Fosun International. News and discussion on how business and/or geopolitical factors might potentially effect Wolves.

[Sirstancullis]

Guo Guangchang: how China’s Icarus fell to Earth

Upday Shared News

f7td5.app.goo.gl

Sent via @updayUK

 

[Mighty Thor]

I have concerns over Fosun's operating strength and stability over the near-term horizon. It's not unusual to see Moody's and S&P diverging in view, and even less surprising given the nature of Fosun's operations. Moody's currently rates Fosun Ba3, on review for downgrade to B1 (low-pass/speculative/high risk), which is pretty significant. I would take with a grain of salt some of the news releases coming from Fosun's website - Fosun (like most public companies) will cherry pick releases to fit a narrative (note they issued a press release regarding the S&P, MS, UBS, etc., analysis, but nothing from Moody's or FT which were critical) so it won't provide a wholesome view. I haven't pulled down the reports, but generally the equity analysts (MS and UBS publications) are concerned with equity valuation (stock price today vs fair value) whereas rating agencies (Moody's and S&P) analyze companies to determine probability of default.

The reason Moody's and S&P are analyzing Fosun is because Fosun's credit agreements (contracts with Banks) requires these companies to assign a probability of default rating to Fosun which will directly impact Fosun's borrowing rates from Banks. Moody's placing the company under review for downgrade could be significant and can have a meaningful impact on Fosun's current and future bank borrowings (which Moody's and S&P both acknowledge the company relies on for financing). Further, a downgrade from mid-pass to low-pass (which Moody's is contemplating presently) generally carries more negative borrowing rate consequences.

My broader concern is where Wolves fit within Fosun's model. I work in banking and analyze companies credit worthiness for a living but my area doesn't tend to lend to these types of companies. That said, at a glance, Wolves appear to contribute less than 1% of Fosun's consolidated revenue and nil operating income. Wolves are immaterial to Fosun and would be a low priority for investment, even less so if the company is cash-strapped. My biggest concern is Wolves selling players, such as Neves, and being told they need to hold cash rather than reinvest in the squad, in-case Fosun needs to upstream cash from its operating companies to cover parent/hold co debt obligations. £70M of cash is worth a lot more to Fosun if they have debts to cover than near-term investment in the squad and performance in the Prem League (will avoid the argument of investment to avoid relegation for now).

I'm generally not a fan of commercial businesses owning football clubs as an investment. In my view, a club should generally be operated at break even (owners shouldn't own with hopes of generating profits for dividends, and any upside comes from the eventual sale). Fosun likely (at least initially) had a goal of growing Wolves and/or the brand to a point where it could pay dividends to the parent and/or help drive operations through additional investment outside of football (i.e. e-sports, music, etc.). They're a long ways off from having capacity to support meaningful investment outside of football, and for reference, the only Prem club that regularly pays the owners dividends is (unsurprisingly) Man U.

I appreciate Fosun's investment in Wolves and where they've brought the club, but think it would be in the best interest of both parties to part ways, assuming the right buyer exists - Fosun earn a nice ROI (and acquire substantial cash through the sale of an OpCo which negatively weighs on its overall operations and contributes nothing to its profitability or cash flow generation) and Wolves are left in a good position as a Prem League club and taken over by investors which can bring new investment.

There is so much nonsense in here it’s giving me a headache. Basic.

 

[Newbridge Wolf]

Suning To Sell Majority Control Of Inter By End Of 2022 Due To New Chinese Government Regulations, Italian Media Report

Inter owners Suning will have to sell their majority shares in Inter by the end of the calendar year 2022, according to Italian media. This is the claim

sempreinter.com

Interesting and presumably pertinent to us?

“According to La Repubblica, a new directive prohibiting “non-strategic” investment by Chinese companies in foreign businesses will affect Suning, who will have to give up control of Inter as a result.”

