Earnings Transcript for 0656.HK - Q4 Fiscal Year 2023

Sun Lu: Investors and Analysts, good morning. Welcome to 2023 Financial Annual Results of Fosun International. I am the General Manager of Investor Relations Department, Sun Lu. Let me introduce you to the management team of Fosun International, Chairman of Fosun International, Mr. Guo Guangchang; Executive Director and Co-Chairman of Fosun International, Wang Qunbin; Executive Director and Co-CEO of Fosun International, Mr. Xu Xiaoliang; Executive Director and Co-CEO of Fosun International, Mr. Chen Qiyu; and Executive Director, Executive President and CFO of Fosun International, Mr. Gong Ping. So today, we have morning and afternoon sessions. In the morning, Fosun International management team will present 2023 annual results and strategy. In the afternoon sessions, the heads of four segments and the management team will present you the annual results of different segments. In 2023, we have been focusing on core businesses and achieved steady progress. First, let me give the floor to CFO of Fosun International, Mr. Gong Ping to talk about financials.

Gong Ping: Distinguished investors online and offline, welcome to 2023 Fosun International annual results meeting. So let me present you 2023 financials. In 2023, we have been facing many uncertainties and challenges. However, we are moving steady and also we have continued our revenue growth. Our total revenue was RMB198.2 billion, up by 8.6% Y-o-Y. Our industrial operation profit was RMB4.9 billion, up by 20% Y-o-Y, excluding impacts of discontinued businesses. The profit attributable to owners of the parents was RMB1.38 billion, and the increase was great. Overseas revenue was RMB89.2 billion accounts for 45% of total revenue. I will elaborate later that our overseas businesses has been a great support to the Group. We have been keeping in making investments in technology and innovation standing at RMB7.4 billion, up by 14% Y-o-Y. Newly registered members in 2023 was 37 million. In 2023, the number of consumer members reached to 14.58 million. And also, we are very happy to see that our -- for this resilience business portfolio composed of four segments including Health, Happiness, and Wealth Intelligent Manufacturing. Especially in 2023, the Happiness revenue has seen a great growth up by 25.7% and Wealth segment stays stable, and also, we have seen great growth from Intelligent Manufacturing BG. Although we have seen a little bit down from the House segment, however, we -- in total, together combined of them, we still see a resilient business portfolio. So these four core subsidiaries has been our solid bedrock and also four core subsidiaries has achieved great results. Yuyuan's revenue was up by 15.8% and Fosun Pharma was down by 5.8% Y-o-Y. FTG was up by 24.5% Y-o-Y standing at RMB17.15 billion. Four core subsidiaries contributed 72% of total revenue. And also, we have keeping optimizing our balance sheet. Our public markets financing, standing at RMB19.86 billion. Cash, bank balances and term deposits was RMB92.46 billion However, because of the -- although the interest rate has been increased in the U.S., but we have been successfully managed our average cost of borrowings and our adjusted NAV was HKD19.0 per share, and I'm also very happy to see that our leverage ratio has dropped considerably standing at 50.4% in 2023. So for the last two to three years, the Group has been disposed the non-core assets, and also we have been keep focusing on our core businesses. This has been recognized by the rating agencies. S&P in May 2023 has lifted Fosun International's credit outlook to stable because Fosun has improved our credit profile, and also, we had smooth progress in asset disposal and debt detection. And also, we have high quality and diversified asset portfolio, and also, we have a stable and stress-tested refinancing capabilities. In September, S&P Global reiterated Fosun's credit rating and stable outlook. So, I think with the macroeconomy last year, this is a successful thing that we have done. But our target is to keep improving our credit rating and also, we will keep focusing on our core businesses and keep deleveraging to elevate our financial performance. And also, we have been paying out stable dividends. Our dividend payout rate keeps at 20% to generate constant cash return to shareholders. I also want to share with you our finance strategy. I think the finance strategy can help the Group to develop. So before 2019, we have constantly implemented business upgrade and transformation. We have constructed a diversified global business portfolio and substantially scaled back real estate exposure, rebalanced focus from investment to industry operations. And also, between 2020 to 2021, we have initiated balance sheet optimization. Especially since 2022, we have intensified the effort to develop focused areas to achieve steady improvement. We further focus on strategic core businesses that enjoys market leadership positions and also, we have been divesting non-strategic and non-core assets. As you know that we have a high-quality global business portfolio, 45 of our total revenue coming from overseas businesses and also, we have a very good revenue combination from our four segments. And overseas revenue CAGR stands at 55% and takes up nearly half of our total revenue. And this does not mean that the Chinese companies that expands to the overseas markets, but also we are talking about the foreign companies that expands to their non-homeland markets. I'd like to highlight that Club Med opened four new resorts in 2023. Its turnover increased by 19% compared to 2022 and has recovered to 118% of 2019 levels. Henlius, its core product HANQUYOU has obtained approval for marketing in over 40 countries and regions, recording 162% Y-o-Y sales revenue growth in overseas markets. And both HAL and Peak Re has recorded a revenue growth in 2023. And also we have diversified our financing tools, robust financing channels and manageable costs. Fosun has achieved in non-core assets divestment and debt deduction. This has strengthened our long-term partnership with banks and significantly mitigated the impact of capital market fluctuations. In January 2023, Fosun successfully launched a mega syndicate of RMB12 billion total credit line with eight domestic banks. And also, in April 2023, Fosun completed a syndicate loan of $520 million, marking the seventh consecutive year of successful launch of syndication abroad. This syndicate was participated by 18 banks and led by several global banks such as Bank of China, HSBC, and Standard Chartered. And Fosun has successfully issued four commercial papers in January, July, August and September 2023, with total issuance RMB3.5 billion and also we have issued medium-term notes of RMB700 million in October 2023, marking a rare case of success for standalone credit balance issued by a private enterprise in the Chinese market in 2023. So I think in the future, we will accelerate asset divestment with orderly and synchronized debt deduction for the Group and its subsidiaries. In 2022, the non-strategic and non-core asset investment recorded RMB29.3 billion by cash proceeds, and in 2023, the divestment at Group level recorded RMB27.3 billion by cash proceeds. And the divestment projects include NISCO, Jianlong Shares, BFC and also other property assets, and Shanghai PANASIA Shipping, ATG, and also other projects. So, by reading the numbers, our interest-bearing liabilities in consolidated statements has down -- has been down to RMB211.9 billion in 2023, including Group interest-bearing liabilities standing at RMB88.8 billion in 2023. And also, we will still make commitments in asset-light operation, and also we will strengthen industry fund financing. In 2023, we have made several successful cases, for example, our headquarter BFC through the quasi-REITs, we have issued securitization and also the Club Med. For Club Med, the self-owned resorts decreased to 15%, and also through sales and the leaseback we have divested some of the projects off balance sheet. For Forte Industry Development Group, the total cash proceeds was recorded at RMB6.1 billion within 2023. And also, we are cooperating with different industrial funds, for example, Fosun Pharma collaborated with Shenzhen Industrial Fund and has established a biomedical industry fund. The fund aims to raise RMB5 billion with Shenzhen Industrial Fund at municipal and district levels subscribing over 70% in aggregate. And also, Yuyuan, together with the Hangzhou GSGT State-owned Investment Group and others, launched Fosun Hangzhou Consumption Technology Fund. Total fund size reached RMB1 billion. And Fosun, Wansheng and Linhai government signed an agreement to set up an industrial fund in joint effort, raising a total of RMB1 billion. So this is my report about the financial highlights and also financial strategy. Next, I'll give the floor to the both CEOs.

