Oddity Tech Ltd

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Dear investors and analyst, both online and off-line, good morning. Welcome to Fosun International 2023 Interim Results Announcement. I’m the moderator today. The General Manager of the Department of International Relations at Fosun International, [inaudible].

First, let me introduce to you the management team. The Chairman of Fosun International, Mr. Guo Guangchang; Executive Director and Co-Chairman of Fosun International Mr. Wang Qunbin; Executive Director, and Co-CEO, Mr. Chen Qiyu; Executive Director, Co-CEO, Mr. Xu Xiaoliang. And we also have Executive Director, Executive President, CFO of the Group, Mr. Gong Ping.

Today’s announcement session is split into two halves. In the morning, the management team will present to you our performance and strategies in the first half of 2023. In the afternoon, the four heads of our business segments will brief you their performance and their strategies.

Since the beginning of this year, we are living in a very complex and political and economic situation. At the same time, we are seeing that the inflation in established economy is moderating. The national government is putting forwards many policies to stabilize the economy. Fosun International on the other hand is more committed to its strategies of streamlining and embracing agility. As we position ourselves as the global family business group, we are more steady, we're more committed.

Now, let's give the floor to Mr. Gong Ping, the CFO of the group to brief you the financial performance.

Distinguished investors and analyst, good morning. Welcome to Fosun International 2023, interim results announcement. First, let me present to you our financial performance in the first half of the year.

In 2023 we witnessed a very complex, ever-changing situation. We have a very high environment globally and after we release all the COVID-19 related restrictions and we have many favorable policies. However, we are living in a complex situation. We are dedicated to our main business.

In the first half of this year, we stay committed to our strategies and concentrated our main business. Our industrial operation property is on the rise. We recorded a total revenue of RMB197 billion, up by 11%. FTG increased by almost 40% in this revenue.

In the first half of this year, those core indicators that reflect our finance performance such as industrial operation profits went up significantly. If we exclude those profits from disposed companies, we actually increased by 66% compared to the same period of last year, because in the same period of last year we had lots of proceeds from disposing some assets, and for that reason, our profitable – our profit is attributable to owners of the parent went down by 40%, recorded at RMB1.36 billion.

For overseas revenue, it's at RMB44 billion. So if we again exclude the proceeds from assets disposable, we -- the number went up by 15%. We invested RMB4.2 billion in technology and innovation.

Through synergies inside the group, we had achieved the multiplying growth. The number of new members is standing at 21.65 million, up by 11%. And the number of consumer members, it went up by 55%.

The four main business segments grew very steadily for Health Group. It went up by 2%. Because the COVID-19 related restrictions have been lifted, so tourism and culture increased by a large margin. So the Happiness group registered to 34.1% growth. Health segment leveled with a minor decrease compared to the same period last year. For Intelligent Manufacturing, it registered a 6.5% growth compared to the same period last year, and all these goes to show our strategies have been effective.

The four core industries contributed 73% of our total revenue, especially Yuyuan and FTG, both in Happiness group. They delivered quality growth and they presented a sustainable trend. Yuyuan registered a RMB27.4 billion, a 20% increase.

Fosun Pharma registered a revenue over RMB021.3 billion. Fosun Insurance Portugal RMB13 billion. As we navigate through this negative cycle, overseas business becomes a very important driver for our business. Since 2012, after decades of year, now the CAGR of our overseas revenue is now 15%, its over 60%.

FFT registered – 82% of the FFT's revenue come from non-Germany regions. The same with a Fidelidade the non-Portugal business take up around 30%. They have both organic and inorganic growth. That made our overseas portfolio commissions more resilient.

For example, in Fidelidade, the premium income of Fidelidade went up very steadily after we took over and its premium income is standing at RMB2.65 billion. At the same time, Fosun helped them to expand globally, and their international business increased by 19.4%, accounting for 30% of total premiums.

Club Med also registered record high revenue and bottom line performance and its Asia Pacific business contributes one-third of their total business. Fosun Pharma is also expanding globally. Gland Pharma completed acquisition of Cenexi, its European CDMO company.

HAL, our German Private Bank, also increased in their revenue, bottom line and ranking in the industry, and before tax revenue, also increased by almost 150%. BCP contributed over RMB1 billion of profits attributes to owners. There are too many examples for me to raise.

But we're also saying that the great performance in the first half of the year relies on our great financial, our great funding. We have very stable funding, both at home and abroad. The group finance in public markets is standing at RMB16.22 billion. That goes to show that investors have faith in us.

At a considered basis, the amount of cash, bank balance and term deposits is at RMB114 billion. In the rate hike environments where the basic rate of finfet [ph] increased by around 400 to 500 basis points. Yet our average cost of a debt is still maintained at 5.3%, only a 60 BP increase compared to 2022. The adjusted NAV per share is still very resilient standing at HKD21.1 per share.

I'm going to continue to step up our strategic transformations and deleverage and optimize our debt structure, so that we can navigate through this perfect storm. Since 2019 we've been downsizing the real estate business. And in the beginning of 2020, we started the dispose of non-core assets, and we are transforming into asset-like business and this strategy has been implemented down to portfolio company level.

Since the beginning of 2021, because of rate hike, we accelerated restructuring of our assets. So in 2021 and 2020, we struck a balance between divestment and investment. But in 2022 and the first half of this year, we have more divestment than we have investment. So to sum up, we continue to optimize those companies, those business that lack competitiveness.

