Fosun International Limited (656) Earnings Call Transcript & Summary

Dear investors and analysts, good morning. Welcome to Fosun International 2025 Annual Results Announcement. I am the General Manager of Investor Relations Department, Sun Lu. Now please allow me to introduce you to the participants here. We have Chairman of Fosun International, Mr. Guo Guangchang; Co-Chairman of Fosun International, Mr. Wang Qunbin; Executive Director and Co-CEO of Fosun International, Mr. Chen Qiyu; Executive Director and Co-CEO of Fosun International, Mr. Xu Xiaoliang; Executive Director, Executive President and CFO of Fosun International, Mr. Gong Ping. Today, we will have morning session and afternoon session. In the morning, Fosun International's management team will brief us on Fosun International's business operations and strategy and afternoon, the head of the 4 business segments will share their business review and future outlook. Now let's give the floor to Mr. Gong Ping to share on the financial part.

Dear investors and analysts of Fosun International, good morning. On behalf of Fosun International's management team, I will now report to you on Fosun's business results in 2025. In 2025, Fosun International made progress under pressure. The total revenue reached RMB 173.43 billion, down by 9.7% year-on-year, mainly due to decline in Yuyuan revenue and changes in consolidated scope. But for the revenue from 4 core subsidiaries, it remained steady with RMB 128.24 billion, accounting for 74% of total group revenue, maintaining stable. We are seeing a highlight, the overseas revenue reached RMB 94.86 billion, accounting for 55% of total revenue, up by 6 percentage points year-on-year, demonstrating the group's solid progress in globalization. As for investment in technology and innovation, the total investment reached RMB 7.8 billion, and we focused on R&D system optimization, R&D efficiency improvement, focusing on input/output ratio. As for the group's industrial operating profit, it reached RMB 4 billion, excluding noncash impairment provisions from subsidiaries, remaining stable. We would also like to report on the net profit attributable to owners of the parent is minus RMB 23.4 billion. For this result, we also expressed our regret. As for 2025, net profit attributable to owners of the parent of minus RMB 23.4 billion. What does it mean? This is the practice based on prudent principle and it is a practice for us to build a solid foundation for our future progress. And the impairment of real estate account for about 55%, mainly from the loss of real estate project under Yuyuan and impairment provisions on real estate project held by the group. And another 45% come from impairment of noncore assets due to changing consumer behavior, shifts in industry dynamics and valuations of secondary-market financial investment positions are affected by share price fluctuations. It's worth mentioning that the impairment is mainly noncash impairment charges. It does not have an impact on the fundamentals of our core businesses and operations. We are unlocking portfolio value with a clear path to value recovery. By the end of 2025, the group portfolio value maintained at RMB 207 billion, with 60% coming from listed assets and insurance concepts -- assets. The adjusted net asset value is maintained at RMB 133.5 billion with adjusted NAV per share reaching HKD 18.1. So that's 0.24 of P/NAV ratio. By the end of 2025, our book value per share reached HKD 12.7 and the P/B ratio was 0.34, which shows our huge potential for value recovery. In the future, the management team will take multiple approaches to drive a leaner, more transparent portfolio to accelerate value recovery. As a midterm target, the group's net profit attributable to owners of the parent will reach RMB 10 billion or above. We will accelerate divestment of heavy assets and noncore subsidiaries to optimize portfolio and reduce group level interest-bearing liabilities to below RMB 60 billion. We will also accelerate spin-offs to unlock asset value. As mentioned in the