Business volume for the resort reached 840 million yuan ($117 million) or higher in the first half of the year, up 73% or more year-on-year. Those include a slowdown in China after big first-quarter gains on the back of a wave of revenge spending after the country lifted most of its Covid controls at the end of last year.įosun Tourism’s China performance is represented by its Atlantis Sanya mega-resort on South China’s Hainan Island, which has become a tourist haven in the last decade. Truth be told, the data mostly reflects trends already reported by other companies from the travel and tourism sectors. We’ll spend the second half of this review delving into the actual data from the second-quarter update that got investors so excited. The stock’s relatively thin trading volumes owe to the large number of shares held its two major stakeholders, Fosun with 79.5%, and bad asset manager Huarong with another 8.7%. Its trading volume spiked to more than 10 times its daily average on Friday after the profit alert, indicating that perhaps another mid-sized investor was buying shares. The company currently counts Meritz Financial as a major stakeholder with about 6.6% of its shares. Analysts certainly seem to believe that, with eight polled by Yahoo Finance giving the company an average price target of HK$15.25 – more than 70% higher than the stock’s Friday close of HK$8.87. So, if you believe that Club Med is really on the comeback trail, then there could still be some upside potential for Fosun Tourism’s stock. (CCL.US), whose cruise ships are a sort of “resort at sea.” Fosun Tourism also trades at less than half the forward P/E of 27 for H World Group (HTHT.US 1179.HK), one of China’s top hotel operators. That’s well below the forward P/E of 25 for Hilton Worldwide (HLT.US), which also operates a number of resorts, and the 18 for Carnival Corp. While some of that was undoubtedly due to lingering “revenge spending,” it does also seem to show that Club Med resorts are regaining some of their former luster under Fosun’s ownership.Įven after last Friday’s rally, Fosun Tourism’s stock still trades at a relatively lowly forward price-to-earnings (P/E) ratio of 12, based on analyst forecasts for the company’s 2024 earnings, by which time effects of the pandemic and subsequent revenge spending should be negligible. Most impressively, Fosun Tourism previously said in its first-quarter update in April that the average bed rate for its Club Med resorts was 30.6% higher during the quarter compared with the pre-pandemic level in 2019. The latest data seems to show that Fosun is bringing the chain back into the ranks of top global tourism destinations, which perhaps partly explains the investor excitement following the latest update’s release. That’s because the chain, which accounts for the big majority 90% of Fosun Tourism’s business, was a relative laggard at the time of the acquisition.

It was never going to be easy for Fosun, one of China’s biggest private conglomerates, when it purchased the Club Med resort chain in 2015 and later added some other assets to create Fosun Tourism, which listed separately in 2018.

But a closer look at the numbers shows the stock is playing a catch-up game, as investors start to regain confidence in this company that still lags most of its peers in terms of earnings multiples. There’s also no question that China is about a year behind the rest of the world in its tourism recovery due to its later easing of Covid restrictions.īoth of those elements are blended into the latest announcement from Fosun Tourism Group (1992.HK), whose upside profit alert pumped up its stock by nearly 13% last Friday.

There’s no question that the global tourism industry is picking up as the pandemic fades into history. The company has revived Club Med eight years after buying the chain, allowing it to boost room prices well above pre-pandemic levels.Fosun Tourism’s business volume rose 24% in the first six months of 2023, similar to revenue gains for global hotel operators like Hilton and Marriott.The global resort operator’s business volume rose 24% in the first half of the year, while its profit more than doubled Key Takeaways:

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