So in all we're doing, we're trying to improve our credit rating. In general, we generated a cash inflow over RMB20 billion and we also gained RMB12 billion worth of syndicated loans. Fosun High Tech also issued financing vehicles in both January and July. And we also repaid syndicated loan and bonds on time. And now we don't really have any pressure for maturity, especially in the next one year we don't really have large-scale U.S. dollar bonds. So we don't no longer have a problem with debt. Because of that, our credit rating has been upgraded by S&P to stable.

In the past one year, the total debt has been continuously on the decline since the beginning of the year. We've been publicizing our interest bearing loan at the – and our total debt, it's now RMB220.9 billion. And the debt's maturing at 2 July. It had really been paid at the end of June.

Looking forward to the second half of the year, we will continue to dispose our non-core assets to further improve our financial performance.

Lastly, it's important for us to repay our shareholders through dividend payouts. The NAV has been very resilient. In the past 16 years our dividend payout has been very stable and total amount is at HKD25.3 billion.

That's the end of our financial performance presentation.

All in all we’ve navigated through this perfect storm. So in the second half of the year, we will continuing to write on this good momentum. I will leave more time for the two co-CEOs for our business and strategies.

Now, let me turn over to Executive Director and the Co-CEO Mr. Chen Qiyu.

Hello, everyone. Let me report to you our performance in the first half of the year, and I will report to you four business segments, including the health, happiness and wealth and intelligent manufacturing. For health segment, we don't have much of change in our health business structure in the first half of the year. We have reached the RMB23 – over RMB23 billion in the first half of the year for the total revenue, up by 2% YoY.

Fosun Pharma has contributed over RMB21 billion in revenue, same as the last year in the same period. However, if we exclude the anti-pandemic related products, Fosun Pharma revenue increased by 15% YoY and has reached over RMB1.7 billion for the profit attributable to owners of the parent up by 15.69%.

If we exclude the anti-pandemic related products, the profit attributable to owners of the parent was RMB1.3 billion, down by 26.28%. Our R&D investment was RMB2.884 billion up by 19.77% and our operating cash flow was quite healthy. It reached RMB1.81 billion.

I think the highlights for the health segment is that we continue to build our innovative pipelines as you can see on this slide, that we have a very sustainable and innovative product pipelines since 2018 and 2019. We have launched different biosimilar drugs and up to now that we have a very steady progress in launching all the biosimilar drugs. And this has created the added value to our performance, including HANQUYOU and HANSIZHUANG last year, which was the PD-1, and also we have launched Yi Kai Da and also we have all different innovative drugs that have been launched.

So from this year and in the future, we will have more innovative drugs waiting to launch and also waiting to be approved by the global markets and our PD-1 is in the clinical trials in the U.S. market and is waiting for the approval in the U.S. market. And also PD-1 has already, the EMA has already accepted our PD-1's application and we're waiting for the approval and the HANSIZHUANG is in the process of the FDA approvals for BLA. And also we have all different vaccines for different indications.

And the second business highlight, which is also very important for us is the deepening global business presence. In the first half of the year our revenue from regions and countries out of the Mainland China was RMB4.76 billion. Total employees in the overseas market was more than 6,000 and we have over 1,000 employees working in the commercialization teams and also we have major progress in different countries including.

In the U.S. we have already established the team for generic drugs. Our PD-1 is in the clinical trials YoY and also we have already established a pre-commercialization team for PD-1. In Africa we have already established five regional distribution centers and also we are building the Cote d'Ivoire Park integrating drug research and development, manufacturing and the logistics distributions. This will speed up our localized manufacturing and supply capabilities.

In India we're actively driving Gland Pharma's transformation into a biological drug CDMO with its products transforming into complex formulations and high difficulty injectables. In Europe Gland Pharma has already acquired Cenexi and built the localised manufacturing capacity in Europe.

For devices and diagnostics, we have healthy growth in our core businesses in the devices and diagnostics brands. For the Medical Cosmetology, Sisram, we have re-worked the whole company. Not only we will have the laser equipment, but also we will have the long-acting Botox and injectable fillers and personal care products.

Sisram is actively building this direct sales team in the whole world. We have already established the direct sales in the U.S. and in the first half of the year we acquired one agency in China to establish our direct sales in China.

For Professional Equipment/Supplies, intuitive surgical has installed 34 units of the da Vinci surgical robots in China for the first half of the year. Over 330 units or YTD and also we have favorable policies issued in the first half of the year, and we have already reached the consensus with our partners. We will localize the manufacturing of the Da Vinci Surgical Robots.

For the ventilators, our Breas is growing very quickly and also has reached a very healthy progress in the first half of the year. During the pandemic period we have contributed a lot to the anti-pandemic products and also Breas has sped up is upgrading. Its upgrading its businesses.

For the medical service and healthcare management, we are evaluating our models and we are quite confident because of the two reasons. The first is that healthcare, service and also management in China we still think that there are great potential and rooms for the medical insurance and healthcare management.

We have already achieved the advantages in China, because we started this business quite early. We have started very early to build our medical presence in China and also we have the – we are one of the few that having the medical professional permit. And also we have a very good experiences in Portugal. Luz Saúde is one of the largest private medical groups in Portugal and also we have the one of the largest insurance companies in Portugal.

Insurance plus medicine business model has been tried in the Portugal and also we have seen great results, which means that we think from the medical service and healthcare management we are trying to build the new ecosystems to trying to have the very enhanced offline foundations and build the online/offline service capabilities and also we are trying to connect in insurance plus medicine. So that in Chinese market we will have a stronger product, even stronger than the top tier insurance companies in the world, and also we have seen the great cooperation between healthcare and insurance right now.

