Breaking Through Starting Anew Fosun International 2025 Annual Results 2026-03-31 | Shanghai 1 Disclaimer This document is not intended to provide a full explanation of any relevant matters of Fosun International Limited ("Fosun" or the "Company"). You must refrain from relying on any information set out in this document. No statement, guarantee or undertaking is or will be made or given at present or in the future in respect of the accuracy, fairness, reasonableness, correctness or completeness of this doc ...

Core Viewpoint - Fosun International reported a total revenue of RMB 173.43 billion for the fiscal year 2025, with an adjusted operating profit of RMB 4 billion, despite a significant one-time non-cash impairment loss of RMB 23.4 billion, primarily from real estate and non-core assets [1][2] Financial Performance - The company achieved a total revenue of RMB 1734.3 billion, with a notable adjusted operating profit of RMB 40 billion [1] - The reported net loss of RMB 234 billion was largely due to impairment charges, with real estate impairments accounting for approximately 55% and non-core asset impairments for about 45% [1] - Cash and bank deposits reached RMB 61.1 billion, with unused bank credit totaling RMB 144.6 billion, maintaining a healthy financial status [8] Business Segments - The four core subsidiaries generated RMB 128.2 billion in revenue, representing 74% of total group revenue, indicating the success of the "focus on core business" strategy [3] - Fosun Pharma reported a net profit of RMB 3.371 billion, a year-on-year increase of 21.69% [3] - The overseas subsidiary, Fosun Portugal Insurance, achieved a net profit of €201 million, a 15.8% increase, and received an A rating from S&P [3] Strategic Focus - The company is emphasizing innovation and globalization as core strategies, with Fosun Pharma's innovative drug revenue growing by 29.59% to RMB 9.893 billion [5][6] - The global revenue for Fosun reached RMB 948.6 billion, accounting for 54.7% of total revenue, reflecting a 5.4 percentage point increase year-on-year [6] Future Outlook - The company aims to restore a profit scale of RMB 10 billion and reduce total liabilities to below RMB 60 billion, targeting an "investment-grade" rating [9] - Plans to increase the dividend payout ratio from 20% to 35% for the fiscal year 2026, with expected dividends of no less than HKD 1.5 billion [8]

Core Viewpoint - Fosun International Limited maintains a robust fundamental performance in 2025, with strong growth in core sectors such as healthcare and insurance, driven by innovation and globalization [1][2] Financial Performance - Total revenue for the group reached RMB 173.43 billion, with adjusted operating profit of RMB 4 billion [1] - The four core subsidiaries generated revenue of RMB 128.2 billion, accounting for 74% of total revenue [1] - Fosun Pharma's net profit reached RMB 3.371 billion, a year-on-year increase of 21.69% [1] - The net profit of Fosun Portugal Insurance was EUR 201 million, up 15.8% year-on-year [1] Strategic Focus - The company is implementing a "streamlining and focusing on core business" strategy, resulting in a non-cash impairment charge of RMB 23.4 billion due to asset revaluation [1][2] - The impairment primarily affected real estate projects (55%) and non-core assets (45%) [1] Innovation and R&D - Fosun's R&D investment reached RMB 7.8 billion, with a focus on a three-pronged global innovation system [3] - Seven innovative drugs received approval for 16 indications, with six additional applications accepted [3][4] - Revenue from innovative drugs increased to RMB 9.893 billion, a growth of 29.59%, representing 33.16% of pharmaceutical business revenue [4] Globalization Efforts - Overseas revenue reached RMB 94.86 billion, accounting for 54.7% of total revenue, an increase of 5.4 percentage points year-on-year [6] - Fosun Pharma's core product, H drug, generated global sales of RMB 1.493 billion, a growth of 13.7% [6][7] - The company has established a global operational network covering multiple regions, enhancing its international business capabilities [7] Insurance Sector Performance - Fosun Portugal Insurance reported gross premium income of EUR 6.53 billion, with a net profit of EUR 201 million, reflecting a 15.8% increase [7][8] - The domestic insurance companies also showed significant growth, with Fosun Baodexin Life achieving a premium income of RMB 13.28 billion, up 41.6% [8] Commitment to ESG - Fosun is dedicated to sustainable development, with significant contributions to global health and rural revitalization initiatives [10] - The company received top ESG ratings, including MSCI ESG AAA rating and inclusion in various sustainability indices [10] Future Financial Goals - The company aims to restore a profit scale of RMB 10 billion and reduce total liabilities to below RMB 60 billion [11] - A plan to increase the dividend payout ratio from 20% to 35% for the fiscal year 2026 has been announced [11]

