Loss forecast exceeds 21.5 billion! Fosun International still undergoing "drastic remedial measures"

Source: Wired Insight

Editor / Night

In September 2015, Fosun International ended its legal dispute with SOHO China, acquiring all rights and income from the Bund 8-1 site, which had previously set a Shanghai land price record. The project was later developed into BFC Bund Financial Center.

At that time, Fosun International held a vast business empire, with real estate and healthcare once serving as the company’s two main revenue sources, supporting Fosun’s desire for high-quality resources and its ambition to build a Fosun “empire.”

Back then, Fosun was generous in acquiring desirable land parcels, probably never imagining that 11 years later, it would report that its “main real estate business segment is under pressure,” with a significant net profit loss forecast.

Recently, Fosun International issued a profit warning for FY2025, expecting a loss of 21.5 to 23.5 billion yuan during the reporting period. Compared to a loss of 4.35 billion yuan in 2024, the loss has nearly increased fivefold.

In the announcement, Fosun attributed the large accounting losses mainly to one-time impairment provisions and revaluation of certain assets, with the first being a significant impairment of some real estate projects showing signs of devaluation.

Besides real estate, Fosun also made impairment provisions for goodwill and intangible assets in some non-core business segments.

It’s clear that the “buy buy buy” approach in the past has left Fosun International with considerable burdens. The recent “downsizing” has had limited impact on improving the company’s situation. The urgent task for Fosun is to recognize that some assets are no longer valuable and to optimize its asset portfolio accordingly.

However, the reality is that the large investments made back then were much easier to execute, and letting go now is much harder. After this self-reflective “financial cleanup,” Fosun may find it difficult to provide the market with a satisfactory short-term answer.

Behind the forecasted loss of over 21.5 billion yuan,

Fosun International wants to shed its burdens

Why did Fosun International release such a huge loss forecast? This likely relates to its expansion starting point.

In 1992, founder Guo Guangchang borrowed 38,000 yuan and, together with Liang Xinjun, founded Guangxin Technology Consulting, the predecessor of Fosun Group, beginning his entrepreneurial journey.

Under Guo Guangchang’s leadership, Fosun made its first fortune in 1994 by代理ing unsold real estate and developing hepatitis B PCR reagents. Four years later, Fosun Pharma (originally Fosun Industrial) was listed.

Since then, Guo Guangchang and Fosun completed their capital accumulation before expansion, riding every wave of opportunity over the next decade.

In the early 2000s, China’s infrastructure boom was underway. Fosun, having secured substantial financing, began investing broadly in upstream resources like steel, gold, and coal mines from 2002.

It invested in companies such as Yuyuan Shopping Mall, Jianlong Group, Nanjing Steel, and China National Pharmaceutical Group. In 2004, Fosun International was established, and through capital operations, Fosun Real Estate, Zhaojin Mining, and Fosun International went public successfully.

Around 2008, China’s economy slowed, shifting from external to internal growth drivers, sparking China’s first wave of overseas expansion.

Fosun quickly expanded abroad from 2007, shifting focus from steel and coal to insurance, investment, and consumer sectors.

It invested in Yong’an Property & Casualty, Focus Media, and Club Med, and established Dingrui Reinsurance and Prudential Life. It also invested in Italian menswear brand Caruso and acquired Israeli medical aesthetic device manufacturer Alma Lasers, among others.

By 2020, Fosun, with businesses in steel, real estate, healthcare, retail, financial services, and strategic investments, continued expanding.

During that period, Fosun aimed to build a C2M closed-loop ecosystem centered on family consumers in health, happiness, and wealth.

As these three core businesses took shape, Fosun launched the Global Partner Program; restructured assets of Yuyuan Shares; and increased investments in Jin Hui Liquor, Shede Group, French jewelry designer Djula, herbal skincare brand WEI, and more.

At its peak, Fosun had over 100 companies, held stakes in more than 40 listed companies, and included 19 global listed companies in its portfolio.

But the cycle’s power is unstoppable. Many of the once-booming sectors have become history, especially the real estate market, once considered a hard currency.

Among Fosun’s “Happy” segment, Yuyuan Shares, the main subsidiary, now faces dual pressures from the real estate and consumer sectors and has become one of the largest drag on the group’s performance.

According to previous disclosures, Yuyuan expects a full-year loss of 4.8 billion yuan in 2025. Its downward trend was evident in the first half of 2025: net profit after non-recurring items fell by 0.66% to 445 million yuan, with revenue and net profit attributable to shareholders also declining year-over-year.

Furthermore, as market enthusiasm waned, many acquired assets failed to generate expected synergies. Fosun made a one-time non-cash impairment and revaluation, leading to the profit warning.

Fosun explained that this was to truthfully reflect financial information, which many interpret as a “financial detox,” showing Fosun’s determination to clear obstacles for future strategic transformation.

“Slimming down”

Looking further back, Fosun had already been shrinking strategically for years before this “financial detox.”

The first signals of “slimming” appeared in 2019, when Guo Guangchang and Fosun International began gradually reducing their holdings in Qingdao Beer, eventually cashing out about HKD 15 billion, with a profit of around HKD 8.4 billion—an almost 127% return.

In 2022, Fosun announced a strategy of “slimming down, strengthening, selectively retreating, and focusing on core businesses,” marking the start of its non-core asset disposals.

