Annual 2016 Fosun International Ltd Earnings Presentation (Chinese, English)
Mar 28, 2017 AM EDT
Thomson Reuters StreetEvents Event Transcript
E D I T E D V E R S I O N
656.HK - Fosun International Ltd
Annual 2016 Fosun International Ltd Earnings Presentation (Chinese, English)
Mar 29, 2017 / 01:20AM GMT
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Corporate Participants
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* Can Wang
Fosun International Limited - CFO, SVP and Executive Director
* Gong Ping
* Guangchang Guo
Fosun International Limited - Chairman
* Lan Kang
Fosun International Limited - Chief HR Officer, SVP and Executive Director
* Qiyu Chen
Fosun International Limited - Co-President and Executive Director
* Qun Bin Wang
Fosun International Limited - CEO and Executive Director
* Xiaoliang Xu
Fosun International Limited - Co-President and Executive Director
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Presentation
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [1]
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Good morning. Welcome to the Fosun International Limited 2016 Annual Results Announcement. My name is Kang Lan. First, I introduce myself, I am the global -- one of the global partners of Fosun. I'm also a Senior Vice President responsible for Human Resources as well as the insurance sector.
Now today, let me first introduce to you, we have Mandarin as well as English simultaneous interpreting. Channel 1 will be English, channel 2 Putonghua. Now if you require a headset, please raise your hand. Our colleagues will provide you with one. And also today, we have a question-and-answer session, which we will be arranging via written questions. Therefore, if you have a question to ask, you're more than welcome to list your question on the question form and give it to our colleagues or put it into one of the collection boxes. Now first of all, let us look at a video to have an overview of our 2016.
[Presentation]
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [2]
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At Fosun, one word that we always talk about is evolution. Therefore, in the past year, for our own core strategy we have also caused some evolution. Now we also suggested an integration of industries as well as optimization of asset distribution. Now this on the one hand can deepen our investment capability and also further clarify the position of one that creates value and power for those industries that we invest in.
And as far as our asset industry is concerned, we remain focused on wealth, health and happiness as far as our investment is concerned. As far as health is concerned, we have signed to acquire an Indian pharmaceutical company, Gland Pharma and also we have taken important measure in the domestic mother-and-child platform. And also the Club Med has broken records of winter sales. And it also shows that we are deepening in our efforts in this particular area. And also as far as richness is concerned, we have acquired a private German bank, H&A and we have also invested in the largest listed bank in -- Portugal, BCP that all of these goes to illustrate the important measures that Fosun has taken in the wealth sector.
Now in the wealth, health and happiness sectors, our profit and our income has been increasing. It has already become a very important engine for growth in Fosun International.
Now as far as asset distribution and optimization is concerned, we are focused around our asset management company, the bigger projects and as well as the unicorn projects. As you may well be aware in 2016, we are continuing to focus on those companies that are -- have a good penetration and ability in developing their own markets. Therefore, we have invested in Rio Bravo, which is a Brazilian domestic asset management company and we have also invested in (inaudible) big data as well as NAGA.
We also attach a lot of importance in the future development of C2M, which is Consumer to Maker and we have taken important steps after [ Xiangdaoming ] we have also invested in www.98ep.com as well as Goujiawang. And also internally, Fosun has also incubated some very important innovative technology, hopefully we can nurture our own unicorns.
Now apart from such investment, we also focused on searching for good quality, big projects around the world, which consistently focus on health, wealth and happiness, which is an effort to build our core global competitiveness. And apart from integrating industries and asset optimization, we also have to deepen our value-creation positioning. Therefore, regardless whether it is the nurturing of our people, innovation of our technology, globalization, brand building, et cetera, we have to add value. We have to empower and support them to grow, to grow more quickly and to create a value system that is unique to Fosun. We call this value system One Fosun.
Now upcoming, I will invite some partners of Fosun to come on stage to talk to you, to walk you through in more detail the 2016 and the results as well as business review. Now may I first invite Mr. Guo Guangchang, our Executive Director and Chairman; Mr. Wang Qun Bin, Executive Director and CEO; Mr. Chen Qiyu, Global Partner Executive Director and Co-President, Chairman of Fosun Health Care Holdings and Chairman of Fosun Pharma; Mr. Xu Xiaoliang, Global Partner Executive Director and co-President, Chairman of Fosun Property Holdings, Chairman of Yuyuan Tourist Mart; Mr. Robin Wang, Global Partner Executive Director Senior Vice President and CFO; Mr. Gong Ping, Global Partner Executive Director and Senior Vice President, Chief Executive Office of Fosun Property Holdings; Mr. Jim Qian, Global Partner and Senior Vice President, President of Fosun Tourism and Cultural Group, co-CEO of China Momentum Fund, Chairman of Atlantis Hainan. Now despite that I have given you a formal introduction, we are colleagues amongst ourselves and we are very friendly and don't have so much -- don't care with so many titles.
Now let me first invite Mr. Wang to walk you through our 2016 performance.
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Qun Bin Wang, Fosun International Limited - CEO and Executive Director [3]
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Respected investors, analysts, colleagues, good morning. I am very happy and honored to be able to report to you here the 2016 results of Fosun.
First of all, I have to report to you in 2016 Fosun International's revenue given our consistent hard work and also at the background of continuous growth in the last couple of months, we have breakthrough to a RMB 10 billion to reach RMB 10.3 billion, which is a record-breaking number for us. So we are especially thankful. Thank you.
