The Outbreak Of The Tourism Industry, Fuxing Travel 7 Billion CMBS Relief

2020 is a difficult year for the tourism industry.

Since the Spring Festival, the domestic tourism market has never been as cool as ever, and because of the expansion of the epidemic since March, the tourism market has also been in trouble.

The layout of the global Fosun tourism culture group (hereinafter referred to as Fosun travel article) has also been affected. In 1-2 months, the company's external business performance increased slightly. But with the global spread of the new crown disease, short-term foreign businesses are also not optimistic.

3 in the middle of the month, the occupancy rate of Fuxing travel articles in the domestic trump card products and Sanya Logis Hotel Atlantis was only 50% of the same period last year.

The company is in urgent need of financing and replenishment of cash flow to maintain its operation this year. A few days ago, Fosun travel article set up an asset support special plan and issued CMBS, with a total scale of 7 billion 1 million yuan, which is rare in recent years.

Prior to March 17th, Fosun travel published its 2019 earnings report, turning losses into profits for two consecutive years. However, the new crown disease that has not been seen for many years has disrupted the pace of the travel of the Fuxing travel agency and is still uncertain whether it will be profitable this year.

Holiday Village troubles

If it were not for this epidemic, the business of this company should be very good this year.

As the largest Relax Resort group in the world, Club Med Resort and Sanya Atlantis are all popular holiday destinations.

In particular, Sanya Atlantis took 3 years to build. Once opened, it became a popular red card for consumers.

According to the 2019 earnings report of Fosun travel, total revenue last year was about 17 billion 340 million yuan, an increase of 6.6% over the same period last year. The business volume of tourism related business reached 14 billion 600 million yuan, an increase of 8.9% over the same period last year, and net profit of 610 million yuan, an increase of 97.4% over the same period last year.

Among them, Sanya Atlantis earned 1 billion 312 million yuan last year, an increase of 74.2% over the same period last year.

In the first two months of this year, due to the outbreak of the epidemic, the main income of Fosun travel is from abroad, and its performance is also good. As of February 29th, the turnover of holiday village business increased by about 8% over the first two months. The EBITDA in the first two months was still positive, reaching 50 million yuan, an increase of over 20% over the previous month.

But since March, the spread of foreign epidemics has been widespread. The overseas business of Fuxing travel is affected. It is inevitable that overseas Club Med resorts are in a closed state. If the global economy is to resume economic order by September, it is expected to lose about 6000000000 of its revenue.

The overall tourism industry is also not optimistic. The Fosun travel text dropped from 11.3 Hong Kong dollars in January 23rd to the latest 6 Hong Kong dollars, or over 45%. Among them, the closing price of 5.99 Hong Kong dollars in March 19th, the lowest since the listing.

After the outbreak of outbreaks, the company hopes for the resumption of the domestic market. On March 7th, Guo Guangchang, chairman of Fosun international, released a short video and personally spoke for Sanya Atlantis, inviting you to take a mask to swim.

At the March 18th performance meeting, the management of Fosun travel revealed that the occupancy rate of Sanya Atlantis in 3 months has returned to 50% in the same period in March 2019. Marketing plans for May 1 and summer vacation are being launched.

Liang Xin Jun, founder of Fosun Group, said on the social platform that the most optimistic estimate was that the traffic and tourism restrictions could be lifted by the end of April and early May, but the flow of people in the whole economic life would return to normal, at least a month later, or in July or June.

It is an indisputable fact that this year's performance has been hit. It is estimated that the Fosun travel document should also rely on the sale of domestic real estate projects to achieve growth.

Qian Jiannong, chairman of Fuxing travel document, said that two projects in Taicang and Lijiang have already started construction, and the total investment in Lijiang is almost 4 billion. The property of the Lijiang project is about 230 thousand square meters. The total investment of Taicang project is about 13 billion, and the first phase can be sold for 560 thousand square meters. "We hope to start the pre-sale of these two projects this year."

China Merchants Securities research report pointed out that with the smooth landing of the company's tourism destination projects, the future performance will be gradually released. With the landing of the project, completion of the purchase and return of the real estate funds, the company's finance will be improved in 2019.

CMBS supplementary cash flow

According to the 2019 financial report of Fosun travel, as of December 31, 2019, the total borrowings of Fuxing travel interest bearing bank amounted to 6 billion 557 million yuan, of which 2 billion 38 million yuan debt will expire within one year. The cash and cash equivalents are only 2 billion 129 million yuan, the cash short debt ratio is 1.04, and the cash flow is not very abundant.

In order to cope with the impact of the epidemic, leading companies will want more security. In March 20th, Fuxing Haitong - Fuxing travel - Sanya Atlantis asset support special plan was issued. The total scale was raised to RMB 7 billion 1 million yuan, with a term of 24 years, of which the priority CMBS was issued at RMB 6 billion 800 million yuan and the coupon rate was 5%.

In fact, in November 15, 2019, the company obtained the letter of no objection from the Shanghai Stock Exchange, which allowed the hotel and Water Park Property of Sanya Atlantis to be mortgaged and issued by CMBS, a 100% stake in Sanya Atlantis company Hainan Atlantis Business Development Co., Ltd. and Sanya Atlantis operating receipts and accounts receivable.

Sanya Atlantis, as the underlying asset, brings confidence to investors. Atlantis increased its average daily price in 2019 by 13.1% over the same period last year, while occupancy rate increased from 58% in 2018 to 68.5% in 2019. As of 2019, Atlantis visited around 5 million 200 thousand times.

In addition, during the epidemic period, the CMBS was able to land, and the strong capital operation capability of Fosun was indispensable. Reporters noted that Fosun travel documents and Affiliated Companies Shanghai Fosun Tourism Management Co., Ltd. also bear the responsibility of the difference payment.

Policy support is also an important reason. At the beginning of the establishment of the Hainan Free Trade Zone, we emphasized the need to gradually liberalize financial business restrictions and promote the business innovation of financial institutions. The release of the special plan coincides with the establishment of the Hainan Free Trade Zone 2nd anniversary. Recently, Hainan also announced the "post epidemic rehabilitation plan for tourism industry", which supports the optimization of asset structure by means of asset securitization, trust, expected income mortgage, and so on.

As the country's first single destination destination CMBS, Fosun's move is a new attempt to reform and innovate Hainan free trade zone.

This is also a rare amount of CMBS. Prior to this, only the right enterprise group issued a large-scale CMBS in 2018, with a total scale of 7 billion 300 million 600 thousand yuan.

The $7 billion 1 million CMBS will add a lot of liquidity to the Fuxing travel document to tide over the hard times before the end of the epidemic.

The board of directors of Fosun travel documents said that about 2 billion 900 million yuan would be used to repay the bank loans of Sanya Atlantis, and other funds would be used for group business development.

Management pointed out that the epidemic situation has a greater negative impact on the global tourism industry in the short term, but in the long run, the demand for the global tourism industry is still going up.

With China's per capita GDP rising to 10 thousand US dollars in 2019, the upgrading of household consumption will become a long-term trend. This trend will not be reversed by a short-term epidemic. The long-term development of the cultural tourism industry is still optimistic.

Qian Jiannong said that the epidemic is not a business mode crisis, and the long-term operating basis of Fosun travel is not affected. After the outbreak, the tourism industry will have a retaliatory growth. The company will continue to look for opportunities and momentum for future growth and seize more rebound opportunities.

CITIC believes that when the epidemic is gradually controlled, tourism demand will usher in the outbreak, and the advantage of differentiation will be even more prominent in the high-end leisure and vacation travel areas.

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