Fosun International delivered a 20% YoY increase in revenue to RMB43.5b in 1H18, as well as a 17% rise in net profit to RMB6.9b over the same period, such that the latter accounted for 46% and 45% of ours and the street’s full year forecast, respectively. Looking back, we note that 1H17 and 1H16 accounted for 44-45% of their respective full year figures.

There was also the adoption of a new accounting standard which decreased investment income; excluding this effect, bottom-line would have increased by 41% YoY.

From HK$33.28/share as at end 2017, Fosun’s adjusted net asset value decreased by 7.5% to HK$30.78/share as of end Jun 2018, mainly due to lower market prices for the group’s investments.

Currently, the stock is trading at about half of its adjusted NAV. Pending a briefing, we maintain our BUY rating but put our FV estimate of HK$23.10 under review.

Source: OCBC Research - 29 Aug 2018