Citi has made material changes to its financial estimates on Fosun International, expecting core profit for financial year 2025 to grow by 197% year on year to RMB2.2 billion (excluding the one-off non-cash loss of RMB5.1 billion from Cainiao in financial year 2024). It also expects an 81% year-on-year profit growth in financial year 2026, primarily driven by the earnings recovery at the "Happiness" segment and lowered finance costs from the Group's proactive deleveraging efforts.

Citi also highlights that Fosun is accelerating its "strategic advancements and exits" strategy, targeting to divest over RMB80 billion in heavy assets and non-core assets. By end of June 2025, Fosun completed the sale of all its 99.743% stake in the German private bank HAL, while retaining the asset servicing business HAFS. Citi believes that the capital recycling from asset divestments will enhance shareholders' returns and narrow the net asset value discount.

The report points out that Fosun's current share price trades at a 71% discount to its net asset value. Despite its stock performance outperforming the Hang Seng Index over the past 30 days (+14% vs. +7%), its valuation still has significant room for recovery. Citi is optimistic about Fosun International's future earnings improvement and the re-rating potential brought by its deleveraging strategy, thus assigning a "Buy" rating to Fosun International.

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