Next for the Happiness business actually the business structure does not have big difference from the past years so we insist on our business structure and in first half of the year we should say, the Happiness segment has both, significant growth of the revenue and the profit.

In total, we have a total revenue of RMB43 billion, which has a YoY growth by 34% and in total there are RMB770 million net profit attributable to owners of the parent. And mainly thanks to the strong performance of Yuyuan and FTG. For Yuyuan revenue in total it's RMB27.44 billion which has a YoY growth by 26%.

For FTG the total revenue RMB8.9 billion which is up by 38.7% YoY and for Lanvin Group revenue in total RMB1.697 billion which has a YoY growth by 6.4%. Fosun Sports revenue RMB924 million and Baihe Jiayuan the total revenue RMB530 million, especially after the pandemic is over the wedding business has been growing significantly.

Next about the Yuyuan business. Indeed in the first half of the year we had very solid operations and our revenue has been increased to RMB27.44 billion. Also profit attributable to owners of the parent, which has an increase by 225.8% and especially our consumer business has contributed a lot and has made a much larger contribution.

In particular, our food and beverage, our jewelry and fashion, those consumption business has been developing rapidly and for the jewelry business it account for 90% the revenue account for 90% of the consumer industry.

And let's take a specific look of the jewelry fashion business. We have a 35% growth YoY to RMB211 million. Especially we have been witnessed a steady growth of the number of our stores which have expanded steadily. Year-by-year we have over 600 store expansion and also in the first half of this year we have an increase of 325. So that's how the expansion of our store and the jewelry fashion business are growing and expanding steadily.

Next about the Liquor business, we have a revenue growth by 16.6% in first half of the year. Especially on the one hand we are destocking and on the other hand we are driving our business growth, especially by seizing the opportunity after the pandemic and the boosting confidence.

On the one hand since the pandemic is over, so the market is rebounding on the other hand we're also deploying our business extensively and we have F&B business recovered by which has an increase by 160% in first half of this year.

Next, the Grand Yuyuan. We are proactively building it into a global fashion culture show with the charm of oriental lifestyle aesthetics. Especially we have conducted a series of commercial activities which are very popular check-up points in Shanghai, and all of those campaigns and activities have been recognized and welcomed extensively, especially for example we have Yuyuan Garden Summer and also we have the Bund Art Festiva.

Next is the FTG's business. We should say it suffered the most during the pandemic in the past several years, however this year in H1, FTG has a significant profitability turnaround and also the revenue growth. For example its revenue has been growing to RMB8.9 billion. Also the adjusted EBITDA now it has reached RMB2,300 million which has an increase by 92% and also the profit or loss attributable to owners of the parent company has been turned around dramatically, which has an increase by 340%.

So we have shown our resilience. It's just that we suffered from the pandemic and such kind of resilience hasn't been reflected. However now, after the pandemic is over, since we have been deeply rooted in China's market and also our momentum has been fully reflected and released. Also Club Med is a globalized brand and business. We have a revenue with 20% higher than the pre-pandemic situation and also the EBITDA and operating profit increased significantly.

At the same time we have the Sanya Atlantis, which has hit a record high of its business revenue. In particular the adjusted EBITDA has reached 100 – has reached 123% YoY growth versus last year. At the same time we are also pushing smoothly the Taicang project.

Next about our fashion business, which is also growing and developing steadily in all kinds of channels and networks and in all dimensions. We continue to optimize our product portfolio and upgrade different product lines.

And when it comes to a wealth segment, it consists of assets management insurance. In the first half of this year, the revenue is at RMB25.44 billion, a slight decrease, mainly due to the asset disposal we had last year. We had less gains this year. Among them Fidelidade registered a EUR 2.65 billion of premium revenue. It's consolidated, it’s a leading position in Portugal, and at the same time it expanded globally. The premium income from its global business increased by 20%. The HAL or German Private Bank also delivered a 24% growth their AUM is at €13.3 billion.

Millennium BCP, our commercial bank in Portugal registered a revenue of €1.2 billion and its profit attributable to owners the parent was at €4.2 billion. For our asset management segment, the revenue is at RMB6.99 billion, 1% slight decrease,. It also consists our first in the Hive asset management business.

In our insurance business, we can basically split them into our international business and Chinese business. Apart from Fidelidade, we also have PeakRe, a reinsurance company based in Hong Kong.

In the first half of this year, apart from achieving their revenue target, Fidelidade also increased their profitability. Their net profit attributable to Fosun is now at €84.2 million. PealRe also increased both top line and bottom line.

In China we have Pramerica Fosun life insurance and also Fosun United Health Insurance. For Pramerica is more associated with our senior CAD scenarios. In the first half of this year, we did a very strong growth because of our continued investment in the past two years. Through community policies we – the premium revenue increased by 289%.

For Fosun United Health, it is also closely associated that integrates it into our health care scenarios and it registers a 14% increase in this premium income.

Then when it comes to our asset management business, we first have a global footprint, but at the same time we continue to try to create synergies with other industries, so that we can continue to build our capacities.

The total AUM is at a RMB2.2 trillion and includes HAL, NAGA in Germany and also Guide, Rio Bravo in Brazil. Also in the Greater China region we have Fosun RZ, Fosun Health Capital and so.

Now speaking of our Fosun Hive asset management platform, we also can split it into our international and Chinese business. For Fosun Hive China our saleable asset is at RMB134.3 billion for AUM is now at RMB300 billion. For Fosun Hive overseas its AUM is at $14.1 billion U.S.

