Goldman Sachs Upgrades Fosun International to Buy on Clearer Deleveraging Path; Keeps New World Development at Neutral
It maintained a Neutral rating on New World Development (0017.HK).
It maintained a Neutral rating on New World Development (0017.HK).
The key change is Fosun’s clearer deleveraging path, stronger commitment to shareholder returns and signs of an earnings recovery. The company forecast first-half 2026 net profit would more than double year over year to RMB150 million-RMB180 million, compared with RMB70 million in first-half 2025.
Key metrics show Fosun’s interest-coverage ratio at 1.4x, versus 1x for New World Development. Fosun’s holding-company net debt-to-EBITDA ratio is 11.8x, compared with 21.6x for New World Development, indicating a clear deleveraging advantage.
Fosun plans to reduce total holding-company debt from RMB90 billion at the end of fiscal 2025 to RMB60 billion by 2030. It also plans to spin off Atlantis, Yuyuan and Club Med. Together, those businesses could contribute as much as 19% of the group’s net asset value.
New World Development continues to face pressure from leasing obligations related to the 11 SKIES project, which could reach more than HK$70 billion over the project’s 40-year lease term. The outcome of negotiations with the Airport Authority Hong Kong remains a significant uncertainty.
In summary, Fosun’s deleveraging and earnings recovery are beginning to form a positive cycle. Asset disposals and planned spin-offs could significantly narrow the company’s net asset value discount from historical lows. New World Development remains weighed down by the unresolved material obligations tied to 11 SKIES, and investors need to wait for greater clarity on the negotiations.
The note is Neutral on New World Development because the unresolved 11 SKIES obligations continue to weigh on valuation. It also says the market remains insufficiently priced for Fosun’s deleveraging progress, leaving substantial room for the discount to narrow.
Potential catalysts include the completion of Fosun’s asset sales involving Shanghai and Wuhan BFC and Millennium bcp in Portugal; progress on listings for Atlantis, Yuyuan and Club Med; the outcome of negotiations between New World Development and the Airport Authority Hong Kong on the 11 SKIES lease terms; and Fosun’s fiscal 2026 full-year results, which could validate the earnings-recovery trend.
The key change is Fosun’s clearer deleveraging path, stronger commitment to shareholder returns and signs of an earnings recovery. The company forecast first-half 2026 net profit would more than double year over year to RMB150 million-RMB180 million, compared with RMB70 million in first-half 2025.
Key metrics show Fosun’s interest-coverage ratio at 1.4x, versus 1x for New World Development. Fosun’s holding-company net debt-to-EBITDA ratio is 11.8x, compared with 21.6x for New World Development, indicating a clear deleveraging advantage.
Fosun plans to reduce total holding-company debt from RMB90 billion at the end of fiscal 2025 to RMB60 billion by 2030. It also plans to spin off Atlantis, Yuyuan and Club Med. Together, those businesses could contribute as much as 19% of the group’s net asset value.
New World Development continues to face pressure from leasing obligations related to the 11 SKIES project, which could reach more than HK$70 billion over the project’s 40-year lease term. The outcome of negotiations with the Airport Authority Hong Kong remains a significant uncertainty.
In summary, Fosun’s deleveraging and earnings recovery are beginning to form a positive cycle. Asset disposals and planned spin-offs could significantly narrow the company’s net asset value discount from historical lows. New World Development remains weighed down by the unresolved material obligations tied to 11 SKIES, and investors need to wait for greater clarity on the negotiations.
The note is Neutral on New World Development because the unresolved 11 SKIES obligations continue to weigh on valuation. It also says the market remains insufficiently priced for Fosun’s deleveraging progress, leaving substantial room for the discount to narrow.
Potential catalysts include the completion of Fosun’s asset sales involving Shanghai and Wuhan BFC and Millennium bcp in Portugal; progress on listings for Atlantis, Yuyuan and Club Med; the outcome of negotiations between New World Development and the Airport Authority Hong Kong on the 11 SKIES lease terms; and Fosun’s fiscal 2026 full-year results, which could validate the earnings-recovery trend.