Sun Lu: Thank you, Mr. Gong Ping. Next, let's welcome Mr. Xu Xiaoliang to talk about the business.

Xu Xiaoliang: Dear investors, analysts and media, both online and in the room, good morning. Over the past year, we have seen great uncertainties and challenges in the global economy. Fosun continued to focus on our four core segments and we have shown strong business resilience. Last year, we have navigated through the cycle smoothly. Next, I will report the business highlights in our four business segments. First, let's look at the Health segment. The Health segment has a solid foundation of Fosun Pharma. And after years of development, we are centering around health products covering medical devices, diagnostics, and we have a very comprehensive health ecosystem. We have registered a revenue of RMB46.3 billion and Fosun Pharma's revenue reached RMB41.2 billion and revenue excluding anti-pandemic products increased by 12.43%. And we are seeing rapid growth for newly launched products with net profit attributable to owners of the parent RMB2.3 billion, and after deducting one-off factors, the profit is RMB2 billion, and our operating cash flow is RMB3.4 billion. Now, Fosun Pharma has various innovative products and HANSIZHUANG registered a revenue of 1.1 billion, up by 230%. HANQUYOU's revenue was RMB22.3 billion. Su Ke Xin's revenue was RMB920 million, up by 19%. In 2023, we have six innovative drugs, eight indications getting approved for marketing like HANSIZHUANG, YIKAIDA, and Bei Wen. And also we have five innovative drug and biosimilars. In total, we have seven indications approving for marketing and we are continuing to enrich our product portfolio, and we have many products entering clinical stage, boosting future growth. Over the past year, Fosun Pharma continued to deepen our global opt landscape. Our overseas revenue has reached RMB10.3 billion by segments. In the U.S., we have over 10 combined therapy with PD-1 at its core conducting clinical trials and we have started a head-to-head bridging trial in the U.S. In India, we are promoting the transformation of Gland Pharma to bio-drug CDMO, and in Africa, we have started the construction of Cote d'Ivoire Park. So in the future, we will have localized manufacturing and supply in Africa. In terms of medical devices and diagnostics, we have seen rapid development in terms of cosmetology, Sisram Med continued to strengthen its global direct sale channel construction in 2023. So we have also built a direct sale channel in China. As for special devices and ventilators, in 2023, Fosun Intuitive has total installments of 55 of da Vinci Surgical Robots and the total amount has reached 350 and we have put into use the first domestically produced da Vinci Surgical Robots. And in terms of medical diagnostics, we have many products getting approval in the reporting period and we will continue to connect within our ecosystem for healthcare service and health management, connecting medical service, insurance and senior care to further build better products, extend our business and serve families better. In terms of the Happiness segment, we are mainly focusing on the need for happiness for global families. We have two pillars that is brand consumption and travel tourism, and we have also set foothold in fashion, sports and dating and marriage. In 2023, Happiness segment registered a revenue of RMB88.9 billion, up by 25.7%, which is mainly benefiting from the recovery of tourism and consumption after COVID-19. And for our core business, Yuyuan registered a revenue of RMB58.1 billion, FTG RMB17.1 billion, accounting for 85% of the total revenue in the Happiness segment, and the Lanvin Group registered a revenue of RMB3.2 billion, Fosun Sports RMB1.8 billion and Baihe Jiayuan RMB1.1 billion. As a core industry for brand consumption, Yuyuan achieved solid operation last year and its revenue grew by 16% Y-o-Y. Its revenue structure continued to optimize and consumer industry's revenue registered at RMB41.6 billion, up by 7.9%. And our operating cash flow had a net value of RMB4.7 billion with significant turnaround. And Jewelry Fashion is the main business for Yuyuan. In 2023, we had a revenue of RMB36.7 billion, up by 11%, and our popular product line Gu Yun Jin had a sales volume of RMB8.1 billion, up by 71%. For other consumer industries, Shede Spirits registered revenue of RMB7 billion, up by 16.9%. And net profit attributable to shareholders registered at RMB1.7 billion, up by 5.1%. And our F&B business recovered quickly with sales revenue of RMB1.4 billion, up by 119%. And we have seen highlights for Yuyuan. We have started the construction of Grand Yuyuan with a total area of over 1 million square meters. We are positioned as an Oriental Lifestyle Aesthetics platform, and we will introduce first year fashion brands to build a fashion landmark in Shanghai. And for Yuyuan Phase 1, we have a total visitor of 40 million, marking a 300% growth, and GMV exceeds RMB2.5 billion. And we have seen successful conclusion of the Shanghai Yuyuan Lantern Festival. We have attracted over 4.3 million visitors with over 4 billion media exposure. And we have utilized new technologies like AR and digital human, providing a must-visit attraction in Shanghai. It's worth mentioning that Yuyuan Lantern Festival also went overseas and traveled to Paris in France. Based on The Classic of Mountains and Seas, we have produced 60 lantern installations over 2,000 Chinese lanterns, spanning