Investment Rating - The report maintains a BUY rating on Henlius Biotech with a target price of HK$99.78, reflecting a potential upside of 52.0% from the current price of HK$65.65 [1][3]. Core Insights - Henlius Biotech reported strong FY25 financial results, with total revenue of RMB6.67 billion, representing a year-on-year growth of 16.5%. Product sales reached RMB5.77 billion, exceeding previous estimates by approximately 7.9% [1][5]. - The company is expanding its global biosimilar footprint and forming new international partnerships, positioning itself as an innovative biologics powerhouse with competitive assets such as HLX43, HLX22, and serplulimab [1][5]. - Anticipated clinical and regulatory catalysts in 2026 are expected to further enhance the company's growth trajectory [1]. Financial Summary - FY25 revenue was RMB6,667 million, with a year-on-year growth of 16.5%. Net profit for FY25 was RMB827 million, showing a slight increase of 0.8% year-on-year [2][10]. - The earnings per share (EPS) for FY25 was reported at RMB1.52, with a price-to-earnings (P/E) ratio of 37.9 [2][10]. - R&D investments increased to RMB2.49 billion, a growth of 35.4% year-on-year, indicating a strong commitment to developing the next-generation pipeline [5][10]. Product Performance - Serplulimab, a key product, generated sales of RMB1.50 billion, reflecting a year-on-year growth of 14.0%. The foundational biosimilar franchise, including trastuzumab, achieved global sales of RMB2.97 billion, up 5.5% year-on-year [5][10]. - Overseas product sales doubled to approximately RMB260 million, marking a 100% year-on-year increase [5]. - HLX43, a leading PD-L1 ADC, is entering pivotal stages with promising early efficacy signals in NSCLC, and additional pivotal trials are expected to commence by 4Q26 [5][10]. Market Position and Valuation - The market capitalization of Henlius Biotech is approximately HK$35.68 billion, with an average turnover of HK$61.5 million over the past three months [3]. - The target price of HK$99.78 is derived from a discounted cash flow (DCF) analysis, with a weighted average cost of capital (WACC) of 9.13% and a terminal growth rate of 3.5% [6][8].

Market Overview - The A-share pharmaceutical and biotechnology index increased by 0.50% last week, underperforming the CSI 300 index by 0.58 percentage points and the ChiNext index by 1.82 percentage points, ranking 25th among 31 sub-industries [4] - The Hong Kong Hang Seng Healthcare Index fell by 6.07%, underperforming the Hang Seng Index by 4.96 percentage points [4] R&D Progress - Last week, several clinical applications were newly undertaken, including CMS-D008 injection by Kangzhe Pharmaceutical and KC1036 tablets by Kangchen Pharmaceutical [4] - Other IND applications included HSK46575 tablets by Haishi Pharmaceutical, injection of Lankangyilong monoclonal antibody by Bailitianheng, and injection of BL-M11D1 [4] - Notable ongoing clinical trials include ICP-538 by Nocera Biopharma and DC6001 by China Resources Sanjiu in Phase I, HLX43 by Fuhong Hanlin and Punanli monoclonal antibody by Tianjing Biopharma in Phase II, and SYH2053 and SYS6010 by Shiyao Group in Phase III [4] Investment Outlook - The company maintains a positive outlook on the pharmaceutical sector's recovery, reiterating the investment thesis based on the three stages of clinical value: 1. "0→1" technological breakthroughs in innovative drugs, particularly in oncology, weight loss, and autoimmune diseases, as well as advancements in innovative medical devices like brain-machine interfaces [5] 2. "1→10" clinical validation with high-quality domestic innovative drugs accelerating overseas authorization and the rise of high-end medical devices [5] 3. "10→100" efficiency in China, where CXO companies leverage low costs and high efficiency to build competitive advantages, particularly in the disposable medical supplies sector [5] - The focus is on the accelerated overseas expansion of innovative drugs and their upstream CXO, as well as the innovation and upgrade of high-end medical devices and high-value consumables [5]