2016, our growth when compared to 2015, we enjoyed a 27.7% growth. However, at the same time, if we also look at those growth of the past 5 years, which we enjoyed a CAGR of 24.7%, I feel that in the past 5 years, Chinese economy as well as global economy has went through many cyclical changes. I believe that Fosun International now within such a 5-year cycle to be able to reach a CAGR growth of 24.7% is something that is hard to come by. We have challenge. We have taken up a lot of challenges and solved a lot of problems. We have compared ourselves with the Hang Seng Index growth.
Of course, we have taken out those, the results of those enterprises that have not been around for more than 5 years and also those that have grew the quickest as well as the slowest. So under such a context, let us make a comparison. The 5 years net profit CAGR was at negative 1.1%.
Another very important index would be the net asset. Fosun has been persisting on value investment. And we have been learning from the concept of Mr. Warren Buffett. I believe one very important index of corporate growth would be the net asset growth. And let us also look at Fosun International net assets in the past 5 years. Our CAGR was at 23.7%. And of course, Mr. Buffett does not give out a dividend, however, we do every year. And also we look at the Hang Seng Index net asset CAGR for the same period, which was 12.2%. Fosun, apart from important growth in our performance and turnover, we have also consistently pushed for a further reform just now Ms. Kang Lan has already introduced to you some highlights. Of course, our focus would be health, happiness and wealth. And the total asset around these 3 elements grew from 55% to 81.5% as far as the net profit is concerned. And as far as net asset is concerned, we grew from 58% to 73%. And also as far as net profit is concerned, we also increased some 73% to 76%. Now this serves to give a further sound base for our further and sustainable developments. And also our strategy to keep a global asset is something that we have been continuing to work on.
Since the financial crisis, our investment in the developed countries in Europe, America and Japan, our investment has already materialized. And since last year, we have also started to step up on our investment in emerging markets including India, Brazil and Russia, et cetera. And I believe in the globalization and also in driving the Chinese growth forces, this is something that we have continued doing.
And also Kang Lan has already talked to you a concept of local, meaning we need to focus on the penetration, local penetration. Therefore, we have a lot of such high-caliber persons joining us including 3 of our global partners are from important U.S. and European industries.
And also I'd like to report to you the continuing optimizing of our balance sheet. And for Fosun, we, of course, wanted to grow quickly but we also look for stability in our growth. One very important index would be our debt ratio to our assets. Now as far as this is concerned, there are several indexes that we look at. First is the term of our debt. Our maturity period of the liabilities has been extended especially the long term and mid- to long-term liabilities proportion has increased in 2016 has grew from the 2015 number of 57.4% to 65.3% in 2016. And our financial -- financing cost continue to drop. Meaning that in 2016, on the basis of 2015, we have further dropped 0.5 percentage points to 4.5%. And of course, this does not include some low-cost insurance funds, which come at an even lower cost.
Our capital debt ratio continues to fall. In 2015, we were at 53.6% and it has come down to 50.7% for 2016. Our net gearing also substantially decreased. That ratio was at 68.2% in 2015 and it has decreased to 60.3% in 2016. Apart from our debt ratios for Fosun, we emphasize a lot and has been focusing on managing the enhancement of our asset liquidity. Now as far as this is concerned, in 2016, we did some -- we put in some big measures. First is the Ironshore sell of assets at USD 3 billion. In the past couple of years, apart from investing, we have also been selling some assets. Now Ironshore, of course, was 100% sell. In the past couple of years, there were a lot of projects that we exited through listing of other channels.
The second area would be those cash that have been recuperated through completion of projects. For example, the Atlantis project, which actually has been completed before, I mean, sooner than we had expected. Then also our PE projects - IPO since we had -- that interest, equity interests has totaled to CNY 6.59 billion. And also our security equitization and also refinancing, et cetera. Then all of these add together has enabled our assets to enjoy better liquidity. And it also allowed us more capital to enhance our investment capability, to both be active, aggressive and yet be safe and stable. I think for Fosun in 2016, and also the last couple of years, our ability to get such performance was based on with the very excellent and diversified, high-caliber globalized team that Fosun has. I believe that this round of annual results announcement, we had tried to create something new, meaning that in the announcement session, we wanted a lot more of our colleagues, our partners to report to you in better detail about their areas of work.
Now upcoming, I'd like to invite Chen Qiyu, our colleague Chen, we call him, to talk to you about our health business.
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Qiyu Chen, Fosun International Limited - Co-President and Executive Director [4]
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Well, thank you. Thank you, colleague Wang. The health business of Fosun is something that we started the earliest. It is also an area that has its own uniqueness, now in the past couple of years with our global strategy being on wealth, health and happiness, so health would be one of the area that we pay special focus on. Given the 2 decades of development, the health business of Fosun has been accumulating step-by-step various assets. And it's waiting to -- and I believe we have blossomed into bright results. Health business requires a lot of resource as you can see, I have a lot more resource on my body than my fellow colleagues. And for health business, there is a new saying about the Internet, we are all talking about new retail now. I think the health business segment that Fosun is trying to build, we are wanting to build a new -- brand-new health business. Therefore, in the Internet age, first of all, Fosun is not an Internet company and we are not intending to turn health business into Internet health for Fosun.