across 72 days, attracting 200,000 Paris tourisms with 1.5 billion global media reach, demonstrating our cultural soft power. And Fosun Tourism Group is a core segment in Happiness. In 2023, we registered a revenue of RMB17 billion, up by 24%, which is many benefiting from new records from Club Med and Atlantis Sanya. The operating profit grew by 200%, reaching RMB1.8 billion, and net profit attributable to owners of the parent turned around to positive RMB310 million, and our operating efficiency continue to improve. Adjusted EBITDA up -- went up by 60% reaching RMB3.7 billion. And we are continuing to improve profitability for our four business. Club Med registered a revenue of RMB15 billion in 2023, up by 19% and our first Urban Oasis resorts in Nanjing Xianlin opened last October and it was favored by consumers. Atlantis Sanya registered a new record high revenue of RMB1.6 billion, up by 91% and the average occupancy ratio was 81%, up by 39% and the ADR was RMB2,385. Our Vacation Asset Management also achieved a strong result. Last December, our Taicang Alps Resort opened, which is approved by market and Foryou Club registered a revenue of RMB355 million, up by 9%, and Lanvin Group's revenue also increased, reaching EUR426 million with strong growth in APAC, and Lanvin has completed creative transformation. Overall, in a very challenging market, Lanvin maintained business resilience and brand appeal, so we have seen strong growth in the future. Fosun Sport continued to demonstrate high growth and the Wolves now ranked the 9th in Premier League show improvement from the last season and Wolves' e-sports has won 10 championships in 2023, hitting a record high in the league and the Wolves' history. In terms of the dating and marriage segments backed by Baihe Jiayuan registered a revenue of RMB1.1 billion with total users 435 million and new registered users over 18 million. As for the Wealth segment, we have seen total revenue of RMB15 billion and net profit attributable to owners of the parent RMB719 million. As for our core business, Fidelidade maintained a leading position in Portuguese market accounting for 30% of the total market share and German Private Bank HAL had a revenue of EUR430 million up by 5.3%. BCP had a core net profit of EUR2.4 billion, up by 32%. Net profit attributable to shareholders was EUR856 million up by 300% and Fidelidade had a net profit of EUR180 million with 10% increase in international business. Pramerica Fosun connected well with our healthcare ecosystem and our new policy regular premium increased by 263%. And we have community policies from healthcare with a total number of over 6,000, and the full-cycle premium reached RMB6 billion. Fosun United Health new policy premium on top by 78%, making profits three years consecutively and the Peak Re's net profits reached $200 million. In terms of investment asset management, our total AUM has exceeded RMB2.28 trillion. We are devoted in investment and financing to create more top positions. And we have investment projects like CHAGEE, MYBank and HelloBike. As for our asset management, we are reducing our domestic assets held for sale. Last year, it dropped to RMB126 billion. Meanwhile, our domestic AUM is steadily increasing, reaching RMB323 billion, up by 6%. And as for Fosun Hive Overseas, our overseas AUM reached $13.8 billion. In terms of Intelligent Manufacturing, after divesting NISCO, we have become leaner, focusing on high technology, new resource and new material with top companies like Easun Technology, Hainan Mining and Wansheng. In 2023, the Intelligent Manufacturing registered a revenue of RMB12.7 billion, up by 23%, mainly driven by the strong growth of Easun Technology. And Easun Technology had new overseas orders of RMB6.2 billion up by 62%. And Hainan Mining had a revenue of RMB4.6 billion last year with net profit attributable to shareholders registering a RMB625 million. Wansheng had a revenue of RMB2.8 billion with net profit attributable to owners of the parent RMB184 million. For Hainan Mining, with the price drop of iron ore and oil, Hainan Mining's performance keeps growing against the odds. And iron ore mining has achieved full capacity production in two years consecutively with record high production in oil and gas. And we have also seen progress in major investments, for example, we have closed the acquisition of 49% equity of Roc Oil, and acquisition of lithium mine in Mali has been completed. As for what is shown, apart from steady growth of flame retardants, we are also seeing strong growth in coating additives, raw materials and intermediates, and we are also implementing base construction to fully tap into the potential. And last year, Fosun is also devoted to market expansion, reaching sales of -- volume of 250,000 tonnes in the main business, up by 20%, and is also driving business upgrade through investment. Overall in the past year, Fosun remained committed to streamlining business, focusing on family consumption business and different businesses are continuing to strengthen their operational capabilities to leverage Fosun's global scientific innovation leverage for resilient development. In the future, we will be committed to our strategic focus, enhance our international capability and step up R&D efforts, providing healthier, happier and wealthier life for global families. Next, regarding the 2022 strategy developments, we will give the floor to Mr. Chen Qiyu. Thank you.