announcement, REIT application has been submitted to SSE backed by Atlantis Sanya and the Easun Technology A-share IPO filing has been submitted to Shanghai Securities Regulatory Bureau. Fosun Pharma also announced spin-off plan for its subsidiaries such as Fosun Adgenvax. As for listed companies, we will strengthen investor communications to improve market cap of listed subsidiaries. We are very happy to see that our 4 core subsidiaries continue to drive growth, building a resilient profit base. For Fosun Pharma, we are seeing innovation with global expansion, driving innovative drug growth, and we are seeing revenue growth from the innovative drug with double-digit growth. In 2025, Fosun Pharma's net profit attributable to owner of the parent reached RMB 3.37 billion with 22% year-on-year growth. Yuyuan suffered short-term pressure, but we're still seeing recovery. We are also seeing strong highlights in Q1 2026. As for the gold jewelry business, it's still ranking the top among its industry and Lao Miao Jewelry opened 3 new stores overseas in Macau and Kuala Lumpur that's global expansion breakthrough. And overseas sales of golden jewelry surged by 229% year-on-year. And Yuyuan Phase 1 achieved RMB 4.29 billion GMV in 2025 with 40 million-plus visits and improved occupancy rate. Fosun Insurance Portugal maintained the market leader in Portugal, and it is steadily going for global expansion, expanding into Europe, Latin America and Africa, and overseas total premium contribution exceeding 30%. Solvency ratio maintained at 190%. In 2025, its net profit attributable to owners of the parent reached RMB 1.63 billion with 16% of year-on-year growth. As for FTG, the adjusted EBITDA reached RMB 3.61 billion with 15% of CAGR in the next -- in the past 3 years and the last 4-year CAGR reached 9% in terms of the revenue. We are also seeing Club Med hitting new high in terms of business volume. As for Atlantis Sanya, it reached RMB 124 million of business volume over 9 days during Spring Festival in 2026 with 98% average occupancy, making a record spring festival performance. We are also happy to see strong growth and next-tier core companies unlocking profit upside. Peak Re reached USD 2.2 billion of total premium in 2025 with 25% of year-on-year growth, and there's nearly USD 200 million annual net profit for 3 consecutive years. In 2025, we also established North America subsidiary and India branch. For Pramerica Fosun Life Insurance and Fosun United Health Insurance, we also saw strong results. In 2025, Pramerica Fosun Life Insurance reached over RMB 13 billion in total premium with 42% year-on-year growth, reaching RMB 650 million in terms of net profit and net profit increased by 5x year-on-year. For Fosun United Health Insurance, the total premium reached RMB 7.84 billion with 50% year-on-year growth and RMB 140 million of net profit. As for Millennium BCP in 2025, it reached EUR 1.02 billion of net profit with 12% year-on-year growth, 14.1% ROE in 2025, making sound balance sheet with strong capital adequacy ratio and CET1 ratio. As for Hainan Mining, it reached RMB 4.42 billion in revenue with 8.6% year-on-year growth and RMB 430 million of net profit. It is still leveraging global M&A to accelerate development of mineral plus energy network across Africa, Middle East and Southeast Asia and profit growth expected to accelerate with ramp-up of lithium and oil and gas production. For Fosun Pharma, it achieved multiple licensing deals and co-development partnership in 2025 with potential milestone payment exceeding USD 4 billion. Henlius has 10 products approved globally covering about 60 countries and regions. Apart from Yuyuan gold jewelry business, Fosun Insurance Portugal also achieved international business contributing 30% of total premium. As for Hainan Mining, it is also actively exploring global resources through projects like Mali Lithium and Oman Oilfield. As for our overseas revenue share, it grew from 49% in 2024 to 55% in 2025. We are also embracing AI across different industries. For example, Fosun Pharma launched