Under the big waves, will the road to wanda commercial management listing be smooth?
Wen | a city finance
Recently, the second round of concentrated soil auctions in core cities has come to an end, and many real estate companies have seen the cautious convergence of the naked eye, and "living" is no longer a slogan.
The real estate winter is probably really coming.
According to the incomplete statistics of the people's court announcement network, from January 1, 2021, as of October 23, 2021, in less than 300 days, 323 real estate industry-related companies across the country have issued bankruptcy documents.
In addition, there are a number of large housing enterprises such as Evergrande, R&F, Fantasia, Xinli, and Contemporary Real Estate, which are also mired in debt and cannot take care of themselves.
At a time when the industry was "wailing", a "newcomer" in the real estate industry quietly went to Hong Kong to submit a prospectus.
This "newcomer" in the real estate industry is Zhuhai Wanda Commercial Management Group Co., Ltd. (hereinafter referred to as "Zhuhai Wanda Commercial Management"). It is said new because it was founded in March this year. However, Zhuhai Wanda Commercial Management is actually "old wine in a new bottle".
It is understood that at the end of March this year, Wanda announced the termination of the A-share listing plan and signed an agreement with the Zhuhai Municipal Government to settle the restructured Wanda Asset-Light Commercial Management Company in Hengqin, Zhuhai, and at the same time, the Zhuhai State-owned Assets Supervision and Administration Commission invested 3 billion yuan into shares, which has Zhuhai Wanda Commercial Management.
Today, it has spun off its real estate business and become a purely commercial management company with overall responsibility for the operation and management of the 368 Wanda Plazas that have opened, 155 Wanda Plazas under construction, and all Future Wanda Plazas.
On the evening of October 21, the Hong Kong Stock Exchange disclosed the prospectus of Zhuhai Wanda Commercial Management, with CITIC Securities, JPMorgan Chase and Credit Suisse as joint sponsors. According to the prospectus, Wanda Commercial Management intends to issue shares with a total share capital of 7.247 billion shares to the world, which will be used for investment acquisition, expansion of the area of properties under management, transformation of scene hardware facilities, enhancement of data processing capabilities and strategic investment.
According to the prospectus, Dalian Wanda Commercial directly owns 69.99% of the equity of Zhuhai Wanda Commercial Management, and indirectly owns 8.84% of the company's equity through Zhuhai Wanxin, Zhuhai Wanying and Yinchuan Wanda.
In other words, Dalian Wanda Commercial holds a total of 78.83% of the company's equity, which is the largest shareholder. In addition, Wang Jianlin holds 52.68% of the commercial equity of Dalian Wanda and is the actual controller of the company.
In the early years, Wanda tried to build an island city version of Victoria Bay in Qingdao, but later sold it to Sunac for its own reasons. Nowadays, Zhuhai Wanda Commercial Management has returned to the real Victoria Bay of Hong Kong, and Presumably Boss Wang is also quite touched.
The much-anticipated listing journey is full of surprises and challenges, what sorrows and joys will be staged here by the new Zhuhai Wanda Commercial Management?
Caprylic on the market
When Wanda Commercial Management was not yet transformed, it also landed on Victoria Bay in Hong Kong.
At that time, the company was called Dalian Wanda Commercial Real Estate Co., Ltd. (hereinafter referred to as "Wanda Commercial Real Estate"), which was not only responsible for commercial operations, but also took into account property development.
On the morning of 23 December 2014, with the bells of the Hong Kong Stock Exchange, Wanda Commercial Real Estate was successfully listed on the main board of the Hong Kong Stock Exchange, raising up to HK$28.8 billion. However, due to the valuation gap between the mainland and Hong Kong markets, Wanda Commercial Real Estate broke on the same day of listing, and since then, the stock price has continued to be depressed.
Wang Jianlin believes that the valuation of Wanda Commercial Real Estate is too low, sorry for shareholders and investors. Therefore, only two years after the listing, in September 2016, it was announced that it was delisted.
After delisting, Wang Jianlin was not reconciled and wanted to return to A shares.
However, despite all the preparations, the return journey has not been successful to date.
It is worth mentioning that after the delisting of the Hong Kong Stock Exchange, Wang Jianlin signed a VAM agreement with investors, claiming that if it fails to list on the A-share market before August 31, 2018, Wanda will repurchase all the shares and pay 12% and 10% interest to overseas and domestic investors respectively, with a total principal and interest of more than 30 billion yuan.
In 2017, Wanda suffered a Waterloo and was mired in a debt crisis. As a last resort, Boss Wang had to sell his assets in order to survive. The well-known Sunac Cultural Tourism, in fact, is based on the project that Sun Hongbin bought from Wanda at that time and further expanded.
During this period, there have also been many "insider" news. According to rumors, on the eve of the press conference of Wanda's sale of the hotel project to R&F, Wang Jianlin once threw a cup in the conference room due to the temporary price reduction of the R&F boss, and the name of R&F was deleted from the on-site display board.
Regardless of whether the rumors are true or not, it can be seen from this matter that Wanda has reached the point where it must be sold, and the situation is really difficult.
Fast forward to 2018, Wanda Commercial Real Estate is still in line in the A-share market. Seeing that the VAM agreement was about to expire, Wanda Commercial Real Estate's listing on the A-share market was delayed, and Wang Jianlin had to ask for another way.
In January 2018, Wang Jianlin saved a bureau, and Ma Huateng, Zhang Jindong, Liu Qiangdong, Sun Hongbin and others brought funds to the banquet. After that, they reached an agreement, led by Tencent, and jointly invested 34 billion yuan in Wanda Commercial with Suning, JD.com and Sunac, which can also be regarded as "paying" for Wang Jianlin's VAM agreement.