However, in the Internet era, what Fosun intends to bring -- to build is the big C2M Happiness Ecosystem for Success. Therefore, given such this value chain we will -- whereas you know, we previously has been focusing on the development of our own strategy -- proprietary strategy, we will turn our focus on developing the C first, the consumer first. First of all, we will build the Doctors segment and then we also have to pay more attention to our health products consumers while the intention is to keep healthy, one day, they would definitely need to see the doctor. And another area would be the senior citizens, and mother-and-child segments. So these would be the core consumer segments for us, which is an important focus for development for us.
Now let's come back to the M, the maker. Now for the consumers, while we provide services and products, in this other end, we have to build a connection and build more, better products at the maker's end. Now this would be the core strategy: to therefore create a brand new supply-and-demand relationship and also a brand new reform in the health business. And the -- in such Fosun health business, in the future year, as well as the upcoming future, the core would be pharmaceutical and medical services.
Now as far as medical services is concerned, we have already gained leadership advantage in Chinese market. We have been continuing to invest in R&D. Now in the Chinese market, we have been growing very quickly and also in the hospital sector, and we are developing core resources including the acquisition that we did in India. This is also important. A very important step of our global pharmaceutical business development. And also as far as the technology development is concerned, we are leveraging on the influence and the power of Fosun in this business.
In the past year, we completed 2 projects with the world's top pharmaceutical and medical companies. We have been setting in China and are in the center for medical robots for surgery use. And also we have been developing another very important technology in health within China in order to build our foundations. And also we are actively developing our medical and medical care services through -- Fosun has our own hospitals and we also work with Taikang to restructure the Huaihai Medical Group. That has a coverage of 25 hospitals globally including ones in Portugal and globally we already have 4,400 hospital beds.
Now in China, we focus on Beijing, Shanghai and Guangzhou as well as the Northern Bohai region. And also the second and third-tier cities were undergoing reform as far as our health business procurement is concerned. And also with a health insurance, last year, we have been approved the permit to build our insurance platform and insurance-let hospitals. And in the future, health insurance business would grow together with medical health services to become 2 important arms of our health business -- C2M business. And also we have built a medical plus insurance package. Say in [ Hamujap ] we built a integrated product based on our insurance product plus medical services. And also in Portugal, we did also a deep-level integration of the 2 resources, meaning medical as well as insurance and it is getting very good results.
And as far as insurance is concerned, we have been doing excellent. And we have been developing the mother-and-child segment. Last year, we invested in [Foreign Language] Babytree, which is the leading mother-and-child community platform with over 100 million users and 6 million active users. This is a very active platform. And Babytree has already strategically become an entrant, a door into family consumption.
As you can see, this is a very important part of the young Chinese families. So using this, we are continuing to build on our health business. Of course, it does not only relate to health business. It is also a very good boost to the overall consumer sections. And also with the senior people we, in Shanghai and Ningbo, we have been pushing this development. We believe that with this particular segment, Fosun also has a lot of advantage to leverage on. So I would finish my report on health business here and I hope that I will -- we will receive more support from you going forward.
Now may I invite Mr. Chen, our Senior Vice President, to share with you what -- how we're doing at the happiness end.
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Qiyu Chen, Fosun International Limited - Co-President and Executive Director [5]
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Good morning. Just now we have already touched on the health part of our wealth, health, happiness core strategy. Now when comparing to health, wealth is a relatively new sector, however, it has been growing very quickly. Now Fosun has been working around the upgraded demands of the middle class of the Chinese people to grow tourism brand as well as all other ecosystem. We call that the ecosystem of happiness.
Now lately, Fosun has been adjusting and creating around this idea. This is not only a change of name and slogan. Last week, together there with Mr. Guo, we met with the COO of a very important investing company in the United States. His view around our strategy to start with the consumers and also our positioning around wealth, health and happiness, he expressed his -- that he found it very good and very smart. So the direction that we are actually going is to satisfy the Chinese consumers especially those who are -- have been upgrading, who have been performing well. We are trying to set aside the upgrading further needs, and the tourism sector is one of the main subsegments. And I'd like to walk you through some of the development that we have experienced.
As you can see, tourism comes with several characteristics. One is that the speed of growth is extremely fast. Now globally, it is like this. It is even faster in China at double-digit growth, way faster than the GDP growth.
The second characteristic is that its industry scale is very large. In China, this industry is already valued at a higher level than education, real estate and automobiles, globally, in many countries where it is at a 10% of GDP.
Thirdly, I think tourism is a highly globalized industry. Despite that there are a lot of trade protectionism in the world, I believe tourism is something that all countries would welcome. Therefore, given such a fast growth and large-scale characteristics and also a globalized career, I mean, a globalized industry, we believe that in China this will bloom even bigger and will boost the development of the tourism industry because the Chinese tourism industry has several characteristics. One is that it is hugely dispersed. And then it is located -- it is still at the stage of huge fierce competition and low-end products. And also it is emerging from destination-based to livelihood-based -- lifestyle-based tourism. And it requires new products.
Therefore, in the process, as you can see, a very strange phenomenon happening in China. The industry is growing quickly and the scale is also. However, many companies within this industry has been losing money, many tourism company and hotels have been losing money. Now in this area, Fosun has been conducting very deep research in order to come up with a new strategy.
Since 2010, when we acquired Club Med, our focus has already been on the leisure holiday, resort holiday segment. And there has also been several rounds of upgrade especially in 2015 after we have bought out 100% equity of the Club Med, our strategic target has become clearer and clearer. Meaning, that we will focus on the middle class of China and their resort lifestyle travel -- tourism needs. And we are also emphasizing on the C2M model to build a global leading leisure tourism group.