Investment Rating - The report maintains a "Buy" rating for the pharmaceutical sector, emphasizing a positive outlook for the recovery of the industry [3][4]. Core Viewpoints - The report expresses a strong belief in the recovery of the pharmaceutical sector, reiterating the investment thesis based on the "three stages of clinical value": 1) "0→1" technological breakthroughs in innovative drugs and devices; 2) "1→10" clinical validation of high-quality domestic innovative drugs; 3) "10→100" efficiency in the Chinese pharmaceutical industry [2][19][20]. - The report highlights the acceleration of BD (Business Development) for innovative drugs and the growth of domestic CXO (Contract Research Organization) companies, as well as the rise of high-end medical devices and high-value consumables [2][20]. Summary by Sections Market Review - Last week, the A-share pharmaceutical index rose by 0.50%, underperforming the CSI 300 index by 0.58 percentage points and the ChiNext index by 1.82 percentage points, ranking 25th among 31 sub-industries [1][14]. - The Hong Kong Hang Seng Medical Health Index fell by 6.07%, underperforming the Hang Seng Index by 4.96 percentage points [1][14]. R&D Progress - Recent clinical applications include CMS-D008 injection from Kangzhe Pharmaceutical and KC1036 tablets from Kangchen Pharmaceutical, both newly undertaken; IND applications for HSK46575 tablets from Haishike and other products are also in progress [1][24]. Key Company Recommendations - The report recommends several companies based on their potential in the innovative drug sector and medical devices: - Innovative drugs: Innovent Biologics (H), Yifang Biologics (U), Tianjin Pharmaceutical - CXO companies: WuXi AppTec (A+H), Proprius - High-end medical devices: Mindray Medical, United Imaging Healthcare, Weisi Medical [2][20]. Financial Forecasts and Valuations - The report provides earnings per share (EPS) and price-to-earnings (PE) ratios for key companies, indicating a positive outlook for their financial performance [3]. - For instance, Tianjin Pharmaceutical is projected to have an EPS of 0.77 yuan in 2025 with a PE of 19, while Innovent Biologics is expected to reach an EPS of 0.49 yuan with a significantly higher PE of 154 [3]. Important Updates - The report includes updates on clinical trial approvals and progress for various companies, indicating ongoing innovation and development within the sector [23][24]. - It also notes the stability of prices for key pharmaceutical raw materials and the overall performance of the pharmaceutical manufacturing industry, which saw a year-on-year revenue decline of 1.2% [28][45].

Core Viewpoint - Fosun International has continued its strong growth momentum in 2026, driven by the commercialization of innovative results and deepening global operations, achieving breakthroughs in sectors such as cultural tourism, consumer goods, and innovative pharmaceuticals [1][2]. Group 1: Cultural Tourism and Consumer Growth - During the Spring Festival, Fosun's cultural tourism sector showed robust growth, with Shanghai Yuyuan Mall receiving nearly 1.2 million visitors, a year-on-year increase of over 20% [1] - Club Med's five domestic resorts achieved an average occupancy rate of 90% during the core holiday period [1] - Atlantis Sanya reported a total revenue of 124 million yuan during the Spring Festival holiday, marking a 20% year-on-year increase and setting a historical record for the holiday [1] Group 2: Innovative Pharmaceuticals - Fosun's innovative pharmaceutical sector has seen significant developments, with its subsidiary, Fuhong Hanlin, receiving clinical trial approvals for HLX15-SC from both the Chinese National Medical Products Administration and the FDA [2] - HLX15, a biosimilar to Daratumumab, has a projected global sales potential of approximately 12.88 billion yuan in 2024 [2] - Fosun's innovative drug revenue exceeded 6.7 billion yuan in the first three quarters of 2025, reflecting an 18.09% year-on-year growth [3] Group 3: Strategic Collaborations and Future Growth - Fosun's subsidiary, Yaoyou Pharmaceutical, signed a global exclusive licensing agreement with Pfizer for the oral small molecule GLP-1 drug YP05002, with potential total payments exceeding 2 billion USD [4] - A strategic partnership with Clavis Bio aims to develop innovative therapies, with potential payments up to 7.25 billion USD [4] - The innovative drug sector is expected to enhance Fosun's long-term valuation elasticity, as the company enters a period of concentrated harvest of innovative drug research and commercial growth [5] Group 4: Globalization and Financial Performance - Fosun's overseas revenue reached 53% in the first half of 2025, marking a historical high [6] - The pharmaceutical sector's overseas revenue grew by 184%, surpassing 10 billion yuan, showcasing the company's global capabilities [7] - The company has successfully divested non-core assets, raising significant funds to support its focus on core businesses, with total debt to total capital ratio at 53% as of mid-2025 [8][9]

