20 Mar 2019

Crosby Research: Fosun Tourism (1992 HK): Turnaround in FY18, driven by ramping up of Atlantis Sanya

Fosun Tourism is one of the leading leisure-focused integrated tourism groups with main business including 1) resorts and destination operations; 2) tourism-related property sales. The company reported a 37.9% YoY growth in revenue to Rmb16.2bn in FY18, supported by robust growth of 15.1% YoY in resorts and destination operations (FY18: 64.3% of total sales, FY17: 77.1%), as well as 600% YoY growth in tourism-related property sales and construction services (FY18: 21.2% of total sales, FY17: 4.2%). The company saw a turnaround with NP of Rmb308m in FY18, from a loss of Rmb197m in FY17. The company provided all-inclusive premium resort services primarily through the Club Med brand, which has 67 resorts in more than 40 countries and regions. Revenue from resort operation was up by 6.8% to Rmb9.7bn in FY18, mainly driven by a combination of 3.3% YoY growth in total beds sold and +4.6% YoY in average daily bed rate. In FY18, the company opened five new resorts, which are all 4&5 trident and the 4&5 trident resort capacity as % of total capacity reached 80.1% (FY17: 78.4%). As of 2 Mar 2019, the cumulative booking for 1H19, in terms of business volume, increased by 5.2% YoY and the management expects to see strong growth in resort business in FY19. Currently, there are 7 new resorts in its pipeline, which would support long term growth.