PharmAID and FTG introduced AI G.O., the world's first AI travel agent across all scenarios. And Fosun Portugal Insurance digital customer base now approach nearly 22% of Portugal's population. As for capturing unicorn opportunities through PE/VC, Maxone Semiconductor, a portfolio company of Fosun Capital, successfully listed on STAR Market, becoming the first listed semiconductor probe card company. Z.ai and Quant Group, portfolio companies of Fosun RZ Capital, successfully completed their IPO in Hong Kong. And Fosun Health Capital ranked among top 20 investors in biopharmaceuticals. We are also stepping up investment in tech innovation. Fosun Pharma has devoted R&D investment reaching nearly RMB 6 billion and Henlius HLX43 will become the world's first PD-L1 ADC to enter Phase II clinical trials, and it is a very promising product with tens of billions of U.S. dollars in terms of value. We are diversifying financing channels, steadily reducing the cost of debt. In 2025, the group's public markets financing reached RMB 27.8 billion, and the average cost of debt in 2025 dropped from 5.6% to 5.0%. We are also deepening collaboration with financial institutions. We have signed strategic cooperation agreements with multiple financial institutions, including CITIC Group, HSBC, Postal Bank China (sic) [ Postal Savings Bank of China ], China Minsheng Bank and BNP Paribas. We also signed another strategic cooperation agreement yesterday. We also successfully arranged our offshore syndicated loan for 9 consecutive years, raising about USD 1 billion with support from nearly 20 major banks. Last week, we also had achievements -- new achievements. And in terms of expanding financing channels, we successfully issued U.S. dollar bonds in January and September, returned to Eurobond market in November and issued JPY 4.2 billion bonds in November. Fosun High Tech also issued the world's first Yulan Bond by a private enterprise in September. As for decline in financing cost, the cost of the group's commercial paper decreased by about 200 bps and coupon rates on long-term public bonds declined by around 110 bps. And our offshore public bond coupon rates dropped from about 8.5% to 5.875% and Japanese bond issued a coupon rate of 3% at Q4 2025. It's also worth mentioning that this morning, we also made an announcement for the USD 200 million, we will offer -- we will have cash offer. And the group will continue to divest noncore assets in 2025. The cash flow at the group level from asset disposal and subsidiary dividend reached RMB 14 billion and signed disposal of heavy assets and noncore, nonstrategic asset across subsidiaries reached RMB 12 billion. And we also received optimistic ratings. In March 2026, S&P maintained our current rating and outlook in the rating commentary that is BB- rating with stable outlook. We will further reduce group interest-bearing debt. In 2025, the number dropped to about RMB 90 billion, and our midterm target is to drop interest-bearing debt to below RMB 60 billion. And the group will sharpen its focus on existing businesses while enhancing shareholder returns. First, we will improve subsidiary operating efficiency, enhance ROE and strengthen dividend management. Secondly, we will accelerate disposal of noncore assets to generate cash and unlock profits. Thirdly, as a general principle, the group will refrain from large-scale investments and M&A. We will also take multiple measures to enhance shareholder cash returns. Firstly, as announced starting today till the June AGM, we have announced we will launch a share buyback plan. And after AGM, we will continuously propose further share buyback plan. And the -- we have also announced the plan of stake increase by major shareholder and management of up to HKD 500 million in open-market share purchases over the next 12 months. And our target payout ratio for 2026 is to increase from current 20% to 35%. The dividend for fiscal year 2026 is expected to be no less than HKD 1.5 billion. Now I will give the floor to Co-CEO of Fosun International, Mr. Xu Xiaoliang.

