Dear shareholders,

In 2023, the global economy showed signs of recovery, yet still filled with challenges. The entire team of Fosun worked together, actively seized opportunities and insisted on pursuing sustainable growth, resulting in the overall achievement of steady growth.

As a global innovation-driven consumer group, the Group always adheres to the strategy of “profound industry operations + industrial investment”, and remains committed to the two core growth drivers of technology innovation and global operations. The revenue of the core businesses grew steadily in 2023. During the Reporting Period, the Group’s revenue was RMB198.20 billion, representing a year-on-year increase of 8.6%; the profit attributable to owners of the parent was RMB1.38 billion, representing a year-on-year increase of RMB2.21 billion, indicating a positive business outlook. There were significant growth in the revenue of the four core subsidiaries, namely Yuyuan, Fosun Pharma, Fosun Insurance Portugal and FTG, contributing 72% of the revenue. In particular, FTG maintained a strong recovery momentum, with business volume substantially surpassing the pre-pandemic performance and reaching RMB17.15 billion for the year, representing a year-on-year increase of 24.5%. Its profit attributable to equity holders turned around to RMB0.31 billion.

Meanwhile, in the face of the complex and volatile external environment, Fosun maintained its strategic focus and continued to promote its business streamlining strategy. On the one hand, Fosun stepped up its efforts in divesting some of the non-core and non-strategy assets to continuously reduce debt and consolidate its liquidity cushion, preparing for the next phase of growth. On the other hand, it further focused on core businesses in the household consumption sector and increased investment in advantageous industries. We are pleased to see that the market has responded positively to Fosun’s strategy and development plan. Fosun Pharma’s independently developed innovative drugs have gradually entered overseas markets, while FTG’s newly opened resorts received positive feedbacks from consumers.

Once again, we would like to express our gratitude to all shareholders for your long-standing support. The entire team of Fosun will work diligently and stay committed with unwavering determination to achieve better results in return for your trust in us.

“Deep mining” and “developing good mines” with stable profit growth as the core objective

After more than a decade of efforts, Fosun has gradually completed its global expansion and industrial business presence, anchoring itself in the household consumption sector, striving to intelligently create a healthy, happy and wealthy lives for families worldwide. Fosun’s industry operation strategy has also evolved from “prospecting” and “exploration” across various industries and locations worldwide to “deep mining” (which means focusing on the development of our core industries) and “developing good mines” (which means tapping into industries with high value-added development and growth potential). We will continue to develop the industries where we have already established a presence, enhancing certainty and making stable profit growth as the core objective of Fosun’s future operations. In the future, we will continue to focus on core businesses, leveraging our unique strengths to enhance our capabilities and strengthen our foundation, and actively invest and expand in advantageous sectors. Through forward-looking planning, we will deeply explore the capabilities and value of the Fosun ecosystem, endeavoring to create more good products and services for one billion families worldwide.

Press ahead with the globalization strategy

Fosun always regards globalization as one of the key core drivers for its development. Since Fosun International’s listing in Hong Kong in 2007, Fosun’s globalization journey has spanned nearly 17 years. In the course of its journey, Fosun has progressively deepened the development and expanded the scope of globalization. It now has established business presence in over 35 countries and regions across five continents, boasting a portfolio of renowned brands. Its “global organization + local operations” model has become increasingly mature. In 2023, Fosun further strengthened its global operations across various industries, with overseas revenue reaching RMB89.20 billion, accounting for 45.0% of the total revenue, representing a 6.0% year-on-year growth.

Fosun consistently adheres to the philosophy of “being rooted in China and serving the world”, continuously improving its globalization strategy by leveraging China’s excellent supply chain system and efficiency advantages. After establishing competitiveness in China, good products of various industries can swiftly enter overseas markets through the empowerment of Fosun’s global ecosystem. Shanghai Henlius’ first domestically independently developed monoclonal antibody drug approved in both China and Europe, HANQUYOU (trastuzumab for injection) has been approved for marketing in more than 40 countries and regions worldwide. In June 2023, the second-generation artesunate for injection (Argesun^®), independently developed by Fosun Pharma, was prequalified by the World Health Organization (WHO-PQ), becoming the first injectable artesunate presented with a single solvent system approved by WHO-PQ, further improving the accessibility of high-quality, innovative antimalarial drugs and saving more lives in Africa and globally. Shede Spirits has deepened its aged spirits strategy, developed a multi-brand matrix, and promoted the in-depth globalization of Shede’s products and brands through various operating models such as trade and duty-free. Dedicated to creating drinking experiences that cater to the preferences of overseas consumers, it has expanded into 31 overseas countries and regions.

