruitful results on industrial operations and strategic investments

As a China expert taking roots in the China market, the Group’s industry investments engaging in pharmaceuticals and healthcare, property, steel, mining and resources achieved notable business performances in general with sustaining increases in their aggregate value. During the period under review, the Group’s operating profit grew 21.5% year on year, of which growths in the mining and property segments were particularly encouraging at 174.5% and 92.2% respectively.

While deeping the advantages of industrial operations, the Group proactively tapped into more investment opportunities that are set to benefit from China’s growth momentums, emphasizing China’s growth momentums and value investing. During the period under review, with the rapid growth of the Group’s investment capability and scale, the Group invested in a total of 58 projects at RMB17.3 billion in aggregate, hitting new records on both parameters. The Group recognized investment gains of RMB2.42 billion and cash inflows of RMB4.45 billion from investment activities during the period under review. It facilitated 6 projects to launch initial public share offerings, bringing in a RMB2.26 billion gain to its shareholder equity.

As far as sector exposures were concerned, the Group continued to receive benefits from sectors that were driven by trading-up of consumption experiences by consumers in China, including pharmaceuticals, high-end healthcare, culture, tourism, financial services and property, and by upgrading of China’s industrialization including resources and energy and manufacturing of industrial facilities. In terms of management of projects invested, the Group focuses on exploitation of synergies with existing investments. For example, after becoming Chindex International’s largest shareholder, Fosun Pharma integrated both organization’s medical equipment operations to boost competitiveness.

Insofar as investment portfolio is concerned, the Group has been sustaining its efforts to increase allocation of assets to sectors involved in consumption upgrade. The Group divested some of the investments that earned respected returns in order to optimize its portfolio further while enjoying rapid growth in investment scale.

Actively pushing forward the Group’s asset management and optimizing its multi-channel financing sources

Faced with the ample investment opportunities brought about by the economic development of China and the rapid enhancement of investment capability of the Group, the Group has started to scale-up its asset management business since 2010 and completed preparation works for several investment funds with various partners and limited partners, including Fosun-Carlyle Shanghai Equity Investment Enterprise, Prameria–Fosun China Opportunity Fund L.P., Shanghai Fosun Capital Equity Investment Fund L.P., and Shanghai Star Equity Investment L.P, etc., raising committed funds totaling around RMB10 billion in aggregate as of March 2011. Mr. Guo said, “The Group’s co-operations with The Carlyle Group in investments and with Prudential Financial, Inc., in asset management represent endorsements of our investment capability by mainstream investment institutions.”

During the period under review, apart from the successful financing from overseas syndicated loans, corporate debts, company loans and etc., the building up of the Group’s multi-channel financing system was further improved. It has established good relationship with more mainstream banks and utilized its unique domestic and overseas platform architecture to lower its funding costs through issuance of US-dollar debts and fixed rate long-term bonds. During the period under review, the Group raised RMB2.1 billion in aggregate via issuances of corporate debts and medium term notes at interest rates averaged 4.9-6.0%. These excellent fund raisings helped optimize the Group’s capital structure. As a result, the weighting of medium and long term debts continued to rise, medium and long term bonds now comprise about 50% of the total liabilities, enabling the Group to maintain its financial stability while enjoying rapid growth.

Creating healthy and harmonious new business ecology

In this post financial crisis era, the prospect of the global economic recovery still seems relatively uncertain. However, considering the progress of urbanization, industrialization and economic transformation while focusing on domestic demand and people’s livelihood in China, the Group believes that China will be able to maintain its competitive edges in terms of economic growth for a relatively long period of time. Meanwhile, following the rapid growths of the domestic market and personal wealth,and the development and maturity of the financial service sector, it is very likely that China would complete the transformation from a manufacturing giant into a consumer and capital giant.  Under these circumstances, the Group believes that not only a number of local companies and brands will grow rapidly and become market leaders in terms of scale and market capitalisation, but more and more international brands would also pay more attention to and increase their investments in China. The country will see an emergence of more investment opportunities than it had in the next five years.

“In 2010, supported by 15 partners and led by the Group, the Chinese private enterprise pavilions at the Expo 2010 Shanghai China showcased to the world the charm of Chinese private sector. I believe this indeed is the best interpretation of ‘forging growth powers’ and ‘creating healthy new business ecology’.  In the future, we will continue to adhere to these principles and enhance our professionalism, being an expert of China. We will also cultivate and accumulate our global capability and actively combine growth momentums of China with global resources, making the Group an investment institution with ‘Fosun’ characteristics and creating value for the shareholders as well as actively contributes its efforts to improve the commercial environment and natural environment of China so as to support the rejuvenation of Chinese economy and culture,” Mr. Guo concluded. 

Note 1: Value of investment portfolio comprises (1) listed enterprises held at Group level at market value (2) subsidiaries and associates of unlisted enterprises held at Group level at attributed net asset value, other investments at investment costs(3) less Group level net debt.