Fosun International Limited (HKEX stock code: 00656, "Fosun International") 
said a major international investment bank Morgan Stanley has reiterated its 
"Overweight" rating on Fosun International with a target price of HK$11.4. 

In the first half of 2022, Fosun achieved sustainable growth in its revenue, 
with a total revenue of RMB82.89 billion, representing an increase of 17.7% 
over the same period in 2021. The company pointed out that after entering the 
second half of the year, thanks to the Group's long-term adherence to profound 
industry operations, the financial and operational indicators of companies in 
multiple segments have rapidly shown signs of a steady recovery.

Fosun's Actual Debt is Only RMB100 Billion, Corresponding to Total Assets of 
RMB270 billion

The market is concern about Fosun International's debt situation and believes 
that Fosun is under the pressure of RMB650 billion debt. According to Fosun 
International's 2022 interim results, its total assets amounted to RMB849.7 
billion and total liabilities amounted to RMB651.3 billion as of 30 June 2022. 
However, the market's perception of RMB650 billion debt is in fact a confusing 
statement.

This RMB650 billion figure is the consolidated total liabilities of Fosun 
International and its subsidiaries, including the liabilities of its financial 
institutions such as insurance companies, banks, etc. However, the liabilities 
of financial institutions and the commonly referred interest bearing corporate 
debt are two different concepts. In fact, the consolidated interest bearing 
debt of Fosun International stands at approximately RMB260 billion only, which 
also consists of debts of its consolidated listed subsidiaries such as Yuyuan 
and Fosun Pharma, etc. The repayment obligations of these debts are 
independently borne by the corresponding listed companies. In other words, the 
actual debt that is borne by Fosun International is only approximately RMB100 
billion, corresponding to total assets of RMB270 billion and net asset value 
(NAV) of around RMB20 per share. From this perspective, Fosun is not under 
significant debt repayment pressure.

Morgan Stanley Reiterated its "Overweight" Rating on Fosun International with a 
Target Price of HK$11.4 for the Third Time

Morgan Stanley issued a research report on 16 September, the report said that 
most of Fosun's debt at the consolidated level reported in its recent interim 
results announcement consists of lending by Fosun's operating subsidiaries. The 
firm estimated that the debt at the holding company, including onshore debt, 
offshore debt and bank loans, is much lower. In terms of cash, with a 
tightening credit market, it is understandable that the company needs to take 
quick action to convert liquid assets into cash. It is estimated that the cash 
generated from its recent asset sales, together with its cash on hand is 
getting closer to being able to repay its near-term debt obligations. Morgan 
Stanley has therefore reiterated its "Overweight" rating on Fosun International 
with a target price of HK$11.4. 

Source: Fosun