Core Insights - Fosun International has continued its strong growth momentum in 2026, particularly in sectors such as cultural tourism, consumer goods, and innovative pharmaceuticals, driven by the commercialization of innovative results and deepening global operations [1][2] Group 1: Cultural Tourism and Consumer Growth - During the Spring Festival, Fosun's cultural tourism segment showed robust growth, with Shanghai Yuyuan Mall receiving nearly 1.2 million visitors, a year-on-year increase of over 20% [1] - Club Med's five domestic resorts achieved an average occupancy rate of 90% during the Spring Festival core holiday period [1] - Atlantis Sanya reported a total revenue of 124 million yuan during the Spring Festival holiday, marking a 20% year-on-year growth and setting a record for the best performance during the Spring Festival [1] Group 2: Innovative Pharmaceuticals - Fosun's innovative pharmaceutical sector has seen significant advancements, with its subsidiary, Fuhong Hanlin, receiving clinical trial approvals for HLX15-SC from both the Chinese National Medical Products Administration and the FDA [2] - HLX15, a biosimilar to Daratumumab, has a projected global sales potential of approximately 12.88 billion yuan in 2024 [2] - In 2025, Fosun Pharma's innovative drug revenue exceeded 6.7 billion yuan, reflecting an 18.09% year-on-year increase, with innovative drugs accounting for 32% of the pharmaceutical segment [3] Group 3: Strategic Collaborations and Future Growth - Fosun Pharma's subsidiary, Yaoyou Pharmaceutical, signed a global exclusive licensing agreement with Pfizer for the oral GLP-1 drug YP05002, with potential total payments exceeding 2 billion dollars [4] - A strategic partnership with Clavis Bio aims to develop innovative therapies based on cutting-edge targets, with potential payments up to 7.25 billion dollars [4] - The innovative drug growth is further supported by the successful global development of core products from Fuhong Hanlin, which saw a stock price increase of approximately 150% in 2025 [4] Group 4: Globalization and Financial Performance - Fosun's overseas business revenue reached a historic high of 53% in the first half of 2025, reflecting its deep industry layout and operations in over 40 countries [6] - The overseas revenue from Fosun Pharma's innovative drugs grew by 184%, surpassing 10 billion yuan [7] - The financial health of Fosun is reinforced by strategic asset divestitures and a reduction in debt costs, with total debt to total capital ratio at 53% as of mid-2025 [8][9]

