Viewpoint “Just finished a business trip overseas for several months. Fortunately, I returned to Shanghai before the typhoon ‘Plum Blossom’. These two days are being quarantined according to the requirements of epidemic prevention.”
On the afternoon of September 13, Guo Guangchang, chairman of Fosun Group, updated his news on Weibo, confirming the gossip that “has returned to China for isolation”. At this time, it has been half a year since his last Weibo update.
He emphasized that, as a company rooted in China, China will always be the most important base for Fosun. Whether overseas or during quarantine, he has always cared about domestic business. “In the future, we hope that Fosun can achieve mutual empowerment and rapid growth in the global ecosystem while cultivating in China.”
This is a very positive Weibo.
As a private market-oriented company, Guo Guangchang’s speech was in response to the negative public opinion that Fosun Group is facing. His return to China also indirectly responded to some concerns in the market.
Prior to this, some capital market media quoted unnamed people familiar with the matter as saying that financial regulators, including financial regulators, were asking banks and other financial institutions to closely review their risk exposure to Fosun.
A document circulating on the Internet also shows that the Beijing management company received a notice from the Beijing State-owned Assets Supervision and Administration Commission, requesting to sort out the cooperation with Fosun Group (not limited to holding stocks, equity investment, capital lending, project contracting, guarantees, business cooperation, etc.). ), and study and judge the relevant cooperation risks, and form a written report.
Fosun Group reportedly said in a statement that the company had not received any notification from regulators about these requirements, and that the company’s subsequent inquiries to Beijing’s SASAC found that these actions were part of a normal investigation by the authorities. The group is not the first to be involved in such an investigation and stressed that the group’s business remains healthy and resilient to challenges.
It was later reported that Fosun Group plans to meet with the Beijing SASAC on the afternoon of September 13.
According to people familiar with the matter, the above-mentioned actions of the regulators do not mean that they want commercial banks to change their financing plans for Fosun, and the Beijing State-owned Assets Supervision and Administration Commission’s request for such information is only to check and understand the risks faced by the company.
However, the risk assessment from market public opinion still reflects the market’s recent attention to the business situation of Fosun Group.
From “continuous buying and buying” to “continuous reduction of holdings”, this storm may have originated from the continuous asset disposal of Fosun Group. According to incomplete statistics from Viewpoint New Media, since September, Fosun Group has successively announced four reductions in its holdings, involving an amount of nearly 6 billion yuan, which has deepened the market’s attention to its liquidity pressure.
According to the stock exchange, Fosun International reduced its holdings of 68 million Zhaojin Mining H shares on September 1, cashing out 392 million yuan.
In the evening of the announcement of the listed company on September 2, it was disclosed that Fosun Hi-Tech planned to reduce its holdings by no more than 3% of the company’s total share capital. Based on the closing price of RMB 40.21 per share on September 2, Fosun could cash out about RMB 3.221 billion from this reduction. Yuan. As soon as the news came out, the stock price of Fosun Pharma fell by the limit on the day, and the market value evaporated by 10.6 billion yuan.
On the same day, Yuyuan, an A-share listed company, also sold 13% of Jinhui Wine to its original controller for 1.937 billion yuan.
After the market closed on September 5, Fosun International sold 28 million shares of Fosun Tourism and Culture to a third party at a discount of about 15% compared to the closing price of HK$10.08 on that day, raising about HK$240 million.
Extending the timeline, since this year, Guo Guangchang has frequently cashed out investment portfolios such as Hainan Mining and Tsingtao Brewery through listed companies. In addition, he has reduced his holdings of Fosun Pharma. The cash amount of “Fosun Galaxy” has exceeded 10 billion this year.
Some market observers said that this series of measures may be in response to the large amount of debt that is about to come due.
Data show that in the first half of the year, Fosun International’s asset-liability ratio rose to 76.64%, with book cash and cash equivalents of 117.113 billion yuan, less than short-term borrowings of 123.692 billion yuan.
Moody’s, an international credit rating agency, downgraded Fosun Group last month. The negative outlook reflects the uncertainty of refinancing, the execution risk of selling assets to repay Fosun’s large debt maturing in the next 12 months, and the company’s negative outlook. Continued challenges in balancing liquidity needs and maintaining portfolio quality.
Moody’s expects that Fosun will expand the scale of asset sales to repay maturing debts, but due to market fluctuations and the likely lengthy negotiation or regulatory approval process, there are uncertainties in the execution speed and actual proceeds of Fosun’s asset sales.
Moody’s is also concerned that the asset sale will reduce the size of Fosun’s investment portfolio, given that listed or high-quality assets are often easier to sell, the sale of assets would also reduce the quality of Fosun Holdings’ portfolio, reduce its asset diversity and portfolio transparency, and reduce the Dividends received by Fosun.
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