Dear investors, analysts and friends from the media, thank you for attending our press release for the annual results. Last year, despite the global macro uncertainties, Fosun has focused on our core businesses, continue to optimize our financial structure and steadily improve our business operations and achieving high-quality breakthroughs in key sectors. So let me briefly share Fosun's business highlights across health, happiness, wealth and intelligent manufacturing. First, on the Health segment. So in 2025, the Health segment achieved a total revenue of RMB 48 billion, up 3% year-on-year with net profit to parent of RMB 1.4 billion, up 59% year-on-year. Fosun Pharma's revenue achieved RMB 41.5 billion. Henlius achieved a revenue of RMB 6.67 billion and net profit of RMB 800 million, marking 3 consecutive years of growth. Fosun Health & JianJia Healthcare generated revenue of RMB 7.37 billion. Luz Saude achieved double-digit growth in both revenue and operating profit. The Health segment overseas revenue ratio increased to 40.6%, further accelerating our globalization. Specifically, Fosun Pharma's innovative drugs served as the growth engine, generating revenue of RMB 9.89 billion, up nearly 3% year-on-year. Net profit attributable to parent reached RMB 3.37 billion. Operating cash flow from -- reached RMB 5.2 billion, significant increase versus last year. Innovation and R&D have now become Fosun Pharma's core competitiveness. In antibodies and cell therapy, Fosun Pharma has become industry leader, combining internal R&D, collaborative development, licensing, fund incubation, industrial investment, the pipeline of innovative products continues to expand. Our core products have achieved global penetration and breakthroughs. So in 2025, Fosun Pharma continued 2-way licensing cooperation globally and collaborative development, achieving 7 license out deals. The total down payments amounted to USD 260 million with potential milestone payments exceeding USD 4 billion. So on -- regarding pharmaceutical manufacturing capacity and global registration, Fosun Pharma currently operates 17 workshops and production lines certified by GMP in major regulatory markets, including the U.S., EU and WHO. And Fosun Pharma has built up a global R&D production registration capability, featuring Western lead breakthroughs deepening in emerging markets. Its global commercialization team exceeds 6,000 people. The core product HANSIZHUANG has been approved in more than 40 countries and regions. MedTech, Sisram has delivered a strong performance across global markets, including North America, Hong Kong, Thailand and Israel. The da Vinci surgical robot operated by Intuitive Fosun has exceeded 500 cumulative installations. On health care services, Fosun Health continues to focus on the Greater Bay Area and the Yangtze River Delta with sustained investment in key specialties. It currently holds controlling stakes in 19 medical institutions with 6,500 licensed beds. JianJia Healthcare is developing rapidly, currently operating 24 rehabilitation hospitals and preparing for one more, further strengthening its nationwide chain network. At the same time, Fosun Pharma continues to explore synergies within its ecosystem, including insurance, consumption and elderly health care services. Fosun Pharma continues to deepen its digitalization and AI strategy, systematically advances AI development. It focuses on new drug R&D, clinical research, operational management and product applications, systematically advances our AI capabilities through platform-based development, engineering and scalable development. For example, decision intelligence platform released by Fosun Pharma has improved the efficiency of extracting drug R&D and industry information by approximately 50%. Let's move on to the Happiness section. The Happiness segment recorded total revenue of RMB 64.75 billion, down 15.6% year-on-year, mainly due to the decline of Yuyuan's revenue. Yuyuan reported a full year revenue of RMB 36.37 billion, showing some decline, but its core business fundamentals remain solid. Net profit to parent recorded a loss of RMB 4.9 billion, mainly due to impairment provisions on certain real estate projects and goodwill, which further enhances our asset quality. Fosun Tourism Group achieved a revenue of RMB 17.76 billion, reaching a historical high, driven by continuous improvement in its global operations. Adjusted EBITDA reached RMB 3.6 billion. So specifically, Yuyuan's admin expenses in '25 were RMB 2.2 billion in '25, down 19.5% year-on-year, demonstrating a clear cost reduction and efficiency improvement result. Cash on hand reached RMB 11.05% (sic) [ RMB 11.05 billion ], an increase of RMB 360 million versus end of '24. The average financing cost decreased by -- from 5% to 4.3%. So its affiliated entities, jewelry and fashion reached revenue of RMB 22.7 billion '25. In Q4, the revenue reached nearly RMB 4.3 billion. The gross margin continued to improve. Online retail maintained a leading position and global expansion achieved from 0 to 1 breakthrough. Shede Spirits' revenue declined due to the industry conditions, but it has actively promoted e-commerce internationalization. Online sales increased by 35% year-on-year and overseas sales now cover 5 continents across 42 countries and regions. The Grand Yuyuan continued to promote scenario integration and upgrades. So Yuyuan Phase 1 leverages IP to promote Chinese style fashion chains and intangible cultural heritage, attracting younger customers. BFC enhanced its fashion positioning by