Sun Lu: Thank you, Mr. Xu Xiaoliang. Next, let's give the floor to Mr. Chen Qiyu to talk about strategic development.

Chen Qiyu: Mr. Chen Qiyu says, let me report you to about the strategic development. As you know that in 2023, the macroeconomy becomes more volatile. We have seen some recovery of global economy. However, it is sluggish and also geopolitical conflicts remain unresolved. And also, we have seen the interest rate hiking and also, in China, the demographic dividends gradually phase. So, with this challenging macro environment, we have weathered through 2023. And in 2024, although we think there are challenges in front of us, but we think that there will be more opportunities for us in 2024. In 2024, the U.S. Fed has paused rate hikes and also Chinese government issued many policies to encourage the development of private companies. And consumption, cultural and tourism industries rebound strongly, and also we have seen beneficial policies issued to support the development of innovative drugs and that has bring more opportunities to industries and also private companies. So Fosun will keep embracing globalization, driving deep into industries to drive new momentum. Multiple innovative drugs has received approval or will receive approval very soon, and tourism and cultural sectors rebound globally. And Mr. Xu Xiaoliang has talked about Yu Garden Lantern Festival debuted in France. The insurance businesses will keep broadening its global expansion. So for the last three decades, we went through several phases including founding, domestic development, global expansion and deepening operation. We are now trying to be more focused on development. Just like Mr. Gong Ping has talked about, the overseas revenue has grown for the past three decades, and also, we have been more focused on our core businesses. In this new strategic cycle, we still need to be more focused, persistent, so that we can achieve a sustainable growth. We will still persist in our values, self-improvement, teamwork, performance and contribution to society. And also, we will persist in our strategic positioning, a global innovation-driven consumer group. And also, we will persist in strategic layout in four core businesses, including Health, Happiness, Wealth and Intelligent Manufacturing. We will leverage technology innovation, globalization, ecosystem and FES to keep improve ourselves. Since 2022, we have insist on lean management. Especially for the past two years, we have put more efforts in the industries that we have advantages. We will further targeting on profitable, liquidity robust and high-growth businesses. And also, we know that after three decades of development, we have accumulated sectors that we can keep investing in. So we will stay focused and also target on profitable, liquidity robust and high-growth businesses. We will prioritize global competitiveness including the pharmaceutical businesses, tourism companies and consumption businesses and intelligent manufacturing businesses. We will foster sector leadership positions through products and customer management cultivation. For the businesses that we will keep investing, we need to develop them as the industry leaders. As for the stable growth, we prioritize the financial strength. We will keep lowering leverage and reducing debt in orderly members. So to adapt to different cycles of the macro economy and also different phases of company development, we will keep refining our businesses, keep enhancing liquidity and profitability, and also we will keep improving our asset portfolio, strengthen our asset-light capabilities. Through building an FES system, we will keep leverage the FES system to enhance operational excellence and also we will keep elevating organizational vitality. As you know that we have been persisting in our four core capabilities including profound global operations, innovation-driven FC2M ecosystem and synergy, and FES system. It has been more and more clearer to us, with the current macro economy, a Chinese company with global operation capabilities is rare and precious. So that's why we are rooted in China and also we have global reach. For the Chinese part, we have our global R&D and business development in China, and also, we have made great investment in R&D and technology innovation in China. And also, we are making investments in the global businesses. We have strategic global investment and financing, for example, Hainan Mining has acquired a mine -- lithium mine in Mali, Africa. And also, we have been keeping promoting Chinese culture to the whole world. The Yu Garden Lantern Festival makes its global debut in France and also it has been leading other companies to go overseas. For Fidelidade, we have been promoting the Fidelidade to expand global markets, especially in the South American markets. So its international business continues to grow rapidly with over 30% premiums revenue comes from international. Bolivian business continues to be ranked market number one and in Peru, we are the third largest in terms of premium in local market. And also, the Club Med has recorded a record high revenue in 2023. As for Easun Technology, we have seen significant increase in overseas orders. In 2023, the new orders reached RMB6.3 billion, up by 62% Y-o-Y and Gland Pharma has acquired Cenexi, a French pharmaceutical company. The overseas revenue was RMB89.2 billion, a record high, and overseas revenue accounts for 45% of total revenue. We have international employees of over 51,000. And we have been keep enhancing our technology innovation. We have invested in technology and innovation, RMB7.4 billion in Health, Happiness, Wealth and Intelligent Manufacturing. All four business segments have their own innovation-driven business activities. And of course, Fosun Pharma has achieved a lot of great results. The overseas marketing authorization application for the self-development innovative anti-PD-1 mAb HANSIZHUANG for first line treatment of ES-SCLC has been accepted by the European agencies and also, it has received approval from the Indonesian agencies, marking its first overseas market approval. HANQUYOU, YIKAIDA innovative drugs and other biosimilars has been approved in different markets. And da Vinci Surgical System was successfully approved by NMPA and has been in operation. As for Intelligent Manufacturing, Easun Technology has cooperated with industry, university and the institute and has further optimized the 2.5D advanced sensor for the self-developed precise and intelligent matching system of the vehicle body. Fusionride continued to refine the pre-fusion algorithm and adopted a multi-layered satellite radar achieving integrated operation of highly scalable radar algorithms and pre-fusion solutions on the SoC domain control platform with high computing powers. And for Happiness BG, Yu Garden Cultural Catering Science and Technology Innovation Center has been committed to the quantitative analysis technology of prepared dishes and collaborated with Jiangnan University to establish a joint lab, which focuses on premium rice and flour products. Fosun Liquor Industry Global Science and Technology Innovation Research Institute was officially put into operation. And for Wealth, MyFidelidade App of Fidelidade obtained more than 1.6 million registered users, the digitization rate of medical reimbursement application reached 95% and close to 2 million remote medical consultation has been carried out. We are also advancing the creation of ecosystem value. Through building FC2M system, we can connect the company with families, clients, supply chain and keep improving our products and to achieve innovative R&D and high gross margin. In 2023, we have achieved several key results. Our consumer members was up by 43%, the supply chain achieved a RMB1.4 billion cost reduction in procurement and new products accounted for 16.1% of sales. And through FC2M system, we have been keep building our Fosun Industrial Edge's industrial exploration, lean management and management system, future-oriented and the value creation. We have been implementing in our core companies. In 2023, we have published our professional tools. We have released over a 100 tools. We'll -- 100 tools will be released in the next three years and 51 tools have been released. And we have already certified over 700 experts in -- will be certified in each of the next three years and already 1,000 experts have been certified, and this will be applied to different areas of business operations including sales, manufacturing, and also organizational upgrade, finance department, so that the Company can be kept improving. And also, we pay great attention to organizational development to excel core capabilities. In 2023, our core work has been made to lean management. The headquarter takes the lead to build professional capabilities and we are more focused on improved workforce productivity, management innovation and cost reduction to keep the sound development of the organization in line with the strategic evolution. And also, we have top management committees and establish their sharing center in different global regions. The partner mechanisms drives organizational momentum and we have global partners, industry/line/innovation partners, and also, we have corporate partners. With a Pyramid Partner System, we have built a leadership system for Fosun. For the last three decades, we have committed to global services, advancing sustainable development. We have been persisting in contribution to societies. In environmental society and governance aspects, we have been insisting on beating our goals. For example, we have set up the goals for carbon peak and carbon neutrality and we have a clear EHS management framework. And in 2023, we have published the TCFD report based on their climate and also their company. For their society part, we have made progress in Rural Doctor Program and also the antimalarial actions. So for their ESG parts, we have been enhancing and keep promoting, and also, we have achieved great results. The -- we are the only conglomerate in Greater China with an MSCI ESG rating of AA maintaining its rating for three consecutive years, and we are selected as a constituent of the MSCI CHINA ESG LEADERS 10-40 Index and we will keep embedding ESG in our sustainable development, so that ESG can be a true driver to our sustainable growth. So this is my report. Thank you.