You can see we have a very even spread across America, Europe and China and Asia and IDERA was also launched. It's a listed company in Japan. Also PAREF is also another listed entity in Europe.

Lastly I want to talk about the smart manufacturing business. Actually NISCO is our biggest business, however it is not included in our consolidated balance sheet in first half of this year. And currently in total we have four business sectors under the intelligent manufacturing landscape.

One is new functional materials since we have Wansheng. Second is industrial automation and digitization with Easun Technology being the entity. And the third thing is the electrification and intelligent cars, since under this business sector we have the JEVE and FUSIONRIDE.

And the last one is the green resource industry, green low carbon resources with Hainan Mining as well as the rock idle under the management of Hainan Mining, to build its green low carbon industry layout and also some mineral resources and oil and gas resources. So in future these four business sectors will be our major footprint and layout under the intelligent manufacturing segment.

In total the revenue is RMB5.46 billion with an increase by 6.5% YoY, but currently it hasn't consolidated Wansheng and for Hainan Mining. In H1 in total the revenue is RMB2.4 billion down by 12.63% YoY. Mainly that's due to the downward price of the iron ore and the oil and gas, which has affected our revenue and profitability in first half of this year, but still we believe in the competitiveness of Hainan Mining.

Easun Technology, in total the operating income in H1 was RMB3.1 billion, an increase of 27% YoY, benefiting from the acceleration of electrification and smart intelligence globally. Also, our orders have been growing significantly from last year to this year. At the same time the quality of those order placement has been much better and we continue to promote our global integrated operation to optimize our global R&D and procurement and sales.

Next is Wansheng. Since it is a leading player in the flame retardant business industry, in H1 also affected by the global market downturn. So the piece price and the gross profit has been down to a certain extent. The revenue is RMB1.425 billion, down by 20% YoY, mainly affected by the circumstances. And now under Wansheng, the major focus is the research and development to create new product lines and growth opportunities.

Next, Hainan Mining. In the past two, three to five years since we have re-planned our layout -- business layout and business structure, in the past we simply had only the iron ore business line, but this time we have a dual engine driven by both the iron ore and the crude oil, the oil and gas, especially our lithium hydroxide project is ongoing. And since we have already released some announcement of the Mali project and I believe that after these two projects have been put in place, we're going to be even more competitive in the new racetrack. And also the iron ore mining is affected by the fluctuated price in the global market. So now we are still building our business structure to become more resilient.

Next is Wansheng which is also the world's leading new functional materials enterprise. In the past it mainly specialized in the flame retardant, but still as it is shown on this slide, we are also exploring other racetracks of different businesses like the additives and catalysts since we have our second research and development center open in Shanghai this year, hoping to rolling out more projects and more products to further upgrade our Wansheng business.

So that's all for the work and performance of our different business sectors. Next we have Xu who will take you through the strategies.

Good morning both online and offline investors and analysts. Our CFO and co-CEO Mr. Guo Guangchang and Mr. Chen Qiyu has given you a very detailed reports of the – our financial results and four segments.

I'll report to you our strategic development. This is our 31st year of Fosun. So for the past 30 years we have experienced different phases, including China drivers to the global operation and global drivers to the China operation.

So during the whole process we focused on two things; the first is change the second is not change. I’ll first report to the not changed -- what's not changed. We still insist on our values; self-improvement, teamwork, performance and contribution to societies and we are trying to support global families to become happier and healthier.

We focused on four core businesses; health, happiness, wealth and intelligent manufacturing. So with all the things that we persist in, how can we navigate through different phases? I think for different phases we have different strategies to adopt – to adapt to changes. I think for the first – for this year we have reported like three different, three changes.

The first is we will streamline our businesses, which means that we will be more focused on our core assets and core industries, and we will insist on divest non-core businesses. And also we will strengthen our core businesses to lead the industries. This is one of the change we will streamline our business, to adapt to the change in the environment.

The second change and strategic focus, which would be the FLI strategy and cooperation with the key partners will enhance our operation capabilities in the global areas and we will cooperate with the key partners in China and also in the global markets.

The third strategic focus would be the balance investment and divestment. We will divest from the non-core businesses, which means that we will focus our capabilities into our core businesses and also we will leveraging investment to boost our industrial operation. These three would be our strategic focus for future.

And as you can see in our four segments, we will have key directions for our four segments. For the health segment we will keep focusing on innovative drugs. We will increase investments in non-NDA pipelines and also we will strengthen global footprints and also we will try to expand their high-end medical services and also to connect with our high-end customers.

In the Happiness BG, not only we will increase our product lines and enhance product capabilities, we will also promote our traditional culture. We will combine the traditional culture with the fashion. We will promote our Chinese aesthetics to the world and also we will leverage our experiences in our existing benchmarking projects. We will try to build the complex, including culture, retail and tourism.

In the wealth segment we will consolidate existing advantages and expand overseas businesses. Fidelidade will focus in the Portugal markets and expand to other markets. In China, we will create ecological insurance policies.

In the intelligent manufacturing, we will expanse to other areas in consultations and build the advantages in agriculture and chemicals. One should not only – it will focus on fine chemicals, but also it will find their second curve drivers.

We are – so if we want to power the future, we need to have four core capabilities, four pillars to power our development. These four core capabilities, including profound global operations, FC2M Ecosystem, Innovation Driven Capabilities and as well as FES systems. I will elaborate you on these four core capabilities.

The first is Profound Global Operations. At present we are operating in over 35 countries and regions. We have over 39 global brands and companies. Over 44,000 people are working in our global markets and our revenues has reached over RMB44 billion from our overseas revenues.