After 2015, apart from holding equities to Club Med, we also wanted to step up on our merger and acquisition of the resources whereas the consumer ends. As far as the resource is concerned, we acquired Thomas Cook headquarters equities. And we also held a majority share of the joint venture that Thomas Cook has. And we also completed the Atlantis Hainan project anticipation commissioning late this year. And also we invested in the Canadian Cirque du Soleil. And since last year -- and we also acquired Yuyuan Tourist Mart. And we also build our own brands, for example, we have set up, [ Anthenon ] which is a hotel and destination management company, and has already signed 10 project agreements and this very year, would be bringing in profits for the group. And we have also set up sales platform including the Mini Club and also the Fanxiu Arts Performing Company of Fosun. And in the entire segment around products, services, destinations as well as channels, we have been putting in a series of measures to both invest and deepen penetrate -- deeply penetrating the segments.
Now the happiness segment, especially tourism, we do expect it to have good result and growth in the last couple of years. Therefore, at the beginning of this year, we have already decided on a new round of restructuring for this particular segment in order to allow this segment to grow very quickly. We also believe that this platform, given its independence and potential, will grow extremely quickly and contribute to the profits and performance of Fosun in the future.
Now upcoming, perhaps I'll invite Ms. Xiaoliang -- Mr. Xiaoliang.
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Xiaoliang Xu, Fosun International Limited - Co-President and Executive Director [6]
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Good morning, fellow investors and analysts and friends of Fosun, good morning. Now Fosun, as a globalized asset company, our ability to -- and capacity to create value in those companies or assets that we invest in is something very important to us. So we focus on the operating capability of such a global asset platform. We would like to enable, empower them, and create synergies amongst them.
Of course, we are aware such empowering in the end would be something between person and person and team with teams. Therefore, Fosun has built a global partnership platform at various levels and various -- to collect people and high level -- high-caliber people from various background.
The paramount platform would be the global partners of Fosun, and secondly, would be those partners at the asset level. And the third area, third level would be entrepreneur partners. So we are creating different platforms, different status of partners. And we also have different focuses: IT, finance, public affairs and people with special capabilities would form our back end partners. Now with the different tiers and different focuses of partners, and also in addition, we have globally 265 MDs, these form an energizing and empowering ecosystem amongst our team.
Let me cite to you 2 examples. First is that in 2014, Fosun acquired Fidelity, the largest Portugal insurance company. And afterwards, we quickly put together an integration plan with Fidelity in order to enhance our empowering capabilities. Now given the leadership of our health business, Luz Saúde. We also purchased Luz Saúde, the largest Portuguese insurance company. Therefore, we integrated the medical services, medical capabilities as well as insurance capabilities of Portugal immediately.
So with their leadership, we were very quick to -- in India, Tokyo, Brazil, the U.S.A., et cetera. 17 countries, we were able to invest very quickly afterwards. So that Portuguese insurance company can enjoy a fast growth and yet be able to manage its risks. Of course, through the global partners of our finance sector, we have been able to very quickly expand our product from previously a very straight limited products to a diversified product portfolio. Now such speedy synergies and empowering has given rise to fast track growth. Therefore, in 2016, Fidelity has reached a EUR 220 million performance, which is double of 2015.
Now just now our colleague Chen has said that Club Med is also an entity that we now 100% own. Now Club Med, we are giving it our full support, full empowering. Within the last 2 years, at 5 places in China we already have new resorts in Guilin, Sanya, Yabuli, Beidahu and also in the Dong'ao Island on Zhuhai. They are all launching at the same time. And very quickly, we have been synergizing between the other assets within our happiness sector with this new -- with Club Med. For example, Cirque du Soleil, as well as others and this has created huge synergy.
As you can see, we are building also on Fosun's brand and goodwill. And in China, we have already practiced a light assets strategy. And with the international business sector, we are doing leasing after acquisition. So we clearly see that Club Med, in the next 3 years in China, would be growing even faster.
In the next 3 years, we anticipate 15 resorts to open by 2010 -- '20. And also in Korea and in Japan, we are also mobilizing very quickly. So through synergy, Club Med 2016 result is the best of its kind in the last decade, and this is purely, only from China. Each year, it already reaches EUR 1.12 billion. So this is excellent, and I think such synergy is something that Fosun has always been focusing. So in the coming years we will through Internet and digitization to enhance such synergies.
Now let me invite Mr. Gong Ping to walk you through some of our investment highlights.
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Gong Ping, [7]
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Good morning. Just now, my colleagues from the Fosun team has been walking you through some of the highlights in world health, happiness and synergies that we have done. And I also like to systematically walk you through some of our investments in innovation and smart technologies, some plans and some results.
I think, first of all, let's talk about our views. We believe that the global technologies are growing even more quicker. And also at the same time, China and global so-called developed market. As far as new technology development is concerned and its application is concerned, there will be a bigger gap -- sorry, there would be a smaller gap because of the investments that has been done lately. And also AI, big data and robots, mobile platform, such new technologies has went through breakthrough and under such a context, some business operations and some industries that formerly we did not see the possibility of experiencing huge growth would now be possible. Now this is our investment map.