For Fosun, globalization means more than just “two-way engagement” between the global and Chinese markets. It extends to the endogenous development of its ecosystem enterprises both domestically and internationally, encouraging them to actively expand their businesses beyond their domestic markets. Fosun Insurance Portugal has actively addressed inflation by enhancing its pricing strategy. It has not only steadily expanded its business in Portugal and maintained local leadership, but also continued to achieve rapid premium growth in its international business, with growing influence in Central Europe and Portuguese-and-Spanish-speaking regions. In 2023, Fosun Insurance Portugal recorded total gross written premiums of EUR5,207 million and net profit of EUR0.18 billion. In 2023, Easun Technology continued to expand into the global market, with strong growth in its North American business and new orders increasing by 70% year-on-year.

In addition to the “hard power” (硬實力) of business globalization, Fosun’s “soft power” (軟實力) accumulated in its globalization journey is equally invaluable. As a representative of Chinese culture, the Yuyuan Garden Lantern Festival, a national intangible cultural heritage, was held in the overseas for the first time. It was designated as part of the opening festivities celebrating the 60th anniversary of the establishment of diplomatic relations between China and France, as well as the China-France Year of Culture and Tourism. It also served as a highlighted event for the bilateral cooperation between China and France in 2024. The Festival Dragons et Lanternes held in Jardin d’Acclimatation in Paris, France from late 2023 to early 2024 attracted nearly 200,000 local visitors, showcasing the magnificent Chinese lanterns, spreading the beauty of oriental lifestyle aesthetics and demonstrating the charm of Chinese culture.

Lead with technology, driven by innovation

Technology innovation serves as another core driver for Fosun’s continuous development. In 2023, the Group’s total investment in technology innovation amounted to RMB7.4 billion. It has established more than ten technology innovation centers covering various industries, continuously empowering the launch of new technologies and products.

In the health sector, Intuitive Fosun has achieved the localization of da Vinci Surgical System and successfully launched commercialization. Since its launch more than two years ago, the CAR-T cell therapy product Yi Kai Da (奕凱達^®) of Fosun Kite, a joint venture company of Fosun Pharma, has been used to treat hundreds of patients with relapsed or refractory large B-cell lymphoma (r/r DLBCL). In June 2023, the second-line indication of Yi Kai Da was officially approved for marketing, bringing more treatment options and hope for Chinese lymphoma patients.

Shanghai Henlius’ independently developed HANSIZHUANG (serplulimab injection) (漢斯狀) has provided a new treatment option for patients with small cell lung cancer (SCLC) and obtained approvals for several indications. It also became the world’s first monoclonal antibody drug targeting PD-1 approved for the first-line treatment of extensive-stage SCLC. In December 2023, it made its debut in the Indonesia market, marking the first step of its international expansion. Our long-term commitment in technology innovation has brought us the joy of returns. Following the first half-year profits achieved in the first half of 2023, Shanghai Henlius achieved full-year profits and has initially developed self-sufficiency capabilities, laying a solid foundation for further high-quality development.

Fosun persists in doing the right things, the difficult things, and the things that take time to develop. We believe that persistence and dedication are essential to achieve the long-term goal of reaping returns through technology innovation. It is the trust in Fosun’s technology innovation and operational capabilities that enabled Shanghai Fujian Equity Investment Fund Management Co., Ltd., a subsidiary of Fosun Pharma to be selected as one of the first batch of “20+8” industrial fund management institutions in Shenzhen in 2023, exclusively managing a biopharmaceutical fund with a scale of RMB5.0 billion.

The year 2023 was known as the “Year of AI”, witnessing the explosive growth of productivity tools in artificial intelligence, represented by OpenAI. Fosun actively seized opportunities in the field of AI, applying AI technologies to areas such as drug pipeline research and development, and online intelligent customer service, exploring opportunities across industries. We will fully embrace changes and better utilize emerging technological tools in all aspects of industry operations. Fosun Aitrox has applied a universal artificial intelligence research and development paradigm to more than 80 comprehensive product matrices spanning imaging, pathology, and ultrasound, focusing on the high-quality development of primary healthcare and cutting-edge technological innovation in clinical disciplines.

In terms of creativity and innovation, Fosun actively promotes innovation in consumption scenarios, endeavoring to fully integrate cutting-edge technologies with offline scenarios. In addition to the spectacular offline scenes, the 29^th Yuyuan Garden Lantern Festival enhanced the metaverse experience through technologies such as augmented reality (AR) and digital lighting, attracting 4 million visitors and driving approximately 50% growth in various industries and product sales during the Spring Festival. Currently, the overall planning of the Grand Yuyuan is proceeding according to the plan. Fosun is confident and well-equipped to build a large cultural and commercial complex of over 1 million square meters, serving as a global fashion and cultural showground with the charm of “oriental lifestyle aesthetics” in the core area of Shanghai’s business district.