A - Sun Lu: Thank you, Mr. Chen Qiyu, for your presentation. So that's all for the management presentation. Next we will move on to the Q&A part and we are open to online and offline questions. So first, please give the microphone to anyone who want to ask a question. So because of the limited time, please limit your question to only one question, and also please tell us where -- which agency you are from and what's your name?

Unidentified Analyst: I'm [Yingzhen from DHL]. Thank you for your time. So my question is that for the past one year with a quite complex global macro economy, we have seen that the Chinese economy has been rebounding and also recovery in their consumption businesses, and also we have seen their improvements in revenue top line and bottom line many companies in Fosun. So my question is to Mr. Guo, what's your view on last year's performance?

Guo Guangchang: Mr. Guo says, thank you for your question, and also I'd like to say thank you to the shareholder and also investors and analysts and friends for your support. And I also want to say thank you to all the Fosuners for your great efforts in the past year. I think we have been working really hard to achieve the results. Our top revenue has recorded over 200 -- nearly RMB200 billion because of our great products, for example, the Taicang Alps Resort. I encourage everyone to take your family and take your kids to enjoy our Taicang Alps Resort, and also Lijiang Club Med Resort is very, beautiful, and I recommend everyone to enjoy not only we have Shede Liquor, but also we have Yelanggu Liquor. Right now, the business is very hard. So for me, I take every opportunity seriously to promote our products. And recently, I have spent much time on Fosun Pharma and when I had a discussion with Fosun Pharma, I am very thrilled to hear that actually, right now the cancer can be self-cured. Because before, we think that we can only live longer the lives of the cancer patients. However, recently with our technology, the cancer patients actually can be cured. So I think this is our goal. We have been talking about innovation, we have been talking about development, but our ultimate goal is to cure patients. So I think this is thrilling for me. For Fosun Pharma, I know that for the past two years, we have products that can achieve revenue over RMB1 billion, RMB2 billion. But I think in the future, we will have more products that can have revenue of RMB1 billion, RMB2 billion or even more in U.S. dollars and with our products, we have cured many patients and a lot of the patients can enjoy their lives with their families. So I think this is most important. Products is always our prioritized thing. And we have been talking about we need to do the hard thing, challenging thing that requires time, which means that we need to spend a long time in R&D to accumulating innovative capabilities. So for the last three decades, whatever we are doing, including globalization, innovation or building blockbuster products, this all requires us to make investments and also take losses. But today, we are grasping the results through the hard times, through the audit investments that we have been made. We have -- some of our businesses has become the leaders in some markets. So, I think on one hand, we need to further enhance such capabilities. And second, we need to further leverage the results that we already have and to build upon it. So last year, we have made very clear that we need to further focus on the profit for high-growth companies. And which means the companies we will focus on will be the companies that has already got the advantages. Before we are exploring for mines, where are the mines, but we have already known where are the good mines. So we need to dig deeper for the good mines. This has been very clear to us. So to answer your question, we know that in the future, we will have more uncertainties. But we know that we have our capabilities to adapt to the uncertainties. We have the products to solve problems. And also, we have the companies that are in the market leadership positions, and we will keep building our globalization capabilities, and we will keep building upon it. Especially our pharmaceutical products, we will promoting sales in Europe, U.S. and Middle East and build a greater platform. I don't think we -- I don't think this requires a lot of money, but I think it will bring us a brighter future. And also, we will keep lower the leverage -- the ratio of heavy assets. It doesn't mean that we will no longer develop. We will develop, but we will focus on asset-light businesses and we will keep building our asset-light capabilities. This is a key method for us and I'm very happy to see that we have started co-operation with the Shenzhen Industrial Funds. So I'm sure that we will divest more properties and also heavy assets in the future, but we will keep building our asset-light capabilities. So we will make money through our skills, not through our money. And also we want more talents to join Fosun. We want to cooperate with the best companies in the whole world and develop together. And also, we want the support from the shareholders and friends. But we will keep improving our efficiency. I think before, our management are a little bit less efficient, but we will keep making investment and to improve our efficiencies. Before, we called each other classmates, but I think in the future, we are more like fellow fighters. We are fighting the same battle together. So this is my answer to you. Thank you.

