FOLIDAY Atlantis Sanya First Tourist Destination on Commercial Mortgage Backed Securities

On March 22, Fosun Tourism Group (01992.HK) announced today that it successfully issued the Tebon Haitong - Fosun Tourism - Atlantis Sanya Asset-backed Securities to raise RMB7.001 billion. The registration and procedure for the listing of the commercial mortgage-backed securities (“CMBS”) will be completed in accordance with relevant regulations of the Shanghai Stock Exchange.

On 15 November 2019, Fosun Tourism Group obtained an approval letter from the Shanghai Stock Exchange for the issuance of CMBS, which were secured on the hotel and water park of Atlantis Sanya, Fosun Tourism Group’s 100% equity stake in Hainan Atlantis Business and Tourism Development Co., Ltd., which is the owner of Atlantis Sanya, and the operating revenue and accounts receivable of Atlantis Sanya. Fosun Tourism Group succeed in raising funds from such a sizeable issue of CMBS at the difficult time of the novel coronavirus pneumonia epidemic. This has fully reflected Fosun Tourism Group’s strong capability for capital operation and investor confidence in the stability and long-term prospect of Fosun Tourism Group’s business and its tourism destination business at Atlantis Sanya.

At the beginning of the establishment of the Hainan Free Trade Zone, the government emphasized that the restrictions on financial business should be gradually loosened and the business innovation of financial institutions should be fostered as long as the risks remained manageable. The issuance of CMBS on the second anniversary of the Hainan Free Trade Zone also represents a breakthrough in the reform and innovation of the zone’s financial system. Fosun Tourism Group will also benefit from the further progress in the reform of the Hainan Free Trade Zone and the development of Hainan International Tourism Island. As the first of its kind in mainland China, the CMBS secured on a tourism destination also shows a new way of operating a tourism destination.

As the first tourism destination project of Fosun Tourism Group, Atlantis Sanya has been in the spotlight since it officially opened in April 2018. In 2019, its business volume amounted to RMB 1.3 billion and the number of visitor arrivals at Atlantis Sanya reached 5.2 million. The Atlantis Sanya project won the "National Quality Engineering Award-Luban Award" in 2019, the highest award in the Chinese construction industry. The project has also become famous because it is Hainan's popular check-in location among the online key opinion leaders. More than 1.8 billion short-form mobile videos as user-generated content about Atlantis Sanya have been posted on the mobile application “TikTok”.

According to Fosun Tourism Group’s announcement, approximately RMB2.9 billion of the proceeds will be used to repay the outstanding bank loans of Atlantis Sanya. The remainder will be used to finance the Group’s business development.

Mr. Qian Jiannong, Chairman of the Board, Executive Director and Chief Executive Officer of Fosun Tourism Group, said a few days ago at a conference about the announcement of its annual results, "We have an abundance of cash flow now. By the end of 2019, the cash and cash equivalents were approximately RMB 2.1 billion, and the unused bank facilities was approximately RMB2.5 billion. Meanwhile, we are planning further financial control measures.” Immediately after his remark, Fosun Tourism Group has successfully completed the issuance of RMB7.001 billion worth of CMBS. This allows the group to have sufficient funds to develop its business and seize the opportunities for business or investment in the industry after the epidemic dies down while reducing risks. The move also represents an unusual way of pursuing extraordinary achievements in corporate development.

In 2019, Fosun Tourism Group recorded a revenue of approximately RMB17.34 billion. Net profit attributable to the shareholders increased by 97.4% to RMB609 million. Less than four years after its establishment, the Group has become a leader in the global resort industry and has ranked among the top 20 Chinese tourism companies. Its strong capability for running a globalized business and for capital operation indicate huge potential for its development.