We have seen the great – we have seen the – for Eason Technology its overseas orders with high gross margin has increased significantly. For Sisram it has already established its new direct sales office in Dubai and has opened the first experience center in Chicago in June. And for Fidelidade, it has entered the new markets in South America and has seen great growth in its revenues. Club Med is also expanding and Club Med will open the first Urban Oasis in China in the second half of the year.

In the FC2M Ecosystems, we want to empower more species. We will focus on family industries and also we hope all the industries enforcing is FC2M. We will have customer systems with different levels and we hope that our product will be innovative and with high gross margin. And also we think – we hope that our supply chain would be more flexible and resilient, and its foundation would be digitalization.

No matter in vertical or horizontal level, we hope the whole system is building upon the smart digitalization, and we are upgrading our FC2M systems for the first half of the year. We – our customer members have from 55% YoY, user operation has reached RMB740 million and we have reduced the cost by 16.1%.

For the technology innovation, which is also one of the main core capabilities, we insist on investing in R&D to build better products. For the first half of the year we have invested RMB4.2 billion in innovation, technology.

Hence the self-developed innovative anti-PD-1 monoclonal antibody HANSIZHUANG has been approved. And Fidelidade has launched its online app and has new registered users of over 1.4 million which is more than 13% of the total population of the more Portugal, and digital claims increased to 60% of the total claims. The functional ingredients of flame retardants antioxidants from Wansheng form a synergistic formula to provide customers with the overall solutions.

The fourth, we have learnt from our past experiences and also we have paid the tuition fees in the past. We keep drawing lessons from our past experiences and empower our sub portfolio companies. That's why we are continuously building the FES systems.

We propose these ideas first in 2021 and we keep upgrading our FES systems. We have already improved over a thousand projects and over 40 activities have been optimized in each of the next three years and FES has been improving our operation. And I think all of the core capabilities relies on our organizational development. We have five top management committees. We have different of BG’s and BUs and PLs from the vertical points. We have already built a web in our organizational development.

For our global operation, we have established 10 regional committees and France and Portugal is our top regional committees. And all of our – we are also pushing our function lines to build their sharing centers, so that all the functions can be shared by our portfolio committee, by our portfolio companies.

We are trying to build an agile flexible and efficient organization, just like water, because water is agile flexible and efficient. So in the future when we are building our organization, the core for our organization would be, we will be more agile, because the macro environment has been changing frequently. We need to have agile teams to adapt to the changes in the macro economy, in the macro environment and we will have streamlined headquarters and lean factors. This would contribute to our agility.

The second core is flexibility. Fosun is a big conglomerate operating in the whole world. We have different procedures and systems operating every day. However, all the procedures need to be in contribution to our businesses. We need to have agile authorization; we need to have flexible top prioritized battles.

And the third core is efficiency. The efficiency relies on our mechanisms, especially the decision-making mechanisms. We have already established talent mechanisms and EMC to decide on different things. And also we have different meeting mechanisms to improve our organization. In talent sourcing, global partner sourcing and optimizing and talent optimizations, all relies on their mechanisms, which is why we have a 271 mechanisms. We rank different companies talents and global partners.

So the efficiency also relies on different sharing mechanisms. We hope to build a really efficient sharing mechanisms that has multiple levels and multiple dimensions. These are the three core things to build for us, to build an agile flexible and efficient organizations.

As you know that, we have our values that insist on the self-improvement teamwork performance and contribution to societies. That's why we stay true to our mission and continuously enhance our ESG capabilities.

For the first half of the year, at the – every year we have published the first TCFD report and also we have included the carbon neutrality into our approval system. At the S-area we launched the Rural Doctor Program for the past few years. We have already benefiting over 3 million families and we have self-produced anti-malarial products that has helped a lot of patients.

In the G-area we will continuously to optimize FSG system and to have to build a bottom to top mechanisms. We keep working on our ESG areas and also we have seen a lot of the results. We are the only conglomerate in greater China with an MSCI rating of AA. These are our strategy development.

As you know, that the global economy is still in the recovering pace for a company like us, we cannot change the macro environment. We can only persist in our strategy, insist on the things that we cannot change to navigate ourselves in different phases and adapt ourselves to different changes.

We believe that development can solve the issues in development and we insist on the longevity and we are hoping to contribute more values to all different kinds of stakeholders and to help our family to become healthier and happier.

Thank you for your support for the past, and I hope that you will have more experiences in our products. Thank you everyone.

Thanks for the management for reporting. Next we will move to the Q&A session. If you have any question please raise your hand. If you have any question, please first name yourself and where you're coming from.

Hello everyone. I'm [inaudible] from the [inaudible] Group. I have a question to Mr. Guo. For the first half of the year, the Chinese economy has rebounded. However, in the international markets we have seen the arising interest rates and also differential political issues. What's your view on Fosun’s strategy and position in the future?

Mr. Guo speaking. Thank you for your support and also thank you for your questions. I think for the past three years, during the pandemic period, this is the 31st year of Fosun

Since Fosun has been established here for 31 years and in the past several decades, we have also experienced a lot of difficulties and also the economic cycles. However, this time it is most difficult one and I think all of you can feel that. So I agree with you that now it's time to rebound.

And last time we mentioned that the difficulty is always very tough to get over, however – and also it's always very tough to pick up to recover from the difficulty. And especially now the real estate business is having much – is having much hardship. And also we believe that it takes time and patience.