Sun Lu: Thank you, Mr. Guo, for your candid and honest answer. We will take the next question.

Unidentified Analyst: I am [Qiu Yu]. Thank you, Mr. Guo and other management team members. Over the past two years, Fosun continued to optimize its asset structure and the business is more focused with clear strategy. We have also seen the significant results of Fosun in deleveraging in '23. So I'd like to know, in 2024, in terms of the non-core assets disposal and deleverage, what's the plan and what's the target debt level for Fosun?

Sun Lu: Thank you for your question. We will have Mr. Wang Qunbin to take this question.

Wang Qunbin: Firstly, thank you very much for your question, and I'd like to thank all of the investors and media both online and in the room. Thank you for your support. Indeed, over the past few years, we have seen great results for our deleveraging work. This is because early on, Fosun has seen that the Fed has entered a rate hike and we have seen China- U.S. trade conflict which has brought us great challenge. As early as 2018, we have seen this problem and in 2020, we have identified our strategy to deleverage. We want to optimize our asset structure to boost healthier development. Specifically speaking, in 2022, in the first half of 2022 to 2023, as presented by Mr. Gong Ping, we have reduced our debt by RMB50 billion in our consolidated statement, and for our headquarter, we have reduced our debt from RMB115 billion to RMB88.9 billion. And we have received strong support for our streamlining business work, which is demonstrated by our S&P rating, which has been increased to stable last year. And as Mr. Guo has mentioned, we will be committed to streamlining business and focusing on our core business. We aim to gradually increase our credit rating to investment grade. Of course, it will take time and this is a very important goal for the Board. In order to achieve this goal, firstly, we need to embrace SLI operation and work with asset-heavy partners, we will dispose non-core assets. And secondly, we will be focused on our core business with strength, with potential for sustainable development. So we will focus on our core business development. This is not only about revenue growth. And as Mr. Xu Xiaoliang and Mr. Chen Qiyu have mentioned, we want to see growth in cash flow and profits, and we want to increase dividend payout for our businesses. For example, Fidelidade, which is one of our core business, every year, the dividend is around EUR300 million, and this year, the dividend may be higher. And with the two major efforts I have mentioned, in the next two to three years, we aim to reduce our debt by RMB10 billion every year to further boost our credit rating. And this will also help with healthier and more sustainable development for Fosun, especially the development of our core business. Thank you.

Sun Lu: Thank you, Mr. Wang, for your answer. Let's see if Mr. Gong has any comments.

Gong Ping: Since the Group has put a lot of efforts on development of four business, and we have many companies with strong strength and competitiveness which will bring us profitability, and we have recovered RMB30 billion every year due to disposal of non-core assets, and we will aim to deleverage by RMB10 billion each year, and we want to increase our recurring profits and based on our current dividend policy, we will be open to improvements on top of our current policy. That's my comment.

Sun Lu: Thank you very much for your answer, Mr. Gong Ping. And we will take the next question.

Cao Ying: Thank you for giving me the opportunity. I am Cao Ying from Essence International. I have a question for management team. We have seen a lot of overseas business for Fosun Group, and based on the current capital market, we are very interested in Fosun's overseas development because we have seen pressure for domestic consumption, and in many countries and regions, we have seen strong developments. So in the future, what's the overseas development plan? And what's your view on the business outlook for insurance, consumer industry and medical service? Which are the core focus? And what's the development outlook?

Xu Xiaoliang: Thank you for your question. And I'd like to say something. We are optimistic about China's economy. Last year, China's consumer industry experienced lower than expectation recovery. And this year during the spring festival, consumption was strong, including consumption in Atlantis Sanya, the growth was very strong compared with last year's Chinese spring festival. So, I think the consumer industry is gradually recovering and we can actually see the recovery and we are very -- we have belief in China's economy's resilience. So, we are optimistic about China's development. In terms of globalization, it's not necessarily about moving capital or factories overseas. We want to build global capabilities and sell our products overseas and deploy our teams globally, including R&D and marketing. We want to have global integration and we also want to have global medical product registering capability. So, we will continue to increase the ratio of our overseas revenue. But there's no specific number on that figure. Well, we have strong profitability for our overseas business, including Fidelidade and Club Med.

Cao Ying: Two, what's the number? Could you please explain further?

