Nan Fung International Holdings Limited (NANFUN)

NFIHL's current credit quality can be assessed as a mid- to lower-tier investment-grade credit, close to the lower end of investment grade but supported by headline financial metrics and the depth of its asset buffer. The direction is broadly stable at present, but it is difficult to call it improving because underlying operating cash flow is weak, investment property valuation losses remain, and FVTPL financial assets continue to introduce valuation volatility. The probability of a rapid change in the level or direction of credit quality is not high, but if property valuations and financial investment valuations deteriorate at the same time and cash or refinancing access weakens, the view could be revised relatively quickly.

The main support for this view is equity and the asset buffer. As of end-September 2025, total assets were HK$152.38bn, equity was HK$111.13bn, investment properties were HK$80.24bn, FVTPL financial assets were HK$33.92bn, and cash was HK$10.46bn. Bank and other borrowings were limited to HK$27.85bn, equivalent to around 25.1% of equity and around 18.3% of total assets. Borrowings due within one year were HK$1.66bn, and cash was more than 6x that amount. These figures indicate a reasonable degree of short-term funding headroom based on public financials.

At the same time, the constraints on credit quality are clear. First, earnings are highly sensitive to investment property and financial investment valuations. NFIHL reported losses for the year of HK$3.68bn in FY2024 and HK$1.85bn in FY2025. It returned to a profit of HK$2.41bn in the September 2025 interim period, but this was strongly supported by net financial investment gains of HK$3.58bn. Second, operating cash flow was negative in FY2025 and in the September 2025 interim period. Third, investment properties and financial assets are large, but security pledges, liquidity, property-level NOI, and the details of Level 3 investments are unconfirmed.