leveraging both major and minor IPs plus self-innovative thematic content metrics. So notably, the Lantern Festival of the Year of the Horse has, for the first time, achieved a coordination across 6 zones, including the Yuyuan Phase 1. So it has effectively boosted the overall customer traffic across Grand Yuyuan. For FTG, the '25 performance has maintained steady growth, and the total tourism operating revenue reached RMB 19.9 billion. Club Med achieved a revenue of RMB 17.97 billion, up 2% year-on-year. Fosun Tourism Group has focused -- has been focused on 3 major product lines like for our Super Resort, Club Med operates 67 resorts globally, all positioned as premium luxurious offerings. The average occupancy rate for the year was 76% and the average daily price was RMB 1,950. For Super Resort Complex, including Atlantis, Taicang and Lijiang Resort, the '25 visitors continue to grow with strong performance. Atlantis recorded revenue of RMB 1.48 billion and average occupancy rate of 85%, total visitor volume of 6.4 million. For Super Culture and Tourism Mall, Fosun reshapes the commercial space with a tourism mindset to create lifestyle destinations, and the Chongqing Culture Tourism Mall will officially open this year. Fosun Tourism's AI plus tourism strategy is accelerating its AI G.O, which is the first -- the world's first full scenario AI vacation engine, has been launched in Xianlin Nanjing and Taicang. Club Med has also launched its AI-powered customer service in about -- in 16 countries and regions globally. Going forward, FTG will build a systematic AI organization aiming to become a leading tourism -- AI plus tourism brand. On the Wealth segment, the performance has remained solid with the total revenue reaching RMB 55.86 billion, up 1.4% year-on-year. Fidelidade achieved total premiums of EUR 6.53 billion, maintaining the #1 market share in Portugal, Peak Re recorded total premiums of USD 2.2 billion, up 25% with continuous improvement on underwriting mix and profitability. Pramerica Fosun achieved total premiums of 13.28% (sic) [ RMB 13.28 billion ], growth by -- up by 41% with a leading growth in the market. Fosun United Health Insurance achieved total premiums of RMB 7.84 billion, up 50%, has remained profitable for 5 consecutive years. Asset management revenue reached RMB 11.05 billion and equity fund AUM reached RMB 42.9 billion. On the Insurance business, the total premiums has reached -- has remained stable. And the domestic insurance companies grew rapidly, leveraging Fosun's ecosystem. And Fosun Pramerica recorded nearly 11,000 community-based policies and Fosun United Healthcare's insurance exceeded 3,500. Fidelidade maintained a leading position in its domestic market in Portugal. Its nonlife business performed strongly, growing 10% versus last year. It continues to deepen its global footprint, especially in Portugal -- Portuguese and Spanish-speaking countries and regions. It consolidated its existing market share and expanded into new potential markets. For example, in Bolivia, the premium income has ranked #1 and in Peru, its premium income ranks #4. On Investment Asset Management business, the total AUM reached nearly RMB 1.2 trillion, up 10% year-on-year. Fosun continued to deepen its investments in core sectors, including consumer biomedicine embodied intelligence and AI chips. It added around 40 new investment projects with total investment of approximately RMB 2 billion. Among the portfolio companies, 11 have completed IPOs and more than 10 have filed for listing. And notably, Ziphu AI, invested by Fosun RZ Capital, has successfully completed its Hong Kong IPO, becoming the world's first listed LLM AI company with the latest market value exceeding HKD 250 billion. On the Smart Manufacturing segment, it has achieved total revenue of RMB 7.74 billion in '25. Hainan Mining recorded revenue of RMB 4.4% (sic) [ RMB 4.4 billion ], up 8.6%. Wansheng recorded a revenue of RMB 3.38 billion, up 40% year-on-year. Overseas revenue reached RMB 2.25 billion. Excluding consolidation impact, overseas revenue grew 29% year-on-year. Hainan Mining maintained stable performance despite a downward cycle. And iron ore production remained stable and oil and gas production increased by over 60%. At the same time, the company has completed a new industry deployment and continue to expand its global strategic mineral resources. For example, the lithium mine in Mali has -- in Africa has successfully started production and has already achieved the first batch sales of lithium hydroxide products. Wansheng achieved a strong growth in core product sales with new products successfully commercialized, driving revenue growth of over 200% year-on-year. At the same time, it continued to deepen base construction, build a global production capacity. It facilitates cost reduction, quality improvement by significantly lowering production costs through automation and supply chain optimization. So overall, in 2025, Fosun adhered to a strategy of streamlining and strengthening business operations, focusing on household consumption industry. Each business segment continuously strengthened its operational capabilities and achieved resilient growth. Looking forward, we will continue to maintain our strategic focus, strengthen global operations and increase innovation in order to create healthy, happy and prosperous lives for families worldwide. And next, regarding Fosun's strategic development for '26 and beyond, including our organizational mechanism, I will leave the floor to Mr. Chen Qiyu. Thank you.