Xu Xiaoliang: Last year, the overseas revenue accounted for 45% and in 2022, the number was 42%. And as for Fosun Pharma, our overseas revenue accounts for 30% of total revenue and our business is in U.S. and Europe and also African market, including Indian market. We have built a solid foundation. As Mr. Guo just mentioned, for Fosun Pharma, we will continue to dig deeper in Southeast Asia and Middle East. We will be rooted in China and also actively build a global operation capability. So on the one hand, we need to boost global sales capability. On the other hand, to match the sales capability, we also need to build a very strong supply chain network, so that covers our vendors and factories and we also need to boost our global R&D capability. We want to be a leading force that sets an example for the industry. We want to have high standard, low cost, rapid R&D development and we want to achieve global R&D standards. So all of this will be covered in our capability building. If we can integrate R&D, supply chain and the sales network to achieve full globalization, then we need the support of two capabilities. First, we need talent management capabilities. Secondly, we need to have financial resource optimization capability. If we can achieve these two aspects then we are confident about our business growth and we have also other international business. Maybe we can have Mr. Xu Xiaoliang to share more information.

Sun Lu: Well, indeed, Fosun's international business is based on the premise of being rooted in China. Next, we will have Mr. Xu Xiaoliang to present our international highlights.

Xu Xiaoliang: Thank you for asking such an important question. Globalization is a core engine deeply engraved in our DNA. Fosun is rooted in China and spreading across the globe. Now we have operations in over 38 countries and regions. And our overseas revenue is RMB89.2 billion accounting for 45% of our total revenue and our overseas employee reached 510,000. As for our global deployment, we have laid a solid foundation. So we have entered a second phase, where we need to emphasize global operation. Before we wanted to see the globe from China, but now we are seeing the world globally and we can feel a gap. Well, we can clearly feel time difference, which is calculated by hours, but the gap I'm talking about is calculated by years. We have seen gaps in developed, developing and underdeveloped countries. We have seen great gap in terms of operation in different countries. What happened in one country will happen later in another time. So if we see the world from a global perspective, we can realize that for product R&D, supply chain integration, and global sales, we need to seize the opportunity of this gap. Last year, take Fidelidade as an example. It is a leading force in Portuguese markets, and we are happy to see that. Its overseas revenue now accounts for 33% of the total revenue. The number is around EUR1.7 billion. They achieved such strong growth because they have seized the gap. A lot of the growth came from Latin American countries. They speak Spanish or Portuguese, so they can take advantage of the language advantage. And for Latin American countries, their economy has been picking up and their national income is increasing. So there is strong need for insurance. It's a process that they need to experience. And this has happened in Portugal and other European countries. If we can notice this gap and seize this opportunity, we can realize strong growth. So in our future, global operation will be centered around family consumption, and we will leverage the opportunities, and apart from our hard power, we also need to show our soft power. For example, last year Yuyuan Lantern Festival entered Paris. And the Lantern festival was successfully held in Paris, which was not a coincidence, it spanned across 72 days, and it celebrated the friendly relationship between China and France. And we can connect Yuyuan with French fashion brands. The demonstration of China's soft power is very important. And we have been communicating with U.K. and Germany about introducing the Lantern Festival to their countries. So there is huge potential in this part. In the future, Fosun will be more focused on global operations. We will dig deeper and perform better. Thank you again for your question.

Sun Lu: Thank you for your question. We will move on to the next question.

Unidentified Analyst: Thank you for this opportunity. So I have one big question and one small question. So my big question is that as Mr. Chen has talked about innovation-driven, so could you elaborate more on the investment in technology and innovation, and also what kind of the results can be achieved in terms of industry empowerment? And my second question goes to the liquor industries. I know that Fosun has Shede and Yelanggu and another brand is called Jinhui. And what's your investment and your view on Jinhui?

Chen Qiyu: Mr. Chen Qiyu answers, so, for the technology innovations, we have shown you a full page just before. So in 2023, we have invested RMB7.4 billion in technology and innovation. And this has been budgeted at the beginning of 2023. So through the last five to six years, we have been insisting on the innovation. And you know that we are an innovation-driven global family consumption group. So before we have put our innovation investment in Fosun Pharma and also Nanjing Iron & Steel company, but I think in the last two years, we are promoting innovations in all the segments, not only in Health, but also in Happiness, Wealth and other segments. In every segments, they have innovation-related products and also battles, and also we have established an innovation committee at the Group level and we have selected innovation partners and this mechanism have been keep improving. And for the non-pharmaceutical businesses as we have talked about in Happiness, liquor industry and also food and catering businesses and also the gold and jewelry sectors had introduced the technology innovation activities. As we know that we have many new technologies, ChatGPT and AI are emerging which has surpassed the past concepts including Internet. We are entering a phase that AI is driven innovation. So in terms of the product design, operation, we are all trying to leverage the AI to lead the product development and also other areas. In Wealth segment, we have mentioned that Fidelidade, but in China, the Fosun United Health are also leveraging AI and also Fosun Wealth in Hong Kong is also leveraging the AI tools. In intelligent manufacturing for the past two years, we have been focusing on the autonomous vehicles and also we are trying to participate in this trend. For example, we have developed many products for the autonomous vehicles. Fusionride has developed the 4D millimeters radar and also has integrated operation of highly scalable radar algorithms and pre-fusion solutions. And I think the past rapid growth can be separated from our innovation-driven strategy. Fusionride is actually a start-up company. We have made over RMB300 million investments in Fusionride, Over RMB200 million was put into the 4D millimeters radar and also they have raised funds from outside and we think that in 2024, we -- they will receive the profit proceeds from the sales of 4D millimeters. And the Wansheng, after Fosun participated, Fosun is also encouraging Wansheng to establish more institutions and explore different products and also pipelines and biopharmaceuticals is also very important. For example, Henlius, they have developed the biosimilars and our anti-PD-1 mAb and HANSIZHUANG has received good results. And also the -- and also they are working on the ADC or AXC because we think other than ADC, we'll have -- they are exploring more mechanisms. And for CAR-T, the second line indications of YIKAIDA was approved last year and can benefit more patients. Not only that we can cure the patients earlier, but also the cost can be reduced. So that I think more people can afford our products in the future. So for CAR-T, not only we are trying to innovate new products, but also we are making advancements in bringing down the cost. And also we are incubating new products in biopharmaceuticals. We have an incubator in Zhangjiang, and also the [Founds], the fund has incubating over 11 companies in different business lines, including mRNA and gene techniques and the methods to help people to gain sight. And before we put a lot of energy in oncology, however, for the past one and two years, we are also exploring areas other than oncology because I think for a biopharmaceutical company, they need to have products targeting oncology and also other diseases. Our innovation is rooted in China, but we can establish clinical trials in the global markets and also launch our products in global markets. Take Henlius as an example. I think before, Henlius has a tag as biosimilars. They developed the first biosimilar products in China and also Henlius is a international -- it's a international company because the product Henlius has approval from Europe, from America and also from Southeast Asia. And based on this, we are also working with global companies including Organon and also other companies to get their licenses. So I think this will set up the trend for the biopharmaceutical companies in the future in China. And Henlius, last year, not only they had made investment in NND but also they have done it very smartly. They have put their -- they have used their resources efficiently and become the first company that -- the first such company that can make -- that has already achieved profits. So I think as for innovation, we have gained the results from innovation-driven capabilities and also in the future, we will persist on the innovation-driven capabilities.