Deepen industry operations and enhance asset-light operational capabilities

In the past few years, Fosun’s industrial operational capabilities have overcome the tests imposed by challenging external economic environments, and have built a more cohesive and resilient team. Despite encountering difficulties, Fosun identified new opportunities for growth and development, which led to a significant improvement in industrial operational capabilities and remarkable achievements.

In 2023, Yuyuan’s Jewlery & Fashion Group strengthened its channel operations, simultaneously improving its “quality + quantity”. The total number of point of sale (POS) for its brands, including Laomiao, Yayi, DJULA, and Lusant, went beyond 5,000, representing a net increase of 424 POS as compared to the previous year. It consistently improved its product offerings, resulting in double-digit growth in both revenue and profit attributable to owners of the parent. In particular, its revenue grew 11% year-on-year to RMB36.7 billion, which outperformed the industry average growth.

In the field of tourism, we have identified many emerging demands which have not been met in China, such as urban vacations and ice and snow tourism. In 2023, FTG launched a series of new product lines. In October, Club Med launched its first urban resort, Club Med Urban Oasis Nanjing Xianlin Resort, in Nanjing, opening up the new field of urban vacations. In November, the Taicang Alps Resort, dedicated to providing ice and snow vacations, had its grand opening. FTG’s innovative products that advocate the concept of “lifestyle-based vacation” and “vacation-like lifestyle” are providing urban residents with new ways of life.

Globally, Club Med also witnessed a record-breaking year in 2023, with a business volume of RMB15.12 billion, representing an increase of 19.2% as compared with the same period in 2022, and equivalent to 118.3% of business volume achieved for the same period in 2019. The adjusted EBITDA of the resort operation increased to RMB3.21 billion from RMB2.19 billion in 2022. In a context of strong inflation, Club Med continued to position itself in high-end segment of the market in order to consolidate its leading industry position.

The recovery momentum of Atlantis Sanya was equally strong. Its business volume surged 90.9% year-on-year to RMB1.67 billion in 2023. Through a series of industry-led international and diversified activities such as “Night Tour Experience”, “Super Summer (超級暑假)”, and “China’s Mermaid Open Tournament”, the average occupancy rate of Atlantis Sanya maintained at a high level and reached 81.9% in 2023. In the first two months of 2024, benefiting from the surge in demand during the New Year and the Chinese New Year holidays, Atlantis Sanya recorded a business volume of RMB0.46 billion, representing an increase of 16.5% over the same period in 2023. The average occupancy rate was 94.8%.

The recovery in consumption also extended to other sectors. In 2023, Yuyuan’s chain restaurant business accelerated its expansion, the number of Songhelou Noodle Restaurant reached 173 nationwide. Marking its two-year anniversary, the Hangzhou-Shaoxing-Taizhou Railway has been operating in a safe and orderly manner, with a total passenger flow exceeding 20 million.

After more than three decades of development, Fosun has accumulated profound operational capabilities. The achievements and figures mentioned above once again confirm the broad scope and depth of Fosun’s industrial operational capabilities, which are essential for seizing opportunities in asset-light cooperation. Considering the current interest rate levels and financing environment, Fosun will focus more on enhancing asset-light operational capabilities. With the asset-light strategy and cooperation with key partners, Fosun will seize the opportunities presented by asset-light operation. In the future, while continuously improving its capabilities, the Group will also expand its network of partners by strengthening cooperation with local governments, state-owned enterprises, and other partners. Through complementary strengths and win-win cooperation, Fosun aims to create more high-quality projects and products. At the same time, we will fully leverage Fosun’s long-established investment capabilities and adhere to the “industry + investment” and “insurance + investment” strategies, making full use of our industrial advantages and cost advantages of insurance funds to effectively implement a combination of development strategies.

Sound financials with balanced investment and divestment

Despite the continued uncertainty in the external market environment in 2023, we implemented a proactive and prudent financial strategy, further optimizing the balance sheet and continuously reducing the leverage ratio, which provided a solid financial cushion for focused development.

During the past year, Fosun successfully carried out the divestment of non-strategy and non-core assets, including the exit from the iron and steel industry by disposing Nanjing Nangang, Jianlong Shares, etc., resulting in a cash inflow of RMB27.3 billion for the full year.