Hello. Let me report to you to our strategic development and next steps of Fosun. So in 2025, this is the 33rd year since our founding, and this is also a key turning point for us. As the financial report has already shown that we had around RMB 20 billion of impairment. The goal is because that a lot of assets were affected by the macro economy and they are becoming the burden for our short-term profitability. So asset impairment has told us to be more focused on the high-growth core sectors. So I think with this time of changes and especially our noncore assets divestment from ''22 to '25 has already achieved over RMB 80 billion. So after this round of change, our structure has become clearer. And in midterm, we still hope that we can recover to RMB 10 billion in profit as we used to deliver. And after that, we also want to create more values. So comparing to the portfolio businesses that we had, we will be more focused on the innovation and globalization in the biopharmaceutical companies. And secondly, our Insurance business also have a very solid international foundation. Our profit and cash flow growth will also remain sustainable as well as healthy. And also, they are our core foundations for solid dividends. We also have global asset-light businesses from culture and tourism businesses. And we also have jewelry businesses, Hainan Mining and Wansheng. Jewelry and Shede Spirits are under Yuyuan and also, we have Hainan Mining and Wansheng in Intelligent Manufacturing. All of these are very healthy assets, and we will see healthy upgrade from them going forward. So first, innovation-driven biopharma helps advance towards a global innovative pharma company. So we have the innovation, R&D, AI biotech and global commercial systems so that we can target a top 20 global innovative pharma company. We want to build a C-MNC with Chinese characteristics. As you know that biopharma companies are normally referred to as MNC, but Fosun Pharma wants to build a C-MNC with Chinese characteristics because we have R&D innovation and also, we are fully embracing AI. I think comparing to other leading Western biopharmaceutical companies, we are more effective, we are faster, and we are also embracing low-cost, high-quality and diversified products as well as the pipelines. As for our global commercialization system, we will also further accelerate our globalization. And when I'm talking about globalization, I'm also talking about our products as well as the pipeline. As you know that the traditional biopharmaceutical companies, 50% or 60% of their marketing as well as the revenue are coming from the U.S. market. So their pricing are quite high. So we also want to change that market framework. We want to base on China, Europe, very deepen globalization market footprint to achieve globalization of innovative drugs. As for insurance and finance, we have a solid foundation. So over the past few years, Fosun International in the past 3 to 5 years, the insurance and finance has contributed revenue as well as the growth. So over decades of development in China, we have insurance ecosystem that can have global footprint. We also have Fidelidade based in Portugal. They also had businesses in South America and Africa through its own international growth. Peak Re based in Hong Kong is also facing the international market. And over the past 3 years, we are seeing great growth of premium as well as the income. And our Chinese insurers are entering a profitability phase. And comparing to their peers, their premium growth are leading. In Europe, we also invested Millennium BCP, a bank in the European market. Its profitability, share price are growing fast in European market. At the same time, we are also focusing on the asset management capabilities based on the insurance and financial businesses. And also over the past few years, this business has also achieved growth. So going forward, we believe we will see sustainable growth in industrial operating profit from insurance and financial businesses to further support group's profit as well as cash flow. As for the consumption businesses, we will further unlock brand value, especially FTG asset-light expansion capabilities. FTG right now have Club Med, Atlantis Sanya and Super Culture Tourism Mall. These are the 3 main product lines of FTG. And also, we are actively expanding through asset-light way to further capture international customers and also international destinations. Our Lao Miao Jewelry, Yuyuan Lantern Festival, Shede Spirits. Consumption brands will actively unlock global brand value as well as the local operation. They will further integrate global channels as well as the supply chains. As for intelligent manufacturing, it will capture clinical (sic) [ cyclical ] opportunities and forward-looking global resource portfolio. For Hainan Mining, it is focusing on resources as well as the new energy. In iron ore, it is securing stable raw ore supply and continuously improving beneficiation efficiency, and we are seeing record