(Text/Zhang Zhifeng Editor/Ma Yuanyuan) The real estate industry has suffered a downturn, cultural tourism has been hit by the epidemic, and the two major business sectors of Fosun Xingxing Business Empire have suffered setbacks one after another. How to meet the upcoming debt repayment peak has become the focus of recent debate in the capital market.
Recently, the internationally renowned rating agencies Moody's and S&P have successively issued rating reports on Fosun International .
The former believes that the epidemic has repeatedly put pressure on Fosun International's already tight liquidity, and that its domestic and overseas debt maturities may further expand in the next 6-12 months, so it has been included in the negative watch list.
The latter believes that Fosun can effectively manage the company's liquidity by relying on multiple debt currencies and stable banking relationships, so it maintains Fosun International's rating outlook as "stable."
The two diametrically opposite attitudes are confusing, but for the public bond market, the bear market coupled with frequent thunderstorms in real estate stocks have already made investors panic and panic. Fosun International stock market and US dollar bond market This also resulted in larger fluctuations.
More than 100 billion in borrowings due within one year
In fact, the focus of the capital market's debate on Fosun International is mainly whether it can successfully survive the upcoming debt repayment peak.
As a huge business empire with assets of RMB 800 billion, its business covers real estate, medicine, cultural tourism, insurance, mining, financial investment and other industries. Fosun International has no doubt about its reputation and strength. Its leader Guo Guangchang It is even known as "China's Buffett", and more than ten listed platforms such as Fosun Pharma , Fosun Tourism, Yuyuan Group, Shanghai Steel Union, Hainan Mining, Nangang Group are all its directly controlled subsidiaries.
In March this year, Fosun International also spent 6.342 billion yuan to acquire the remaining 50% equity of the Shanghai Bund Financial Center to fully own this landmark project on the Bund of Shanghai.
However, behind the rapid expansion, high debt has become a hidden concern. According to
annual report data, Fosun International’s total assets are 806.372 billion yuan, of which 603.158 billion yuan are liabilities, with an asset-liability ratio of 74.8%.
Specifically, the company's undiscounted financial liabilities with contracts totaled 491.356 billion yuan, of which 99.827 billion yuan required immediate payment and 158.89 billion yuan will mature within one year.
Fosun International said its goal is to use interest-bearing bank borrowings and other borrowings to maintain a balance between financing continuity and flexibility. As of the end of 2021, 44% of the basic debt on corporate books will mature in less than one year, an increase of 5 percentage points year-on-year.
Against this background, the total interest-bearing bank loans and other borrowings of the company alone reached 262.175 billion yuan, and its total net assets were only 203.214 billion yuan.
In comparison, Fosun International's liquidity funds are slightly tight. Its cash and cash equivalents are 96.278 billion yuan, while the company's interest-bearing loans due within one year alone are 105.227 billion yuan, which is far from enough. Cover short-term debt.
Cashed out more than 4 billion in a single month
Guo Guangchang's business philosophy is changing from "buy, buy, buy" to "big sale."
is like Tsingtao Beer . In 2017, Guo Guangchang wrote "My Story with Tsingtao Beer" and invested HK$6.617 billion in a high-profile investment in Tsingtao Beer, becoming the second largest shareholder.
From August 26, 2021 to May 19, 2022, Fosun sold H shares of Tsingtao Brewery multiple times, with the price per share ranging from HK$59.47 to HK$66.54, cashing out a total of HK$2.917 billion.
On May 31, 2022, the fate between Guo Guangchang and Tsingtao Beer finally ran out. Fosun sold the remaining 66.8 million H shares of Tsingtao Brewery at HK$62 per share, cashing in another HK$4.1 billion.
At this point, Foxingxing will no longer hold Tsingtao Beer H shares. As for the reason for the liquidation, Fosun announced that it was "normal surrender and withdrawal arrangements."
It is worth noting that Fosun’s selling plan does not stop here.
html On the evening of June 15, Fosun Group planned to reduce its holdings of Zhongshan Public Shares by no more than 6%. Based on the closing price that day, the corresponding cash amount would be about 700 million. As for the reason for the reduction, Zhongshan Public Utilities stated that it was the needs of shareholder Fosun Group’s own business plan.On the same day, another A-share joint-stock company Taihe Technology also disclosed that the shareholder Fosun Chuanghong (a subsidiary of Fosun International Holdings) has continued to reduce prices through centralized bidding or block transactions from March 30 to June 14. He holds 8.1348 million shares of the company and has cashed out a total of approximately 184 million yuan.
