One-time liquidation risk, Fosun International sheds its burden and moves forward again

Presented by|China-Survey Network

Reviewed by|Li Xiaoyan

On March 31, Fosun International held its 2025 annual results briefing in Shanghai. Chairman Guo Guangchang, together with the core management team, addressed market concerns head-on. With a performance record of “enduring pains, but even more confidence,” the company systematically explained the strategic logic behind the Group’s proactive cleanup of historical liabilities and its focus on core business segments, conveying steadfast confidence in crossing economic cycles and moving toward high-quality growth. Although the books show a non-cash loss of RMB 23.4 billion, Fosun’s core industries remain steady, cash flow is ample, the debt structure has been optimized, and future impairment pressures have been cleared. With the resolve to “let go, declutter, and simplify,” Fosun has begun a new development stage that is lighter, healthier, and more sustainable.

In 2025, Fosun International delivered a core operating performance answer sheet of “stable scale and optimized structure.” Full-year total revenue reached RMB 173.43 billion. After adjustments, industrial operating profit amounted to RMB 4.0 billion. The Group’s four major core subsidiaries contributed revenue of RMB 128.2 billion, accounting for 74% of total Group revenue—showing the ongoing strengthening of the “core business focus” effect. Overseas revenue reached RMB 94.86 billion, raising its share to 54.7%, as the Group’s globalization strategy moves into a harvesting phase. After adjustments, net asset value was RMB 133.5 billion, with NAV of HKD 18.1 per share. The underlying fundamentals of its assets remain solid.

The market is focused on the annual book loss of RMB 23.4 billion, which was not caused by deterioration in operations. Instead, under the principles of prudence and in accordance with Hong Kong accounting standards, the Group proactively made one-time non-cash impairment provisions for real estate and non-core assets. Among them, impairment for real estate projects accounts for about 55%, while impairment for goodwill and intangible assets related to non-core businesses accounts for about 45%. This provision does not affect the Company’s daily operations and cash flow. It is a strategic move of “book adjustments and risk clearance.”

From the industry background, in recent years China’s real estate market has undergone deep adjustments, with the value of some commercial real estate projects facing pressure. In the early years, during diversified expansion, some non-core assets failed to meet profitability expectations and lacked growth potential, becoming historical burdens that weighed on the Group’s valuation and resource allocation. Fosun chose the phase when business fundamentals are sound and cash flow is safe to “fix the roof on a sunny day,” completing a one-time revaluation of the value of risk assets. In essence, this is about proactively divesting inefficient assets, eliminating future uncertainties, and creating room for resources to support core businesses. As Guo Guangchang said, this move marks Fosun’s entry into a brand-new development stage: “We will resolutely exit assets that are not generating good earnings and fail to meet value benchmarks, and concentrate resources on high-growth core business segments.”

Behind the impairment provisions is the steady operation of Fosun’s four major segments—health, prosperity, happiness (culture tourism), and intelligent manufacturing. Core businesses continue to generate profits and cash flow, providing solid confidence for crossing the cycle.

The healthcare segment leads growth, driven by a dual engine of innovative global development. Fosun Pharma’s full-year attributable net profit was RMB 3.371 billion, up 21.69% year over year. Revenue from innovative drugs was RMB 9.893 billion, up 29.59% year over year, and its share in the pharmaceutical manufacturing business rose to 33.16%. Multiple self-developed products were approved both domestically and overseas. Nearly 40 innovative drug clinical trials received approvals from China, the US, and Europe. Haislin (Lian Lin) has achieved both revenue and profit growth for three consecutive years. Products such as Hansus and Hanquyou cover more than 50 countries globally. Its global commercialization capabilities continue to break through. From rare disease medications to anti-cancer ADC drugs, the innovation pipeline is gradually entering a harvest period, laying technical foundations for long-term growth.

The insurance segment makes steady progress, and the value of global deployment becomes increasingly prominent. Fosun Portugal Insurance’s attributable net profit was EUR 201 million, up 15.8%. Market share remains firmly at 28.1% in Portugal. Its international business has expanded to Latin America and Africa, with the share exceeding 30%. It received an S&P A-grade credit rating, and asset quality has been recognized internationally. In China, Fosun Prudential Life’s net profit was RMB 650 million, surging 492% year over year. Fosun United Health’s insurance business profitability improved significantly. With strong coordination across domestic and overseas insurance businesses, it has become a cornerstone for stable cash flow and profits. Dingrui Reinsurance’s gross premium grew 25% to USD 2.2 billion, reflecting substantial results from global and diversified deployment.