In 2022 alone, Fosun sold assets including American insurer AmeriTrust, Zhaojin Mining, Taikang Insurance, Jin Hui Liquor, and Rock Petroleum. From 2023 to 2025, it further divested Nanjing Steel, IGI Group, German private banks, Shanghai Xingguang Yao Plaza Phase II, and Luz Saúd medical in Portugal.

By 2026, Fosun continues to sell assets, including Shanhe Pharmaceutical, Caruso menswear, and shares in Chongqing Rural Commercial Bank.

Since 2022, Fosun has cumulatively raised about HKD 8 billion through asset sales.

After four years of “slimming,” Fosun’s impairment provisions are seen as a thorough risk clearance, and the company remains confident.

Guo Guangchang stated at an investor conference, “Removing potential risks all at once better demonstrates Fosun’s overall competitiveness, and future capital performance will truly reflect Fosun’s value.”

To boost market confidence, Fosun launched a share repurchase plan. The controlling shareholder Fosun Holdings and senior management plan to buy back up to HKD 500 million worth of shares within 12 months after the FY2025 earnings announcement.

In addition, Fosun has been actively repurchasing shares recently. On February 27, it spent nearly HKD 50 million on buybacks, and on March 2, announced plans to repurchase shares worth up to HKD 1 billion.

However, market doubts remain. From December 2025 to March 2026, Fosun’s stock price fell from around HKD 4.94 to HKD 3.86, a decline of over 20% in three months. On the day of the profit warning, the stock opened lower and continued to decline, with market value shrinking further to HKD 29.3 billion.

More concerning is Fosun’s debt situation. As of June 2025, its interest-bearing debt rose to HKD 222.1 billion, with short-term interest-bearing liabilities exceeding HKD 110 billion, accounting for over 50%, while cash and bank deposits totaled only HKD 67.8 billion.

Clearly, Fosun’s debt pressure remains significant.

Another harsh reality is that not all assets will generate cash flow. Unsold assets may become even harder to sell later, and “fire sale” losses could be a future challenge.

“Selling things isn’t painful; not being able to sell is.” Guo Guangchang’s past remark about “buy buy buy” has become a boomerang.

Can Fosun, after “lightening the load,” still be competitive?

Fosun’s profit warning includes an explanation: “The large non-cash impairment and provisions aim to truthfully reflect the company’s financial position and do not affect overall operations and cash flow.”

This suggests that the over 20 billion yuan loss isn’t cash flowing out of the company’s accounts, and its operational cash flow remains unaffected.

In fact, Fosun’s confidence lies in several core business segments that still have bright spots, which is why some market voices continue to hope for a “lightened” Fosun.

According to its financial report, Fosun divides its business into four segments: Health, Happiness, Wealth, and Intelligent Manufacturing, covering pharmaceuticals; consumer and tourism/cultural enterprises; insurance and asset management; and resources, manufacturing, and technology. The first three are Fosun’s current strategic focus.

Fosun Pharma, in the health segment, remains a major source of revenue and profit.

Despite a 4.97% decline in revenue in the first three quarters of 2025 to 29.39 billion yuan, its net profit attributable to shareholders increased by 25.5% to 2.52 billion yuan. The net cash flow from operating activities also grew year-over-year, reaching 3.382 billion yuan, up 13.23%.

This company, which has been a “pillar” since Fosun’s early days, still develops innovative drugs for core treatment areas like solid tumors, hematologic malignancies, and immune inflammation. In the first three quarters of 2025, revenue from innovative medicines exceeded 6.7 billion yuan, an 18.09% increase over the same period in 2024.

Additionally, licensing products to other companies also brings revenue. For example, in December 2025, Fosun Pharma announced a licensing agreement with Pfizer, granting Pfizer rights to a small-molecule oral GLP-1 product. Fosun Pharma will receive an upfront payment of up to $150 million and could earn milestone payments up to $1.935 billion, plus tiered royalties after approval.

In the Happiness segment, besides Yuyuan Shares, there are Shede Liquor and Fosun Tourism & Culture. The recovery of the domestic cultural tourism market has boosted these businesses.

Fosun Tourism & Culture’s revenue in the first half of 2025 reached 9.53 billion yuan, up 1.3%; adjusted net profit was 460 million yuan, up 42.0%.

The Wealth segment, including Fosun Portugal Insurance and Fosun Wealth Holdings, is a cash cow for Fosun.

Fosun Portugal Insurance’s gross written premiums (GWP) in the first half of 2025 reached €3.271 billion, up 16.5%, and by mid-2025, it held a 29.3% market share in Portugal.

Fosun Prudential Life Insurance recently reported full-year results for 2025: total insurance revenue of 12.6 billion yuan, up 36.2%, with net profit of 650 million yuan, an increase of over 450%.

Perhaps because Fosun International still has several “strong” core businesses, the market remains somewhat optimistic despite the large non-cash impairment provisions.

For example, Guotai Haitong Securities issued an “Overweight” rating, believing Fosun is a global family consumer industry group with a steadily improving fundamentals, accelerating profit momentum, and promising upside potential.

However, removing some “overstated” figures, Fosun’s massive losses remain a concern.

How much room does the company have for asset reallocation? How long until it truly “lightens the load”? Can its core businesses realize greater potential? These questions await answers from Fosun.

(The featured image is from Fosun’s official website.)

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