[ET Net News Agency, 28 May 2018] S&P Global Ratings affirmed its 'BB' long-term issuer
credit rating on China-based investment holding company, Fosun International Ltd (00656).
The outlook is stable.
At the same time, the credit rating agency affirmed its 'BB' long-term issue rating on
the outstanding guaranteed notes issued by the company's financing platform, Wealth Driven
Ltd. and Fortune Star (BVI) Ltd.
S&P affirmed the ratings to reflect our view that Fosun will sustainably grow with a
balanced investment and divestment strategy. It also expects the company to maintain a
loan-to-value (LTV) ratio of 30%-40% over the next two years.
Fosun's well-diversified investment portfolio and the stable credit quality of its key
investees support its fair investment position, it said. Fosun's investment portfolio
increased to about RMB237 billion as of end-2017, from RMB204.6 billion in 2016, mainly
due to appreciation in the value of its listed assets.
The company's portfolio ranges from healthcare, insurance, consumer products, leisure to
commodities in Asia-Pacific, Europe, and the Americas. This diversity could help Fosun to
better navigate industry cyclicality and dilute risks in a single market.
At the same time, most of its invested assets have sustainably growing operations with
stable credit quality. Fosun's asset liquidity is constrained by its large amount of
unlisted investees.
It expects these investees to account for less than half of Fosun's asset portfolio over
the next two years, compared with 57.6% as of end-2017. Fosun's asset capitalization and
IPO plans should temper the risk and allow flexibility of available-for-sale assets.
Fosun's ongoing asset injection into listed investee company, Shanghai Yuyuan Tourism
Mall, and more potential IPOs for some key assets should back the company's plan to
improve asset liquidity.
However, the timeframe of these plans are uncertain and they are unlikely to materialize
in the next 12 months. Fosun's short operating record in exiting investments is another
risk to its investment profile. (KL)