Sun Lu: Thank you, Mr. Chen, and we will have Mr. Xu Xiaoliang to add some comments.

Xu Xiaoliang: Due to the compliance requirements for listed companies, we cannot have holding off two liquor business. Now for Jinhui, we are the second largest shareholder. Jinhui has experienced steady growth over the past few years and it has gained a strong foothold in Gansu and Longnan and in Tsinghua and inner Mongolia, we have seen strong growth for Jinhui and we are optimistic about Jinhui's deployments in Northwestern region. Yuyuan also bought back some shares of Jinhui last year. In the future, we are optimistic about Jinhui and we will be supportive of Jinhui's development. Thank you for your question.

Sun Lu: Right. Thank you, Mr. Xu, for your answer. We have seen a lot of questions and we will have one question for our online investors and analysts. I just received an online question from Xingye Securities -- from China Industrial Securities. Based on the uncertain global economy, especially the rate hike in U.S., we have seen the impact on global financial markets. The question is for Fosun's overseas insurance. What's the situation and what's the outlook? And we will have Mr. Gong Ping to take this question.

Gong Ping: Right. Thank you for your question. In the afternoon, we have a presentation for wealth management and Mr. Vincent Lee will have further details on that and I will give you a brief introduction on that. For our overseas finance business, we have seen strong growth and it has also experienced challenges from macro uncertainty, geopolitical conflicts, exchange fluctuation, and a very weak secondary market. But we have seen highlights for our businesses, especially our crown jewel, Fidelidade. We have seen double-digit growth for its non-life insurance and the international business, and they have actually overcome a lot of unfavorable factors to achieve such great performance. Although life insurance has experienced pressure, Fidelidade's life insurance still remained a leading position in Portuguese markets and its CoR has also improved due to its active underwriting and claim management and increased level of underwriting. So, the CoR has dropped by 1.4 percentage points compared with 2022 and we have Peak Re, who is prudently managing its risk exposure and optimizing its underwriting structure, and its CoR has improved to -- greatly to 87.3%. And in terms of underwriting, claims management and sales, it's also worth mentioning that for our International business, Fidelidade's overseas business has grew from single digit to over 30%. And on asset investment side, our investment is prudent, showing strong resilience. Under high interest rates, we have some long-term investment, especially for debt interest and stock interests. For Peak Re and Fidelidade, the -- in 2023, the ROI has exceeded last year's in performance. And apart from market share and sales, another important indicator is solvency, which is a key concern for analysts focusing on overseas finance. Fidelidade's solvency ratio is 180%, Peak Re is 300% and Fidelidade remained its A rating and Peak Re remain its A-minus rating. So for Fosun's overseas insurance, we are seeing steady growth and promising future. And for our joint venture company, BCP, that is not in our consolidated statements. Thanks to the higher net-interest margin, BCP's performance also increased greatly. The revenue was around EUR900 million last year. That's all from me. Thank you.

Sun Lu: Right. Thank you, Mr. Gong Ping, for your detailed answer. Before concluding this annual results announcement, we'd like to see if Mr. Guo has anything to add to our analysts and investors and media.

Guo Guangchang: Right. I'd like to talk about scientific innovation investments. We need time, patience and capital. Building on the past few years' investments, we have gained a lot on top of losses. There is never enough money for scientific innovation. So we need to strengthen global BD. We need to work with our partners, that is, we are very committed to that. So we will have joint BD and scientific innovation, which is a successful path for Fosun. And if we do not still have enough money, and especially for biological pharmaceutical, we cooperated with Shenzhen Government because we have seen that in the past few years a lot of capital flowed into biological pharmaceutical business and heavy investment has been made. But in recent years, capital is withdrawing and a lot of projects will shut down. If Fosun Pharma undertakes all of these projects, then we definitely do not have enough capital. So based on the situation, we have started a RMB5 billion fund. So we want to build on our existing pipeline that require the capital and we -- if we see promising project that requires further injection, then we can continue with the injection to shorten the R&D lifecycle. So we attach heavy importance to our cooperation with Shenzhen Government. We want to invest in R&D, but we still need to be prudent. So as a businessman, on the one hand, we need to be active. On the other hand, we need to remind us that we need to be prudent and we need to be grounded and work on our progress. Thank you.

Sun Lu: Thank you, Mr. Guo, and fellow management team members. That is the end for the morning session for Fosun International 2023 annual results announcement. We will see you again at 2