Author | Market boundary Zeng Jiayi
Editor | Lang Ming
For Fosun International (656.HK), whose total assets exceed 7 billion yuan, it is also necessary to be nervous about the "food and grass" in the rear.
on July 27th, Moody's downgraded Fosun International's corporate family rating from "Ba2" to "Ba3"; At the same time, the senior unsecured rating of the bonds issued by Fortune Star (BVI) Limited was lowered from "Ba2" to "Ba3", and the rating outlook was changed from being on the rating watch list to "negative".
Moody's believes that there are four main reasons for the downgrade: Fosun International's debt leverage ratio is high and increasing; Long-term investment depends on short-term funds; Interest coverage ratio at the holding company level is low; The risk of credit contagion is increasing.
Moody's is a world-renowned rating agency, and its rating results are often an important reference for large international institutions or government sovereign funds to measure the investment scope.
Just before Moody's downgrade, on July 24th, Fosun International disclosed its profit warning for June 22, saying that in the first half of 22, it would record a profit attributable to shareholders of the parent company of about 1.8 billion to 2.2 billion yuan, down 76.35% to 71.9% compared with 7.61 billion yuan in the same period of 219.
As for the reasons for the decline in net profit, Fosun International said that the operation of its Fosun Tourism Culture Group was affected mainly by the COVID-19 epidemic, with an estimated loss of 85 million yuan to 1 billion yuan in 22 and a profit of about 49 million yuan in 219.
in addition to the decline in performance, fosun international's huge debt also makes its cash flow tight.
By the end of 219, Fosun International had total assets of 715.681 billion yuan, total liabilities of 534.757 billion yuan and asset-liability ratio of 74.72%.
under the pressure of high debt, its short-term and long-term solvency is also challenged. By the end of 219, Fosun International had short-term loans of 82.738 billion yuan, notes payable and accounts payable of 23.275 billion yuan, long-term loans of 125.549 billion yuan, and its overall interest-bearing liabilities amounted to 231.562 billion yuan.
The high interest-bearing liabilities caused the financing cost of Fosun International to soar. In 219, its financial expenses amounted to 1.221 billion yuan, and the ratio of financial expenses to total operating income increased from 5.6% to 7.15%, which greatly eroded profits.
However, Fosun International's cash and cash equivalents at the end of 219 was 94.9 billion yuan, a decrease of 1.7% compared with 16.317 billion yuan in 218. It can be seen that its cash on hand is already stretched to meet the current short-term debts.
Just in June this year, there were rumors that Fosun International sought to sell 6.7% of Cainiao's shares in part or in whole at a valuation of nearly $2 billion. In response to this rumor, the rookie responded that he would not comment.
fosun international has not responded to this. whether it is true or not, it reflects to some extent that fosun international is "short of money".
fosun international, established in 1992, mainly involves three sectors: health, happiness and prosperity, specifically in the fields of medical health, tourism and leisure, and insurance and finance.
As early as 27, Fosun International achieved the overall listing of the Group in Hong Kong. As of July 29th, the total market value of Fosun International was HK$ 7.8 billion.
With the soaring net worth, founder Guo Guangchang has long been the richest man in Shanghai. According to the latest Hurun Report 219, Guo Guangchang ranked 45th with 57 billion yuan.
however, can fosun international survive in the face of high debt, tight liquidity and business uncertainty caused by the epidemic?