And according to the previously disclosed plan, Fosun Chuanghong plans to reduce its cumulative holdings by no more than 16.2148 million shares before September 14, accounting for 7.5% of the company's total share capital. Based on previous transaction prices, the total cash out was approximately 368 million yuan.
Taihe Technology also stated the reason for the reduction of holdings as "shareholders' capital needs."
In other words, Fosun’s cash withdrawal amount exceeded 4 billion yuan in the equity transactions disclosed in the past month alone. Lenovo Regarding the cash flow crisis that companies may face, Fosun was at the forefront of public opinion for a while.
Rating agencies "fight"
Moody's said in its research report that the reason for being included in the downgrade watch list is that it is worried that the rising risk aversion among investors in the public bond market will put pressure on Fosun's already tight liquidity, and in the next 6- The company's 12-month domestic and overseas debt maturities are relatively large.
Moody's expects that Fosun will increase asset withdrawals and reduce the scale of investment to maintain liquidity for debt repayment, but there is uncertainty about the specific execution time and the actual amount of financing through relevant channels.
And continued asset withdrawals will weaken Fosun's upcoming dividend income and the size and quality of its investment portfolio, which may not support the company's Ba3 rating profile.
Moody's believes that in the sluggish environment of China's real estate industry, the contagion risks brought by Fosun's investment targets in the real estate industry, such as Fosun Real Estate , will increase.
As of the end of March 2022, Fosun’s cash at the holding company level is insufficient to repay short-term debt due within the next 12 months, and its recurring income (mainly including related investment dividends) is insufficient to support interest and operating expenses.
Moody's pointed out that due to the rising risk aversion of domestic and foreign investors towards high-yield private enterprises with greater exposure to the real estate industry, Fosun's public bond market financing channels will face challenges, which will significantly increase Fosun's refinancing risks.
actually works as expected.
Not long ago, Fosun International’s U.S. dollar bonds recorded the largest decline since March. At the same time, Moody's also placed the Ba3 backed senior unsecured debt rating of the bonds issued by Fortune Star (BVI) Limited on the watch list for downgrade.
The above-mentioned bonds are unconditionally and irrevocably guaranteed by Fosun. This move triggered speculation in the market that Fosun International's funds are tight.
Perhaps affected by this, Fosun had to announce a full offer to repurchase the only two overseas bonds due this year on June 22: One is FOSUNI 5.5% 2023, which investors have the right to redeem in August this year. The U.S. dollar bond, with an amount of approximately 380 million U.S. dollars; the second is the FOSUNI 3.3% 2022 Euro bond due in October this year, with an amount of approximately 384 million euros.
However, some analysts pointed out that many real estate companies have been downgraded one after another recently, and it has become normal for rating agencies such as Moody's to be bearish on domestic real estate companies. However, Fosun has already become a relatively mature comprehensive enterprise with diversified businesses. The impact of pure real estate business on the group is limited and cannot be generalized.
For example, listed companies in the cultural and tourism sector have revived tourism culture and started to turn from profit to loss in 2020. From 2020 to 2021, they suffered losses of 2.574 billion yuan and 2.712 billion yuan respectively.
But for the entire group, Fosun International's net profits attributable to the parent company in the two years were 7.998 billion yuan and 10.086 billion yuan respectively. Although it has declined from the high of 14.797 billion yuan in 2019, there is still a certain profit margin.
Another international rating agency, Standard & Poor's, believes in the latest research report that as of the end of 2021, Fosun International's total debt to total capital ratio has dropped to 53.8%, and the average debt cost is at a historical low of 4.6%; the group and its subsidiaries The company has established cooperative relationships with more than 100 Chinese and foreign banks around the world, and has signed strategic cooperation agreements with many international banks and Chinese banks.
In addition, Fosun has a global business scale and a diversified investment portfolio, which enables it to maintain a balance between investment and withdrawal.
S&P is therefore optimistic about its flexibility in withdrawing funds and maintains Fosun International's rating outlook as "stable". It also affirms Fosun International's "BB" long-term issuer credit rating and the company's secured senior unsecured debt. "BB" issuance rating.
In the past few years due to the impact of the epidemic, Fosun Real Estate and cultural tourism have both suffered setbacks in their two important business lines, resulting in declining revenue. How should Guo Guangchang cope with multiple pressures?
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