In health, in entertainment, in consuming -- consumer, we connect them all to such innovative technologies to provide explosive exponential growth. And Fosun has been deploying a very comprehensive network around this, including NAGA, which is a smart analytical system and we also invested in the biggest car Internet flow from the U.K. and also in health and in entertainment, and in consumer segment, we have also invested, put in a lot of measures, which I will not go into detail here.
As far as the finance value is concerned, we have this pyramid structure. We have all set our goal to become the king of unicorns. Meaning, amongst the smart technologies sector, we have already invested in 60-plus projects. Those, about USD 1 billion, sorry, unicorns, so like Cainiao, Best Logistics and We Doctor Group. And then the smaller ones, at RMB 1 billion that would be like little unicorns like Easy print, Red collar and Hecom, et cetera. And we also see a lot of projects that are related to our assets. As you can see, BAT, people are -- talk about BAT. However, many lead companies in the industry regarding even the so-called leaders, their penetration is not even higher than ours. For example, in the innovation technologies. We're talking about accurate diagnosis, and also we are growing a -- we are building a JV with them. They are into R&D of such innovative products, sales as well as marketing. I think you already know them despite that this is only one product, it has with it about 4,000 patents. So this is the top of the AI. Then also Floow, which is the U.K. company, the largest car Internet, through sensors, through software and analytics. It has created the car segment to help the smart selling of cars as well as cutting down of cost. It will also engage into smart driving. Now since 2010, with 3 employees, it has now 7,000 employees and is already making a profit.
Now in the Weiyi case, as you can see, this is a nationwide medical consultation and service platform. It's penetration and coverages are satisfactory to us. It already covers 2,400 hospitals with 150 million users. And in the coming years, it will connect its online and offline and also connect the pharmaceutical and medical services channels and by doing so penetrate the market. What we'd like to talk about is the future in the global investment in this sector. It's not limited to the joint venture that we just now talked about. We also, through investing in further technologies. For example, special steel, it may need very many different kinds of steel products. However, with the current industry, it is very hard to find products that are -- that can be catered to our very specified needs. Therefore, we are building a C2M supply-chain and that is at the 3% of our -- that could cut away a lot of our cost and shorten the procurement period to 3 months. Therefore, we are creating a new -- something, a very new phenomenon out of these very traditional sectors. So what we are doing is investing more in smart technologies especially AI and big data and to make changes to the -- this would create a big impact to consumer behaviors. So we believe that this is not only something that we should do with our venture capital platform. And it is also globally, in Brazil, in India, U.S., European and Russia, with all of these different platforms, this should also be one of our investment focus. And it is also something that we would continue to expand our investment in.
As you can see, in this round of directors, board of directors meeting, we have invited Dr. Lee Kai-Fu, a specialist in this area to join our board. So this is our preparation to capture the opportunities of the next wave.
So let me pass on the floor to another colleague, Mr. Wang Can, to walk through the financial highlights.
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Can Wang, Fosun International Limited - CFO, SVP and Executive Director [8]
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Now first of all, thank you for my predecessors for the excellent sharing. Now let me review the financial highlights of Fosun in 2016.
First of all, now in the past year, Fosun International has again delivered beautiful results. A net profit attributable to owners of parents in 2016 has reached CNY 10.27 billion. Now despite that this has been disclosed, has been discussed to you by Mr. Wang, I think good news is -- can be something that we keep repeating, because CNY 10.27 billion is a historic height for us. Since our listing in 2010, this is the first time that we have a net profit exceeds CNY 10 billion. Now this morning, in the breakfast meeting with analysts, Mr. Guo has said that this is only the start, and we believe that upcoming, we will even pay back our shareholders with even better results. And also, we have been talking about since this is the last -- this is one -- last of the 5 consecutive years when we have excellent profits and the year-on-year change is 27. 7%. And in the past couple of years, our net profit performance can perhaps mitigate some of the concerns that you may have and be more confident in our future. And such net profit has to do with our 3 main segments, wealth, health and happiness, as well as our asset distribution and optimization. Now these 3 segments in the last year has contributed CNY 7.26 billion, contributing 76% of our total net profit. And this will continue to rise in 2016. Our basic earnings per share is RMB 1.19 versus 2015 is 12.3% increase. Diluted earnings per share is CNY 1.19, it's a 13.3% increment. And we will rely on our leverage on our synergies to create more value for you.
The book value per share on 2016 is CNY 10.74 versus last year, is a CNY 1.9 increase, 22% increase. And this is from intrinsic growth, and also some of the selling of our assets is also added to our net profit. This has built a good foundation to our future development. And also in 2016, our adjusted BV per share is CNY 16.11, which is a CNY 1.12 increment over last year.
Let's take a look at the next page. Now just like Mr. Wang has indicated in the second highlight, we continue to pay attention to the security and the debt structure. Our debt structure has continued to improve. In 2016 end of year, we have total assets of CNY 486 billion, 19.7% and our total debt is CNY 126 billion, 9.7%, which is way lower than our asset growth. And also our total debt to total capital ratio has improved from 53.6% to 50.7% in 2016. And also our debt structure continues to improve. Our security net has already -- is already improving. And also, our cost especially the financing done in U.S. dollars, which is facing a rate hike cycle, therefore we have been making an early judgment in early 2015. We have already made use of this low-interest rate window to extend the maturity level of our debt. So we have lockdown on low-interest rates and stable finance resources and further stabilizing our debt structure.