The happiness (culture tourism) segment hits historical highs, with an acceleration in asset-light operations. Club Med’s performance broke records. Global operational efficiency improved, and the asset-light model is accelerating in replication, covering high-end vacation and family consumption markets. High-quality assets such as Yuyuan Shares’ gold jewelry and gemstones, Shuotianjiu (Shede Liquor Industry), and Hainan Mining have been steadily upgraded. The consumer segment’s ability to resist macro fluctuations has strengthened, leveraging brand and channel advantages.

Regarding debt and financing issues that the market has raised concerns about, Fosun CFO Gong Ping disclosed that the Group’s diversified financing channels are open and active, with continued optimization of the debt structure and steady decline in costs. Since 2025, the Group has completed four issuances of long-duration bonds overseas, and multiple issuances of 2-year credit bonds domestically. The proportion of mid- to long-term debt increased from 48.7% in 2024 to 53.5%, effectively extending debt duration and reducing near-term repayment pressure.

As of now, the Group’s cash and bank balances exceed RMB 61 billion, and unused bank credit lines exceed RMB 144 billion, providing a sufficient liquidity safety buffer. On March 31, Fosun announced a full repurchase of its USD 205 million notes due in May 2026. The funds all came from its own resources, demonstrating financial strength and determination to meet repayment obligations. International rating agencies maintained Fosun’s outlook as “stable.” Communication with banks and bond investors has been widely recognized. In the future, financing capability will remain steady.

The co-chairman, Wang Qunbin, stated clearly that this impairment had been provisioned prudently and sufficiently based on industry cycles and asset prospects. “From today’s perspective, the Company does not have further impairment pressure.” This judgment removes the biggest uncertainty in the market and lays a foundation for valuation recovery and improving operating performance.

At the briefing, management disclosed a clear mid-term plan: accelerate the sale of heavy-asset and non-core subsidiaries and optimize the asset portfolio. At the Group level, interest-bearing liabilities will be reduced to below RMB 60 billion to lower financial expenses. Push attributable net profit to gradually recover to over RMB 10 billion. Explore capitalizing non-listed assets to enhance asset transparency and valuation.

Meanwhile, Fosun introduced multiple shareholder-return initiatives: the board announced a share repurchase plan, and major shareholders and the management team launched share increases. For FY2026, the target dividend payout ratio will be raised from 20% to 35%. Dividends are expected to be no less than HKD 1.5 billion, giving back to investors through concrete actions that reflect trust.

It is undeniable that the book loss of RMB 23.4 billion and the disposal of historical assets have been stage-by-stage pains in Fosun’s development history, and they also reflect the asset-structure challenges brought by diversified expansion in the early years. The progress of disposing some non-core assets and the pace of achieving the RMB 10-billion-profit target still needs to be verified by subsequent operating data. However, when viewed over a longer cycle, this “proactive cleanup” is precisely the key choice for an enterprise to cross the cycle—during periods of economic fluctuation, divesting inefficient assets, concentrating on core business segments, and optimizing the financial structure is far more valuable for the long term than blind expansion.

At the briefing, Guo Guangchang emphasized, “Fosun has the ability to cross economic cycles. There will be pains in the short term, but in the long run, everything we do is to help Fosun move more steadily and go further.” From the development history of global enterprises, every round of deep adjustment is the starting point for a new cycle of growth. Relying on the profitability of core assets such as innovative healthcare, global insurance, and quality culture tourism, combined with the financial foundation of liquidity safety, debt optimization, and risk clearance via impairment provisions, Fosun is gradually shedding the constraints of historical burdens and moving onto a high-quality development track characterized by “asset-light, high profitability, strong innovation, and deep global integration.”

At a new starting point, Fosun’s “shrink and strengthen, focus on core” strategy has entered a period of implementation and results. As growth momentum in core segments continues to be released, the asset structure continues to be optimized, and the shareholder-return mechanism keeps improving, this industrial group—having weathered cycle tests—has the potential to experience valuation recovery and value re-shaping after risk clearance, and to write a new chapter for crossing cycles and achieving steady progress with a lighter posture.