Meanwhile, Fosun maintained smooth financing channels with domestic and overseas banks as well as the public market. In early 2023, Fosun High Technology entered into a syndicated loan agreement for an amount of RMB12 billion with eight domestic banks, led by five major state-owned banks, reflecting steadfast support for the development of private enterprises. In the international market, Fosun successfully formed and completed a syndicated loan amounting to over USD500 million with international banks, domestic banks, Hong Kong banks, and European banks. In terms of public market financing, Fosun High Technology successfully issued RMB700 million worth of medium-term notes, serving as a rare example of a privately-owned enterprise successfully issuing pure credit bonds in the domestic market in 2023.

Overall, Fosun successfully attained the objective of maintaining a stable financial position in the past year. As at the end of the Reporting Period, the consolidated interest-bearing debt was RMB211.92 billion, representing a decrease of RMB15.00 billion in comparison with the end of 2022, while the total debt-to-capital ratio stood at 50.4%, representing a decrease of 2.9 percentage points from 31 December 2022. Cash and bank balances and term deposits reached RMB92.46 billion.

Recognizing Fosun’s debt reduction capability and execution, the international credit rating agency, S&P, carried out a positive rating revision of Fosun in 2023, raising the Group’s rating outlook to “stable”.

Looking ahead, we hold an optimistic view on gradually entering an interest rate reduction cycle following the peak of the US dollar rate hike. We believe that the further improvement of domestic and overseas financing environments will inject more vitality into Fosun’s development.

Remain committed to the original aspiration of “Contribution to Society” and develop business for good

Since its establishment, Fosun established its original aspiration of “Self-improvement, Teamwork, Performance, and Contribution to Society”. We firmly believe that business should be developed for a good cause, and the greatest value of a company lies in its social impact. While focusing on business operations, we have been committed to strengthening sustainable development management, actively shouldering corporate social responsibilities, implementing environmental, social and governance (ESG) practices. Leveraging the resources and advantages of Fosun’s global industrial ecosystem, we strive to continuously create a better world.

In 2023, Fosun’s ESG management system was further strengthened. Fosun International received an MSCI ESG rating of AA for three consecutive years and ranked among the top 6% of industries worldwide in the S&P Global Corporate Sustainability Assessment (CSA). In addition, Fosun was included in S&P Global’s Sustainability Yearbook 2024 and recognized as an Industry Mover.

We have actively responded to the national carbon peaking and carbon neutrality goals, and have implemented measures for carbon neutrality and energy conservation and emission reduction. We have also issued our first Task Force on Climate-Related Financial Disclosures (TCFD) report, demonstrating our commitment to climate action to the international community. Through the establishment of a Carbon Neutrality Committee and a Carbon Neutrality Working Group, the Group continues to drive the achievement of carbon peaking and carbon neutrality goals and promotes carbon neutrality management among its member companies. These initiatives not only demonstrate Fosun’s commitment to environmental protection, but also reflect our determination to promote sustainable development globally.

The Rural Doctors Program has covered 78 key rural revitalization counties in 16 provinces, municipalities, and autonomous regions across the country. A total of 371 staff have been sent to counties to provide assistance, supporting 25,000 rural doctors and benefiting 3 million grassroots families.

In addition to the efforts at the group level, Fosun also actively encourages its subsidiaries and ecosystem organizations to actively improve ESG practices. Artesunate for injection (Artesun^®), independently developed by Fosun Pharma, is the preferred treatment of severe malaria recommended by the World Health Organization (WHO) and has become a well-known Chinese innovator drug in Africa and the world. As at the end of 2023, Artesun^® has been used to treat more than 68 million patients with severe malaria worldwide, most of whom were African children under five years old. Through the power of football, Wolves Foundation has collaborated with more than 100 local schools, supporting the growth of thousands of primary school students in key areas such as personal development, social engagement, health, and sports.

At the beginning of 2023, Fosun officially incorporated the half-day public welfare leave policy into the Group’s employee manual. Since its implementation one year ago, a total of more than 4,500 Fosun employees at home and abroad have participated in public welfare activities in various fields, amounting to 34,476 hours, demonstrating that Fosun has been contributing to the society through concrete actions.

In this ever-changing world, Fosun’s entrepreneurial journey of more than 30 years has been full of challenges and opportunities. Despite the fluctuations in the external economic environment, our industrial operational capabilities have not only withstood the test, but have also improved significantly. This growth is not solely ours, but is a testament to the trust and dedication of all shareholders and supporters. Every step of our progress has been driven by the support and confidence of our shareholders, motivating us to keep moving forward.

Looking ahead, we are filled with confidence. We believe that no matter how challenging the future may be, every Fosuner will stay true to our original aspiration and will consistently create value. We firmly believe that no matter how the world changes, people’s aspirations for a better life will remain unchanged, and Fosun is committed to its vision of creating better lives for families worldwide. We look forward to joining hands with shareholders to create a better future.

Guo Guangchang

27 March 2024