You can see in 2014, we were at 51.4% debt ratio and 2015 at 55%, and 2016 is 65%. And we are also -- our average funding cost for 2016 has dropped from 4.97% in 2015 to 4.47% in 2016. 2 weeks ago, we are also issuing an 800 million of U.S. dollar debt. Now this will -- this is at a 2.25 coupon rate, and this is another measure to make use of this low-interest rate window and we have been receiving 4.4x of purchase requests. So that goes to say that our debt ratio -- our debt is very welcomed by the industry. And also the credits that we have not used has increased by 19% to reach CNY 15.3 billion. And this also prepares for liquidity of our -- for us and also to ensure our safety.
In 2016, I think our performance results including the first time when we break through the CNY 10 billion, this is a milestone for us. And I think the overall -- our team in Fosun would still work hard to -- around the wealth, health and happiness theme in order to create further and more values for our shareholders. So that in 2017 we can deliver even further results and build on our medium-term strategy. Thank you.
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [9]
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Now let me just say it here. Very thankful for our fellow colleagues to walk us through the excellent results that we enjoyed in 2016. Now let's move into Q&A.
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Questions and Answers
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [1]
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Please if you have a question, please fill that question on the question form and fill it and send it to our colleagues. Now I have already received some questions. While the other questions forms would continue to be collected around the floor. Now this is in standard Chinese, for Mr. Guo, Fosun's management has undergone great changes. Now can Mr. Guo explain to us what are -- the market has different interpretations of this, would that create a negative impact to Fosun?
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Guangchang Guo, Fosun International Limited - Chairman [2]
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Now first of all, for Xin Jing, because of health reasons, now he has to take a break. Now I express my regret, Xin Jing for the past 25 years, with Wang, we have been working very close together, closely together, just like brothers. Now for the last 25 years, he has contributed greatly to Fosun's performance and foundation today. Now personally, I have been mean on him, I have been very demanding to him. For others, I am more lenient, but to him I am never lenient. I would say whatever that comes to my mind. Therefore, he lives up to the very open and honest culture that Fosun has. Well now, this is Point 1. And secondly, I feel that in the short run for Fosun, his departure has an impact. However, we need to turn something bad into something good. This round of restructuring, we see that Fosun has a new generation of management. We feel that after many years, Fosun has a lot of good, excellent, high-caliber people with us. Because of some accidents that has cost us, forced us to think more about giving more opportunities to younger people. As you can see on the board, we have specialists from the Human Resources profession and we also have Wang Can, Robin, who is an expert in finance. And Gong Ping has an international perspective. And we are also focused on penetration in the domestic market and to form a very good team. I think as far as this is concerned, Alex has been doing well. And also Jim Chen and Jacqueline, they have been doing well, excellent. And also to you, Mr. Chen? How many years have you been with Fosun?
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Qiyu Chen, Fosun International Limited - Co-President and Executive Director [3]
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23.
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Guangchang Guo, Fosun International Limited - Chairman [4]
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23. At the health sector, he has been taking -- making it step-by-step, building a lot. And also Xiaoliang. Mr. Xu Xiaoliang, and Mr. Chen Qiyu. Both of them, our global partners. And also the new CEO, Mr. Wang with us, I think with them, we have an even stronger team and with them, I believe the future of Fosun has a lot to offer and a lot for us to expect. Well, running a corporation is like running a football team. While we always want to win, there are bound to be teams, or members of the team that need to take a break. And there would always be a newcomer. Regardless of how good your skills are, we can't be always playing the game with members who are, like in a football game, like 30 years old or so.
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [5]
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Well, next question, why is it that you are launching this new C2M model? What does your Fuson C2M means? It seems that people don't quite understand the C2M concept. So who will make an explanation there? Mr. Wang, colleague Wang?
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Qun Bin Wang, Fosun International Limited - CEO and Executive Director [6]
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Well, C2M is something that has been created by Colleague Guo. C would be customers, M, well we have been thinking. S, would be supplying, manufacturing. However, we decide to use them with make-up because it emphasizes more on creation. So what Fosun means is to build our business around customers, family customers from the world to create unique value to them. Now this is a hope on Fosun's part, something that we hope to be able to contribute to today's society. And of course, as far as makers are concerned, we have products and we have services. But it is all focused around the themes of wealth, health and happiness. Now just now, Colleague Chen has already given a very good sharing about these segments. And in Fosun, we believe in improving one's health, improving one's family, improving one's country and then you can do better for the world. So this is what Fosun believes. This is our way of creating value for our customers and for the society and therefore, living up to our unique value-creating ability. You have to be -- if you want to be unique, you definitely have to excel in Internet, artificial intelligence, as well as high-tech, in order to solve the efficiency problems in products and services, and also address some of the pain points where products and services are not satisfactory. And also to enhance the quality of our products and services.