high production in oil and gas. So I'm sure that with the uncertainties of the macro economy, we will see even higher growth in oil and gas. As for the lithium hydroxide production, it has already been connected with the lithium resources from the upstream to lower stream. It has already achieved an integrated industrial chain. And we will further enhance the production of the lithium resources so that we can continuously build resilience through market cycles. Wansheng, it's a manufacturing company with global sales. So right now, we are also making breakthroughs in globalization, including launched construction of the Thailand base, marketing a solid step in global capacity footprint. And also, we are enhancing AI capabilities to cover new product businesses, new technology, new products to provide services to the industrial upgrade. And going forward, we will further enhance industrial operating capabilities and strengthen portfolio value. In Fosun, we look at this from 2 perspectives. First, from industrial level, from P&L level, we will further deepen the FES management system to advance lean operations and organization efficiency, including management efficiency, global operations as well as the operation excellence, focusing on ROE and ROIC to further improve operational efficiency and profitability. And on this foundation, we will further strengthen operational quality through industrial operations and further improve their competitiveness. At the group level, we will strengthen strategic focus and drive dynamic portfolio optimization and upgrading. So with FES tool, we will keep focus on strategic core businesses, just like in the 20 to 30 year of turning of Danaher, it become a leading life science company through transformation. So at the group level, for our portfolio, we will be more focused on core assets to create value, long-term value creation. And also, we will focus on balanced leverage. And more importantly, we will further enhance dividend level. For fiscal year 2026 -- after the fiscal year of 2026, our target dividend payout ratio will be 35%, and we will further improve that going forward. So I think right now, AI is a hot topic. And this is also something that we are implementing across all industries. At the Health segment, we implemented AI in drug discovery. We are the early adopter. We cooperated with Insilico, small cell -- small stake investment. But also, we are very happy to see that Insilico has already become a star company in AI drug company. And Fosun Pharma and Henlius has developed PharmAID decision intelligence platform and HAI Club platform to assist pipeline positioning and other drug discovery. As for Happiness Wealth, we are also implementing AI, for example, FTG AI G.O. Grand Yuyuan Xiaoyuyu AI guide. And in Wealth segment, in the product design and also other areas, we are using AI. And Fosun Wealth also has F-AI platform to empower financial services. Intelligent Manufacturing is also using AI to accelerate sales and solutions to delivery. And in this macro economy, we are still enhancing our organizational support, create and share incremental value while upholding entrepreneurial spirit. So we are strengthening organizational support for business alignment, building a water-like organization, flexible management, choosing what works best. So for organization, talent mechanism and culture, we are upgrading all 4 areas. I want to highlight 2 areas. The first is how we build our globalization organization. No matter it's the Health segment, Wealth segment, Happiness segment or Intelligent Manufacturing segment, all of the segments, especially for our core companies, we are building globalization organization. We are recruiting high-level performers from around the world. And we are also building a top-level talent pyramid. And also, we are creating the culture so that everyone can learn and contribute in this platform. So this is the culture that we are enhancing joint entrepreneurship and Fosun's founding mission and global governance culture. As a listed company, as a global company, we are also committed to global services, advancing corporate sustainable development. So in the area of ESG, we have already set up the initiatives, goals. I'm not going to elaborate on this. But as for the result, we are recognized from global institutions. In 2025, our MSCI ESG rating upgraded from AA to AAA for the first time. This is a hard-earned rating upgrade. And S&P CSA ESG score surged to 33 (sic) [ 73 ], maintaining a leading position among global peers. We -- our Hang Seng Sustainability rating maintained at AA-. This is because since our founding, we are committed to the global services. And since 2020, Fosun International has achieved the ESG Leading Enterprise Award from Bloomberg Businessweek/Chinese Edition for 6 consecutive years. So ESG is not only a slogan. It is something that we are working on. It is our mission to global services and also create value to shareholders. That's all from me. Thank you.