Fat chance of this bit happening here mind -

“Meanwhile, La Repubblica also reports that the Nerazzurri owners are hoping to get the new stadium plans moving quickly along with AC Milan so as to make the club a more attractive asset.”

 

[YouGottaRaulWithIt]

Suning To Sell Majority Control Of Inter By End Of 2022 Due To New Chinese Government Regulations, Italian Media Report

Inter owners Suning will have to sell their majority shares in Inter by the end of the calendar year 2022, according to Italian media. This is the claim

sempreinter.com

Interesting and presumably pertinent to us?

“According to La Repubblica, a new directive prohibiting “non-strategic” investment by Chinese companies in foreign businesses will affect Suning, who will have to give up control of Inter as a result.”

Fat chance of this bit happening here mind -

“Meanwhile, La Repubblica also reports that the Nerazzurri owners are hoping to get the new stadium plans moving quickly along with AC Milan so as to make the club a more attractive asset.”

Thanks for posting. Why do you reckon there is fat chance of this gapping here?

 

[Wolf316]

Thanks for posting. Why do you reckon there is fat chance of this gapping here?

I’m guessing he means accelerating the stadium redevelopment

 

[Newbridge Wolf]

Thanks for posting. Why do you reckon there is fat chance of this gapping here?

As above, re: the stadium.

Can barely cobble some scaffold into a temporary stand, let alone a complete rebuild like Inter/AC are planning to make us a more prospective sale.

 

[Deleted member 8455jwf]

I mean we also don't share our ground with AC Milan to spread the costs do we? Also having been to the San Siro numerous times if you think our ground is run down...

 

[Wisdomwolf]

There is so much nonsense in here it’s giving me a headache. Basic.

Yesterday Chairman Guo was in France as a leading business delegate (you don’t get to do that unless CCP endorsed) to advance China France trade and cultural ties. This follows the meeting held between Macron and Xi-Jianping two weeks ago when China agreed a multi-billion deal deal to buy French aircraft. Interestingly given Moody’s red flag about fosun investment in real estate as a primary cause for concern, Fosun this week announced 17 new club meds hotels of which half will be in China and the others overseas.

I, and others such as Mighty Thor, have said our piece already on this issue but what’s becoming obvious is there is a propaganda war against Fosun by certain publications which is being met with counter force and more by Fosun.

 

[Newbridge Wolf]

I mean we also don't share our ground with AC Milan to spread the costs do we? Also having been to the San Siro numerous times if you think our ground is run down...

Fair point, although at the same time we’re not building a 65,000+ stadium of which a quarter is already done.

Just a temporary stand between the South Bank and Steve Bull would be nice.

 

[Deleted member 8455jwf]

Fair point, although at the same time we’re not building a 65,000+ stadium of which a quarter is already done.

Just a temporary stand between the South Bank and Steve Bull would be nice.

Think they are sharing a 1.2BN Euro loan @ 5% interest a year

Just think us borrowing tens of millions of a stand to put more loan interest on us (think we shelled out £5M last year already) doesn't make economic sense.
Building a new stadium and taking on a bigger loan over a longer period would make more.

 

[Stourport wolf]

My own view, is Fosun have given me the best time as a Wolves fan in 40 years. I am thankful for that and would like them to stay at Wolves and sort out the very real problems we have.
If they leave it wouldn't surprise me, but I always accepted they were an investment company and not a charity.
I also try to think what will life be without them. Will we be better or worse off as a club. Is someone equally well off likely to take us over. I don't think lightning strikes twice, when you are from a relatively empoverished city in the Black Country.
I am happy they bought us and greatful for the happiness they have given me as a Wolves fan.
I won't cry if they leave, but I am not going to hate them when things go wrong.
If they stay or go, We are still Wolverhampton Wanderers. The vast majority of us have loved this club for many a year. I have no doubt, we will stay with them whatever league we are in. . Once you support the Old Gold and Black, it becomes part of your life. What a special football club we are.