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Guangchang Guo, Fosun International Limited - Chairman [7]
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Now mobile Internet, especially given artificial intelligence birth, we can see that as of now, it's -- the Internet's penetration to various industry is still at the surface. Now more importantly, is still the platforms, meaning the BAT. Now if we have to dig into the industry, it is entirely a C2M connection. Connecting the makers directly to the consumers. Now given the AI development, there can be seamless connection between these 2, and we can, therefore, see very, very big changes happening to various industries. And it is also where opportunities come from for investors. Now on the one hand, C, if we focus on C, the consumers, now because we have a deep penetration there and using big data and analytics, we can very accurately describe, understand the behavior and the demands. And also with the makers, for those who has the level of create and there, better value has more flexibility for intelligent changes, smart changes, they can therefore provide to the satisfaction of the consumer. And also with -- if we have to do better with the makers, we have to enhance -- we have to make changes to the entire supply chain, which will have to be restructured on the basis of modern technologies. So with these 3 observations, we believe that we need to speedily respond to the needs and requirements of the consumers. And while at the same time, we need to be producing economically and cost-effective products and services. So this is a huge revolution. On the surface, it seems very peaceful. However, if you look deeper, I think it is already a very vigorous market with a lot of competition. Now it is -- Fosun's investment is guided along this strategy, to build this ecosystem. Now when comparing ourselves with those that have not done a deep understanding and research about this ecosystem, we will be different and we are to be expected.
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [8]
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Now Mr. Chen and Mr. Xu, being new to us, can you say a few words and also what are the areas that Fuson needs to pay attention to in the coming future?
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Qiyu Chen, Fosun International Limited - Co-President and Executive Director [9]
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Now just like we have said, I've said that I have been with Fosun for 23 years. And even if I had to, want to find another job, I would not be able to. So I feel very close to the team. And I feel very fortunate because I am doing something that I like. Not only the annual changes in performance of Fosun every year, actually every month, we are seeing new things, new changes. Now for the board, including Mr. Guo and Mr. Wang's considerations and the appointment to me, is an honor. And of course, the most important thing to do is to build well the health segments. And I would be applying some of the deeper understanding of this industry to the strategy, to the management and to the development of the group. I think for Fosun, the roots are in the deep understanding of the industry. Therefore, we have to perform as an entity that can be representative of the 1.3 billion people in China, and also to take a leadership role in the global market and to deliver those values that we should.
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Xiaoliang Xu, Fosun International Limited - Co-President and Executive Director [10]
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Now joining Fosun was something like 20 years ago. It is very clear that Fosun is my home, for this life at least. I think I am a very fortunate in every era there is a dream. And Fuson's dream is related to this era. We are very confident and very -- we believe in ourself. We are committed that we have found the right way and we will be building an ecosystem for happiness, which is to go for each and every human. And of course, with happiness, you will need health, you will need wealth. So I think for those who are within our team, we ourselves are very happy. However, this world continues to be changing quickly like artificial intelligence, with Internet technologies. Now people are saying that artificial intelligence is the last innovation of this era. And with mobile technology, many abilities would be deeply enhanced. It is hard to imagine what it would look like in another 5 to 10 years. And I think there's a common point, which is a gene of Fosun for the last 20 years, which is the learning, the capability to learn. We do not stop at any time to learn. This has been the gene in the DNA of Fosun. And this means that we will be working with more and more different partners to live up to our dream, to deliver on our dream.
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [11]
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Thank you. Now this question probably should be answered by our CFO. Capital control in Mainland China is higher and what are the impacts and however, what are the impacts of the RMB values, fluctuation? And also with Brexit and also the many European countries, would also exit the European Union. So what are your views on the investment skyline this year?
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Can Wang, Fosun International Limited - CFO, SVP and Executive Director [12]
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The first question regarding the RMB control, we have 2 financing platforms, one is Fosun International Hong Kong, then we have Fosun High Tech. We are always saying that we are hedging, using RMB versus other foreign Cs and despite that, there are challenges, I think this is more like opportunities. Our competitors would be harder to find finance with the Hong Kong financing platform, Fosun is able to capture more, better quality financing. However, thank you for your concern and your care about us. And also with Brexit, its impact for us, I think first of all, we have limited assets in the U.K. We have one -- it is a European company that owns our asset in Britain. So the exposure is very small. So Brexit would have little, ignorable asset on our balance sheet. Would you be changing your investment portfolio? Let me first try to answer this and Mr. Guo and Mr. Wang can supplement. As the CFO, Brexit, as you can see, pounds, sterlings are coming down for us. This may mean an opportunity for investment. Now for a value investor, we have to find a point of value in order to invest. We will not say it is because of Brexit that we invest more or less in the U.K. What we need to do is to be able to find those, a target that is worth investing before we invest. And our investment is around wealth, health and happiness. This is strategic to us. Mr. Guo, do you have any supplement?
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Guangchang Guo, Fosun International Limited - Chairman [13]
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Well first, I'll say a few words. First of all, just like Mr. Wang has said, Fosun has an international channel for financing and investing. We are a Hong Kong-listed company and we have just issued 800 million of U.S. dollars debt. So we have various capabilities to finance internationally. For example, we have an insurance that's around 20 billion of assets in euro that needs to be invested and deployed. Fosun actually has been optimistic about the opportunities in China. In fact, its biggest opportunities is in China. So we will continue to step up on our investment in Mainland China. We will actively encourage both within our group to enhance, to step up on our investment in Mainland China. We would also encourage those overseas entities that we have already invested to go back to China and invest, including Club Med. We will accelerate in building more resorts in China including Atlantis and our insurance arm. I believe that Fosun is an investing institution that is driven by strategy. And Fosun is also a long-term value investor. Of course, we will pay attention to cyclical opportunities. However, we feel that more important would be our long-term strategy around the health, wealth and happiness themes, which would be the key requirement for the future generation. For our happiness ecosystem, what we see as more important is after the investment, what are the synergies and the empowerment that can be created. Therefore, given this consideration it is likely that apart from European and American markets, we will pay more attention to India and Russia, and of course, we have to perfect our global network and also to perfect our integrated capabilities in wealth, health and happiness sectors.