So on the one hand we need to take care of our profitability and on the other hand the cash flow, the liquidity as well. So here it is already very clear that we have already survived in the economic cycle and we have already well – get well dealt with our cash flow. So now it's time for us to stay, to be focused on our advantages businesses; the health, happiness, wealth and intelligent manufacturing sectors.

So I think the core to solve problems of development is to develop – is development. But of course we will focus more on building our product and branding our globalization and innovation. So we'll continue to divest from those non-core, those heavy assets and as a private and enterprise, the financing cost is very high which is even much high, over 5%. So that's why we're going to continue to divest from those heavy assets to reduce our liabilities, to focus on the right asset strategy and to invest more in the research and development in entrepreneurship and innovation. This is something that's already very clear.

Another thing is, I think it's time for us to be brave, to be bold and also I like to encourage all of you also to encourage ourselves. Since now we are welcoming a strong rebound after the darkest time, on the one hand we have witnessed that from the Chinese government and also some regulatory authorities of securities. They are now being increasingly supportive and to roll out some policies to the private owned enterprises and the economic market.

Also, maybe I dare not to predict that there will be no longer any more interest rate hike, but I think it's already enough, even though it is hiking rapidly, but I believe that it will also come down in a faster pace, because an interest rate hike is not a long-term solution, it cannot exist in the long run.

Also, in the medium to long term, since recently I also visited the U.K. and the U.S. I had a lot of communication with them. So I believe in a potential mitigation of the interest rate hike and globally I believe you can all feel that the global economy relies on the globalization. So that's why we say the globalization of Fosun is a very important and critical strategy for us.

So this year actually our overseas or the global business has much better profit and profitability and performance than our domestic business which is contributed by our globalization capabilities, and our long-term globalization strategy.

So in future, we will continue to insist in such globalization strategy. To be focused and to dig into the core of each business sector and also to be focused in our investment to invest more in our advantages businesses. So thank you for your question, this is my answer.

Thank you for the answer by Chairman Guo, by the management. Next question.

Thank you for giving me the chance. I am the analyst from Guotai Junan Securities. Mr. Leung. And just now in Chairman Guo's answer you mentioned that Fosun Group will continue to optimize its asset structure and its cash flow, its liquidity. So here my question is, in the second half of this year and even until next year, for Fosun Group how are you going to improve your liquidity, your asset and liabilities, and also your cash flow.

What are the specific measures and actions to take? And at the same time against this backshop what are your major business and what is your investment development plan into your major businesses?

Thank you for a question, so I’d like – we’d like to have Co-Chairman Mr. Wang to answer this question.

Thank you very much for raising this question. And also thank you very much for all the investors and all the people who pay much attention to the business and development of Fosun. Thank you for all the guests and analysts.

Indeed as Chairman Guo just mentioned, now we are optimizing our asset structure to be focused on our major businesses and advantageous business and also to go the light asset strategy, also to focus on our global assumption to serve the global families. Also to invest in innovation in globalization in research and development.

Along with our development path, indeed we need to well manage our cash flow, that's very critical for us and recently as you may see that our rating is improved. But currently this is just the very beginning and since we become even more steady and in the following several years we hope to drive our rating into BBB step-by-step, but of course it takes time. We have to achieve it step-by-step.

And focusing on achieving this target and objective, in 2022 we divested from those non-core assets and in total the signed amount is over RMB40 billion and we have a cash inflow collected over RMB30 billion, and in the first half of this as mentioned by Mr. Gong Ping, we insist on the light asset strategy and asset structure optimization, not just from the perspective of the headquarter, but also our portfolio companies are doing towards this direction by the end of June this year for Fosun Group, which includes [inaudible] and all our portfolio companies.

In total we have collected back the cash for over RMB20 billion, and at the headquarter level in total we have recovered and collected back RMB14 billion. So far we can say that we have already successfully managed the liability issue and survived.

For our future development, we will continue to optimize our asset structure to reduce our liabilities on the consolidated balance sheet, since we have already shown you the numbers on our consolidated balance sheet, and we have already reduced the liability for around RMB45 billion [ph], in total that's around RMB26 billion approximately.

So now we are reducing our liabilities step-by-step in a steady pace, but at the same time we'd like to embrace partners in happy assets and also insist on the light asset strategies. Along the way we have to seize the opportunities of the innovation and the research and development in the global market, especially we'd like to have more partnership with those corporate companies and also institutions who have strong advantages.

But of course with all of these strategies and I firmly believe that under the hard work and efforts of all our teams, on our major businesses we will continue to develop and our advantages businesses will even play a leading role in the global market and also to become more competitive in the global context. Thank you.

Thank you Mr. Wang for your thorough explanation. Now let's move on to the next question.

Good morning dear management team. I'm with [inaudible] in the Private Equity Firm. On Fosun Pharma I'd like to ask one question. As we're seeing – previously when we talked to the capital market, we realized we have less income related to COVID-19 and that's why Fosun Pharma was under pressure. So do we have any highlights that we can expect going forward. I'd like to ask co-CEO Mr. Chen Qiyu to answer this question.

Thank you very much for your question. It's fair to say that the results from Fosun Pharma, be it the revenue or net profit, it's true. Our results were affected by the changing situation related to COVID -9. No matter its short-term or long-term, I think our drivers are very clear. Is there for everyone to see, because we invested in our digital, in our technology transformation over decades. So if you look at Fosun Pharma’s business, first we have two cornerstones which guarantees its stability, namely our generic drug business and also our revenue from Sinopharm. So these two areas are very solid.

For our generic drug business, apart from Yuyuan Pharma and [inaudible] Parma also Gland Pharma in India. Moreover we have also established our network in Africa and also in America. So when it comes to generic drug, we've been improving our competitiveness on a global scale. So that's the fundamentals for us.