Thank you for your sharing, the management team. Now we will go into the Q&A part. If you have any question, please raise your hand, we will have our staff to send you the mic.

I am from Guotai Haitong Securities. I'm very happy to hear the management team's detailed introduction about Fosun International streamlining portfolio and our eyes are on the impairment. Could you please share with us the consideration for the impairment? And apart from the impairment, how is the performance of each business segment in 2025? And I would also like to know, after the impairment, will the company enter financial recovery? As mentioned by Mr. Chen Qiyu, the company wants to return to a profit of RMB 10 billion. So could you please explain your plan on that? We are also happy to see for financial year 2025, the expected dividend would be HKD 1.5 billion. So could you please explain more about the plan?

Right. Thank you for your question. We will leave this question to Mr. Guo Guangchang.

Okay. Let me answer this question. First, I want to be clear. In 2025, we made a prudent accounting treatment, not a reflection of those operational issues. Specifically speaking, the loss was primarily driven by one-off impairment charges decided by the Board, in line with a prudent management approach on certain noncore assets. So this is noncash accounting treatment, reflecting the difference between current market values and historical costs, mostly coming from real estate impairments. Because of our misjudgment, especially my misjudgment, we made significant loss from a project in Wuhan. But most of our investments are successful. And some investments didn't reach our expectation for financial returns. So we also recognized some goodwill impairment. But our net operating cash flow has remained positive. Our financing channels are open and our fundamentals remain solid. So this impairment is more like fixing the roof on a sunny day. But making losses or recognizing impairment is not a good thing. On behalf of the management team, I would like to say sorry to Fosun's shareholders, especially long-term shareholders. We will step up our efforts to thank you for your trust and confidence in us. In the long term, this impairment marks Fosun's entry into a new phase of development. We are resolutely exiting assets with weak profitability, also par value creation and reallocating resources to high-growth core sectors, driving the company towards a leaner, healthier and more sustainable growth model. Our management team also introduced earlier that from an operating standpoint, our core businesses remain resilient. In pharmaceuticals, our globalization strategy continued to make breakthrough with multiple products launched overseas. And we have several R&D pipelines with multi-tens of billions of U.S. dollars potential. In Insurance, we see Fidelidade business expanding to Latin America and Africa. In China, Fosun United Health Insurance and Fosun Pramerica Insurance are also significantly increasing their profitability. And in FTG, Club Med also reached record high business performance. Such businesses have the capacity to generate sustainable profits and cash flow, and they underpin Fosun's confidence in continued growth. We believe that our future results will more truly reflect the true quality of earnings from our core businesses. Our management team, including me, remain highly confident about the company's future, and the Board has announced a share buyback plan. And our major shareholder and management team will also increase their holdings. Going forward, Fosun will, based on operational improvement and cash flow, actively roll out additional shareholder return measures, including optimization of our dividend mechanism. So we have a clear conviction in Fosun's future. I believe that Fosun has the ability to navigate cycles. There may be short-term pains. But in the long run, this is about making Fosun stronger and more enduring. I believe that as long as our direction is right and our original aspiration remains unchanged, we will find our path forward. We look forward to working together with shareholders and partners to drive Fosun's development to an even higher level. Thank you. And Gong Ping, you can make additional comments.

Right. Thank you, Mr. Guo. After completing the financial bottoming out, the signal we want to send to the market is clear. The company will place greater emphasis on shareholder returns. Now our NAV is not reaching our expectation, but we have made share buyback plan, and we will step up share buyback, and we will further reduce the interest-bearing liability to RMB 60 billion in the midterm, and we will raise our target payout ratio from previous 20% to 35%. The shareholder and management team will increase their holdings, which is also announced. So these are all showing our confidence in Fosun's long-term future.

And then we are open for the second question.

So as a bond investor, I want to ask 2 questions. So in 2025, will the company face further impairment pressure going forward after 2025 impairment? And also from a liquidity perspective, will this noncash impairment and resulting accounting loss have any material impact on cash flow or the company's future financing capacity? So okay. So I will let Mr. Wang answer this question.

Thank you for your question. Dear investors and analysts, both in the room and online, dear friends from the media, hello. For financial year 2025, the net loss attributable to parent was approximately RMB 23.4 billion, and it was primarily driven by noncash impairment charges, and 55% came from real estate-related impairments. And also, we had impairments from noncore businesses, including impairment on goodwill and intangible assets. This part account for about 45%. At the group level, at the holding company level, we have already made full and prudent provisions for these impairment items based on the actual operating conditions of the impairment assets, the valuation cycle of the relevant industries and our expectations for future growth of the related business strictly in accordance with the prudence principle and the requirements of international accounting standards. So currently speaking, we don't have pressure from further impairments. Since announcing the impairment, the management team has proactively engaged in timely and in-depth communications with rating agencies, our major partner banks and public bond investors. Rating agencies and the major creditors, including banks and investors, they have generally recognized our proactive approach to addressing impairment risks. For banks, during our communication, we received recognition from our partner banks. So we have signed many strategic cooperation agreements with many banks like with HSBC and Pudong Development Bank yesterday. And our financing costs coming from the banks are also continuously declining. For our communication with public bond investors, in terms of offshore public bond price, we are seeing stable price in this part. So bond price stabilization also shows that this impairment is recognized by public bond investors. So this is for bond investors. And we are also seeing good share price performance, which shows we are also recognized by our equity investors. For our future financing capability, we are very confident on that. While we remain confident about our financing, for our onshore and offshore financing costs, we are seeing strong improvement, but we will continue to streamline our operations and focus on growth. We will be committed to enhancing our credit rating and especially for our debt, we aim to reduce our interest-bearing debt to lower than RMB 60 billion in the midterm.

Okay. We can move on to the next question.

I'm from Nomura Oriental International. So my question is about globalization. We know that in 2025, Fosun and its subsidiaries continued to advance localized operations and local development. And we also know that the ability to manage complex and diverse operations globally also requires complex capabilities. So my question is that how does Fosun build strong global operating capabilities amid an increasingly intense competitive landscape?

Okay. Thank you for your question. I will let Mr. Chen to answer.