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [14]
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There are 2 questions asking a similar question, so I will combine into 1. Company previous said that you would stop for -- temporarily the investment in Europe, including real estate investment and will not also increase its investment in the United States. Question is, how long do you plan to stop doing this? And also real estate investment in the future, where would it be focused in?
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Gong Ping, [15]
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This is an excellent question. However, I feel that for the entire Fosun Group we are a very nimble and flexible investing company. As far as real estate is concerned, we have been focusing in the way on the various major markets. Just like Mr. Guo is saying, we are, of course, we look for increase in value in the -- all of the markets. And also Europe -- EU is still a very large economy. In the European Union, we already have 4 offices: in Zurich, in Lisbon, in London and also in Moscow, the pan-European team. So as far as geographical deployment is concerned, this is already in place. I mean, our strategy. However, this then doesn't stop us from, at the time of uncertainties, that we take a prudent approach. Now this is in line and consistent with our position as a long-term value investor.
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Guangchang Guo, Fosun International Limited - Chairman [16]
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I think Gong Ping is very academic in this way. Let me try to be more casual. Now in his report, I think there is -- in some of the report, it's a misunderstanding of his meanings. He did not say that we would stop investing, he just said that we remain prudent, careful as to some of the uncertainties that are now in Europe. Our commitment in Europe is long-term and we already have built our teams and presence, it is just that with such uncertainties we are only playing more -- playing it safer, considering more, it doesn't say that we are stopping. I think you can just simply say that we will not stop, and so that people will understand you.
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [17]
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Now that we have a clear picture, the next question has to do with our board. Now as a nonexecutive director of the board, with Mr. Lee Kai-Fu, when did that start? And in the future, will there be any further cooperation with Mr. Lee?
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Guangchang Guo, Fosun International Limited - Chairman [18]
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Mr. Lee Kai-Fu, we have appointed and asked him to become an independent director of Fosun International. That's mainly because in the area of AI and high-tech, this will be the direction of Fosun's future development and it would also be the basis of our -- technology basis of our creation of the C2M happiness ecosystem. I think we believe that he has a global expertise in this area and it is also a further upgrading of the quality of our board. And also secondly, with Mr. Lee Kai-Fu, we have already communicated with him in a big way, in some of our projects, let's say in some of the VC and angel projects that Fosun has invested, including many of the high-tech and AI projects that we've just now talked about. In the future, Fosun is a legal representative and we will focus on our governance, our strategy-driven value investment, we will continue to work with high-caliber investors and experts in a flexible way. Now at the moment, we do not have anything specific that needs to be disclosed to our investors. Thank you.
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [19]
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Perhaps we will take the last question. I'd like to ask Mr. Guo. 2016, Fosun's result and performance, what is your view? And what is your anticipation of the stock price? And what are your hopes for 2017?
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Guangchang Guo, Fosun International Limited - Chairman [20]
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Now first of all, since this is the last question, I have to thank our media friends, thanks, our investors and also thanks, the colleagues and team at Fosun for the hard work in the past years. 2016, we have a 27-point-something growth, a CNY 10 billion plus net profit. I think we should be happy about it. However, for somebody in business, we always look ahead. I see that our global partnership system would make it stronger and the newcomers who would make us stronger, including new management team who is younger, who is more international, who can play important roles in the next 5 years of Fosun's development. And also, the breadth and depth of our projects are becoming stronger and richer. And for the next 5 years, to be able to keep a higher speed of growth, we are highly confident. So from these 2 points, I believe Fosun's stock price is seriously underestimated, undervaluated. Regardless of -- you -- where do you find such opportunities like the ones that we have found, even with a premium and discounts? I think the Fosun stock price is seriously underestimated. Therefore, I am hugely confident. Well, me, Wang, I don't have any other asset. The only asset I have is Fosun International. The others that aren't in here, because they are too small. And everything that I have is with this company. So as long as my health allows, I myself, including the others, will definitely work to our best. Therefore, another 10 or 20 years for all of our investors and shareholders.
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Qun Bin Wang, Fosun International Limited - CEO and Executive Director [21]
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The key is, Mr. Guo is playing excellent tai chi and we are sure that he will remain healthy in the next 2 decades. Now the same applies to our team.
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Lan Kang, Fosun International Limited - Chief HR Officer, SVP and Executive Director [22]
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We are delighted today. Actually, here with us are the partners. Apart from those on stage, there are also a few others that I'd like to introduce to you. First of all, I would make use of the discretion as a host to introduce to you our latest member in the insurance area, Mr. Vincent Lee. As you know, insurance is also of strategic importance for Fosun. And we have been emphasizing on professionalism. Vincent is bringing to us many years of experience in the insurance sector. And we are calling him colleague Lee already. And also, I'd like to introduce Mr. John Hua Chao, independent nonexecutive director of Fosun, and also our global partner and senior vice president, as well as our Treasury Management Department, General Manager, Mr. John Hau Ling and also Mr. Lee Hai Fung, Global Partner and Senior Vice President of Fosun, President Fosun Pictures Group. And also Franz Joseph Hahn, Global Partner, Fosun and Chief Executive Officer of Peak Reinsurance. Now may I invite all of these partners to come on stage for us to take a group picture, please.
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