Now when it comes to growth, the main growth will lie in innovation and the contribution made from innovations mainly lies in anti-cancer treatment. Before 2018 you could see in our revenue, oncology related revenue has a very small share. But now relevant area has become a very important part in our revenue, be it biosimilar drug PD-1 or small molecule drugs.

If you look at our diagnostics and devices, the da Vinci robots or the CAR-T treatment technology, all of these could be traced back to 2016, 2017 when we set up the joint venture and launched this new product. So all of these great innovative products were developed back then.

So there are two parts. We introduced CAR-T and da Vinci from outside world, but at the same time we also have our own R&D and exporters elsewhere, and we've already built a very good partnership network for our PD-1 products, for our biosimilar drugs. We have lots of partners all around the globe and be it in South America, Southeast Asia, Europe, America, we almost have a global coverage.

So everything comes down to our high quality R&D and our local manufacturing capabilities everywhere in the world. So one great microcosm, one great snapshot or casing point here is that Henlius has become one of the first pharmaceutical company in China that can make profit. After 14 years of development, now Henlius is now in a position where it’s taking the leading position in commercialization R&D and many other fronts. So in the last one month we've received four rounds of GMP verifications and studies. And so we have quality R&D, we have a very high standard for manufacturing and production. So these are the foundations for innovative drugs.

There are many players in innovative drugs, but apart from great R&D, your manufacturing capabilities, your registration capabilities, your global BD capabilities and your global network are also very important. So when it comes to oncology treatment, which also includes devices and treatment, and I'm sure our found – we have very solid foundation to guarantee our growth in the next 10 years.

At the same time we are also entering emerging areas that have been rarely touched in these industries. So we will have more innovative drug in non-oncology area, but it would take some years for us to launch these new products. So that's the – our overarching strategy for a pipeline control. So between 2009 and 2019 we allocated lots of resources in oncology treatment. So going forward we will allocate more resources on non-cancer related areas. So that's something we've been exploring.

So when it comes to innovation we can do it in-house, you can develop – we can do R&D ourselves and we can replicate our successful experience with Henlius. So we have lots of new incubation methods now.

So there are three main incubators. First, we have this innovative drug fund and in America we also have a fund. So all these incubators are supporting around 15 to 20 startups. We hope these startup platforms can help us incubate more innovative drugs and in the innovative medicines, because they are spread out in all kinds of industries. And when it comes to global expansion, it’s also going to be a very important part of our growth in the next decade. We hope Fosun Pharma will become a very important international pharmaceutical company in China.

Thank you Mr. Chen for your answer. Next question. The lady in white sitting on the first row.

Hi I have seen the great growth from Happiness BG. What's your view on the next year, because as you know that we have seen the trends in China that after five months of great consumption from the Chinese spenders, we think that in the next three to five years Chinese customers will take different spending behaviors. And I know what's your view on this, and I know that we have a leading presence in the happiness sector in the world. How can we learn from our global experiences to position and strategically develop ourselves in China.

Thank you for your question, I'll give the floor to Mr. Xu our Co-CEO.

Thank you for your question. We have seen the growth from the Happiness BG up by 34% YoY, net profit attributable to the parent, it's over RMB750 million. This is because of the growth from FTG and also other companies in the happiness BG.

Yuyuan has also reported its interim results. Its revenue has reached over RMB27 billion in the first half of the year, and a great growth YoY. And its net profit contributed to parent is over RMB2.2 billion, over 200% growth YoY. I think we are very happy to see that the total revenue was around RMB27 billion and 86% coming from the consumption sectors. So this is the result of the quick recovery from the Chinese consumptions.

Especially in the gold and jewelry sectors, the total revenue from gold and jewelry has reached RMB21 billion and then we have newly opened over 300 stores. The total stores has reached over 4,000 in china. We have caught the recovering pace in gold and jewelry sectors in China. And the gold sector in Yuyuan, we have self-developed our gold product and the sales has already reached over RMB5 billion, which is a very great growth.

In dining, in liquor, we have all seen the great growth from different sectors. These are all reflecting our consumption recoveries. Another sector is FTG, Fosun Tourism Group, which has been hugely impacted for the past three years. FTG has reported its interim results. It has reached over RMB470 million in profit, with the efforts from nearly 2,000 employees, and also benefiting from the macro economies, FTG has marching into its right treasury. For Club Med we have seen great growth recovery over the global markets and also it has recorded the – record high results.

In China we have also seen the recovering tourism strains. As of the end of the August, Atlantis has already recorded over RMB1.3 billion in revenue, which is in line with our 20 – the full year sales of the 2019. In August it’s one month sales has reached over RMB200 million. We think that Atlantis will record a record highs revenue for this year 2023.

With the tourism recovery, back to your questions, foreign IPs and brands has invested a lot in Chinese market. This is why Club Med will launch the first Urban Oasis Hotel in China. We have seen different resource in suburban areas and also the destinations, however we think that in the city areas we are still lacking of a resort or a hotel that can fully meet the demand to take vacations in cities. This is why Club Med has launched – will launch its first Urban Oasis the Urban Hotel in China.

We think – I actually think that the Chinese economy is still in the recovering period, although it's not as quickly as we expected. However I think the trend is still here. From our numbers, not only in China, but also India, overseas markets we have seen this trend, and also we think there's still two potentials. The first is Chinese tourists taking the overseas trips and also foreigners taking trips in China.