Core Insights - Fosun International has continued its strong growth momentum in 2026, particularly in tourism, consumption, and innovative pharmaceuticals, driven by the commercialization of innovative results and deepening global operations [1][2] Tourism and Consumption - During the Spring Festival, Fosun's tourism and consumption sectors showed robust growth, with Shanghai Yuyuan Mall receiving nearly 1.2 million visitors, a year-on-year increase of over 20% [1] - Club Med's five domestic resorts achieved an average occupancy rate of 90% during the core holiday period [1] - Atlantis Sanya reported a total revenue of 124 million yuan during the Spring Festival, marking a 20% year-on-year increase and setting a record for the holiday [1] Innovative Pharmaceuticals - Fosun's innovative pharmaceutical sector has seen significant developments, with its subsidiary, Fuhong Hanlin, receiving clinical trial approvals for HLX15-SC from both the Chinese National Medical Products Administration and the FDA [2] - HLX15, a biosimilar to Daratumumab, has a projected global sales potential of approximately $12.88 billion in 2024 [2] - Fosun Pharma's innovative drug revenue exceeded 6.7 billion yuan in the first three quarters of 2025, representing an 18.09% year-on-year growth, with innovative drugs accounting for 32% of the pharmaceutical segment [3] Strategic Collaborations and Agreements - Fosun Pharma's subsidiary, Yaoyou Pharmaceutical, signed a global exclusive licensing agreement with Pfizer for the oral GLP-1 drug YP05002, with potential total payments exceeding $2 billion [4] - A strategic cooperation agreement with Clavis Bio could yield up to $7.25 billion in payments for developing innovative therapies [4] - The self-developed small molecule inhibitor FXS6837 has entered a global licensing partnership, and the rare disease treatment Rumaine has received breakthrough therapy designation in Saudi Arabia [4] Globalization and Revenue Growth - Fosun's overseas revenue reached 53% of total revenue in the first half of 2025, marking a historical high [7] - The overseas revenue from Fosun Pharma's innovative drugs grew by 184%, surpassing 10 billion yuan [7] - Club Med's global performance reached 9.25 billion yuan in the first half of 2025, with an 11% increase in operating profit [7] Financial Health and Debt Management - Fosun's total debt-to-capital ratio was 53% in the first half of 2025, with a decrease in debt costs [11] - Significant capital was raised through the sale of stakes in various subsidiaries, including a 3.1 billion euro stake in Luz Saúde and a 7.03 billion euro stake in HAL [11] - The company secured a record offshore syndicated loan of $990 million, the highest in five years, and issued $400 million in bonds [11] Conclusion - With a focus on innovation and globalization, Fosun International is positioned for sustainable growth, enhancing its long-term valuation flexibility as it continues to realize innovative results and deepen its global presence [10][11]

Core Insights - Fosun has shown strong performance in its core sectors such as tourism, pharmaceuticals, and insurance since the beginning of 2026, with significant growth in revenue and strategic partnerships [1][4][6] Tourism Sector - Fosun's Club Med resorts in China have seen a threefold increase in inbound revenue compared to the same period last year, driven by strong demand for travel during the New Year [1] - The company launched three major product lines in 2025, including 14 projects, with notable developments like the Mediterranean White Day Ark Resort in Hangzhou and a Super Cultural Tourism Mall in Chongqing set to open in 2026 [2] - During the New Year period, Club Med's domestic resorts reported a 33% increase in total revenue, with some resorts achieving occupancy rates above 97% [2] Pharmaceutical Sector - Fosun Pharma's subsidiary, Huahong Hanlin, has entered a partnership with Eisai Co., Ltd. for the exclusive commercialization and joint development of an anti-PD-1 monoclonal antibody in Japan, with a potential total value exceeding $300 million [1] - The company has secured significant licensing agreements, including a deal with Pfizer for a GLP-1 drug with a potential total value exceeding $2 billion [4] - Huahong Hanlin's stock price surged approximately 150% in 2025, reflecting its strong position in the innovative drug market [6] Insurance Sector - Fosun's insurance companies have reported substantial growth, with Fosun United Health Insurance achieving a business income of 7.84 billion yuan, a 50% increase year-on-year, and Fosun Baodexin Life Insurance's income reaching 12.6 billion yuan, up 36.2% [6] - The insurance segment has provided stable cash flow and supported long-term investment strategies for the company [6] Financial Health and Strategy - Fosun has maintained a healthy financial status, with a total debt-to-capital ratio of 53% as of mid-2025, and has successfully executed significant equity sales to enhance cash flow [7][8] - The company plans to reduce interest-bearing liabilities by approximately 10 billion yuan annually over the next two to three years, aiming for an "investment-grade" rating [9] - Fosun is preparing for potential IPOs of two subsidiaries in 2026, which could provide strategic synergies and investment returns [9] Future Outlook - The company is positioned to capitalize on opportunities in the family consumption sector, particularly in health and wellness, as well as tourism in emerging markets [10] - Fosun's chairman emphasizes the importance of leveraging the company's strengths and continuing its innovation and globalization strategies to achieve high growth [10]