This is why we think that Chinese, the consumption is still in the recovering period. However, how we can catch this period relies on our good products. So our Happiness BG, the mission for our Happiness BG is to help the families to become happier. We need to promote and launch more new products, to launch new scenarios to achieve this mission. Thank you for your question.

Thank you Mr. Xu for your answer. We can have another question. The analyst in blue.

Hello everyone. I have a second question. With the changing interest rate and also exchange rate, how does that impact our financial results? With the rising interest rate, how can we – our insurance companies adapt to this change?

I think this question, we can give to our CFO, Mr. Alex Gong.

Alex Gong speaking. This is a very good question. Mr. Wang has already given you a summary of our strategy. So with this macro economy, I think Fosun has already passed different issues. Liquidity management is our foundation, half of our – nearly half of our revenues coming from overseas markets. So how can we efficiently manage this and we can take the opportunities.

As we know, the interest rate has gone up by 5 percentage points, but as you know that our average cost of loan is around 5.3%. So with the interest rate rising, I think we still managed our exchange rates quite efficiently. But we are of – we are a conglomerate operating in the whole world and also we have a global supply chain. I think we still have – a lot of methods can be taken. The first is from the asset side. With the disrupting supply chain, we can see that a lot of companies have seen see the greater cost in supply chain.

And also the rising interest rate has benefiting our overseas financial institutions. So for the asset side, we were focusing on the companies that we have advantages. We were encouraging our companies to develop in the global markets and to develop in a more diversified ways.

Global operation and also diversified portfolio has contributed a lot for us to navigating through different storms. And also we will do several other things. The first is the securitization of our portfolio companies, including IPOs. If it goes smoothly, our first IPO would be one of the largest hospitals in Portugal market.

We have already divest our iron businesses, iron and steel businesses for real-estate. We will take the asset life strategy, embracing the key partners. We will leveraging the REIT and REIT like vehicles to help us to optimize our financial structures.

For the debt end, we will optimize our debt structure and also for the banking, we will increase the proportion from the banking loans. And for the public debt, we have already elaborated on this.

We will also leverage more on the insurance capitals, including to leverage the cooperation between insurance and the healthcare sectors. And also we will leverage the part – we will try to leverage the capital from the companies that has low-cost finance, including the SOEs and also the capitals from the SOEs.

And for the exchange rate we still have some opportunities. For example, for our insurance companies, they can lock their profit in the rising interest rate environment. These are some of the things we will do and thank you for your question.

Thank you Mr. Gong for your answers. We have a limited time. So we will give the last question.

Thank you. Thank you very much for giving me the last question. I am also from a Security Institution and just now we have seen many of our colleagues have already raised some questions and we have seen that Fosun is striking a balance between investment and divestment to go light asset and also to embrace partners on happy assets.

The topic of today's announcement is focused development with a steady advancement. So here, my question is, Fosun as a globalized company, what is the message that you'd like to convey to the society to the public.

So I think Chairman Guo you may answer this question.

Well, I like to say something about the globalization, because this is also what many people have been paying attention to, especially in the past, because in the past people are talking about the decoupling and I should say China as the second largest economy in the world. Since we are a global company and a globalized company, but I don't think there are many globalized companies in China I think or I should say too few, especially versus Japan and the United States.

Indeed we don't have that many globalized companies. So through many years of our efforts, now Fosun has already built its globalization capabilities and as you can see, during the pandemic, we can always coordinate and collect all kinds of anti-pandemic supplies and resources, and also we collaborated with biotech in Germany. All of these are thanks to – contributed by Fosun's globalization capability. Maybe – I hope that there will not be any more virus or pandemic, but in future there will be other development opportunities.

And the second is the so-called deglobalization. And I think for a period of time, for sure China has already benefited from the globalization. So we don't want to decouple with the United States. We don't want to decouple with the global economy. And also I think the U.S. is now beginning to realize, come to realize that decoupling is also not beneficial for them. But in future, going forward, I think there will be some risk mitigation in the decoupling or deglobalization.

So I think interaction with the global economy is the thing that can benefit the most. So this is my personal idea. And I think that deglobalization cannot disappear, but I think it will be mitigated step-by-step. So I have already sensed some changes and transformations in this respect.

Next, is indeed Fosun has benefited from our globalization and globalized capabilities and also we will further strengthen the globalization. And I remember that Fosun Pharma has licensed in and licensed out since we have [inaudible] and da Vinci robot which has collaborated with overseas partners. But also we have Fosun Handlers to output our achievements.

So I think for China's product, each of the industry, I think all of you can feel the fierce competition in each and every industry and business, and because Chinese people are always very competitive, especially in terms of profitability. And normally there will be one or two leading players who are extremely profitable or one or two products – product lines are extremely profitable. But such a fierce competition also has some benefits, because it brings Chinese enterprises more competitive edge to be more competitive to going global.

So in future, sometimes maybe the gross margin is a bit low, but this time we can make money from all over the world. And maybe even the overseas markets has bigger potential than the domestic market. We can make more from the overseas markets. So I also hope that in future our – maybe hopefully our overseas revenue and profitability will outperform our domestic markets. This would be the potential trend, but of course, this has pros and cons both for Chinese enterprises.

But as a company you cannot choose to stay in which environment. The way – the only way for you is to be always adaptive and competitive to the changing environment. So we have to optimize ourselves and to always get over the difficulties, the economic cycle to be innovative to serve better our global consumers. So step-by-step just make it happen and let's move forward, let's work together. Thank you.

Thank you Chairman Guo. Again, I like to extend my thanks to all the colleagues and partners and analysts here. So that's all for today.