It is worth mentioning that in this investment agreement, it is also mentioned that the investor requires Wanda to complete the listing by October 31, 2023.
On March 1, 2018, Wanda issued an announcement announcing that it had changed its name to Dalian Wanda Commercial Management Group Co., Ltd. (hereinafter referred to as Wanda Commercial Management), which officially opened the road of asset-light transformation.
Although Wanda Commercial Management has been vigorously promoted to list on A-shares, it is not easy for domestic housing stocks to be listed in A-shares. As a result, Wanda experienced a six-year long queuing period.
The time comes to 2021, and there are only two years left before the deadline required by the agreement, and Wang Jianlin seems to have no time to wait.
Time is precious, and Jianlin is in a hurry
In the past year to the present, Wanda's senior personnel changes are quite frequent.
According to incomplete statistics from Yichengjun, in 2020, 7 members of Wanda Commercial Management Group have left one after another, including vice president Liang Feijian, vice president Shen Jiaying, wang rui, assistant chief president and general manager of the investment center, Huang Zhaozhou, senior assistant president and general manager of the planning center, Chen Yihang, assistant president and general manager of the South China Operation Center, and Zhu Zhanbei, vice president of Wanda Commercial Management Group, who was removed from Wanda commercial management group for suspected corruption.
Not only are the executives "leaving" one after another, but the internal personnel deployment of Wanda Commercial Management Group is also continuing.
On January 3 last year, 65-year-old Ding Benxi announced his retirement as president of Wanda Group, and it was Qi Jie, who was then the president of Wanda Commercial Management Group, who also took care of business management business.
Earlier, Qi Jie's head was the president of Wanda Commercial. During Qi Jie's tenure as president, Wanda Commercial changed its name to Wanda Commercial Management and began to divest the real estate business. After undergoing several adjustments, Qi Jie's head was successively changed to chairman of Wanda Commercial Management, director and president of Wanda Group, chairman of Wanda Real Estate Group, and executive director of Wanda Culture Group.
Chart: Wanda Commercial Executive Team Changes in 2020/Images from the Internet
Since Qi Jie took over as the president of Wanda Group, in April 2020, Xiao Guangrui, former senior vice president of Wanda Group and general manager of human resource management center, took over the position of president of Wanda Commercial Management. Subsequently, a number of core business leaders under the commercial management began to leave successively.
Among them, Han Yang, former general manager of Wanda Commercial Real Estate City Company, took over Liang Feijian; Chen Hongtao, former general manager of West China Operation Center, took over Huang Zhaozhou; Zhang Peiyu, former senior president assistant of Wanda Commercial Management Group, took over Wang Rui; and Sun Yaya, former senior president assistant of Commercial Management Group and general manager of North China Operation Center, succeeded Shen Jiaying.
However, just over a year after Xiao Guangrui took over Wanda Commercial Management, on August 2 this year, Dalian Wanda Commercial Management Group Co., Ltd. issued an announcement that Xiao Guangrui resigned as president of the company and would be taken over by Qi Jie.
After a year, the "veteran" is once again in charge, and some experts have analyzed that this change is to prepare for wanda commercial management to sprint IPO this year.
And that's exactly what happened.
On March 24, 2021, Wanda Commercial Management announced that, based on the judgment of its own strategy, it decided to reorganize the company's asset-light commercial operations, technology, data, personnel and other related resources to achieve domestic and overseas listing as soon as possible, so it decided to withdraw Wanda Commercial's A-share IPO application.
Only 5 days after Wanda withdrew the listing notice, that is, on March 29, Wanda Group announced that Wanda Commercial Management Group and Zhuhai Municipal Government signed an agreement to settle the restructured Wanda Asset Light Commercial Management Company in Hengqin, Zhuhai, while Zhuhai State-owned Assets Supervision and Administration Commission invested 3 billion yuan in Wanda Light Asset Commercial Management Company.
According to industrial and commercial information, the major shareholder of Wanda Commercial Management Group has been changed to Zhuhai Wanda Commercial Management. According to the enterprise investigation, the chairman of Zhuhai Wanda Commercial Management is Qi Jie, and the general manager and director are Xiao Guangrui.
The "departure" of the executives did not stop the pace of Wanda Commercial Management from listing, time is precious, and Wanda is very anxious.
After its establishment, Zhuhai Wanda Commercial Management not only looked for listing financing everywhere, but also actively prepared listing materials.
On August 20, about five months after Wanda Commercial Management withdrew its A-share listing notice, the CSRC received the overseas listing materials submitted by Zhuhai Wanda Commercial Management for the first time. On August 26, the CSRC issued a notice of amendment. On October 9, the corrected materials were received. On October 11, the submission was accepted.
After getting the "small road strip" of the CSRC, Zhuhai Wanda Commercial Management "Lightspeed" submitted a prospectus. On October 21, Zhuhai Wanda Commercial Management disclosed the prospectus on the Hong Kong Stock Exchange, officially entering the substantive stage of its IPO in Hong Kong.
Unlike 7 years ago, when he returned to Victoria Bay again, Wang Jianlin was very beautiful.
Before the listing, Zhuhai Wanda Commercial Management received nearly US$6 billion in financing, and in addition to local state-owned assets, there were many leading Internet, real estate companies and top institutions to invest in it. Under the influence of comprehensive factors, the valuation of Zhuhai Wanda Commercial Management reached 180 billion yuan.
Zhuhai Wanda Commercial Management's investors are not only many companies, but also corporate executives. Previously, it was reported that Zhuhai Wanda Commercial Management had been raised by Pre-IPO, with an amount of up to HK$46.8 billion, about US$6 billion, led by PAG (Pacific Alliance Investment Group) and jointly invested by Country Garden, Tencent and Ant.
According to the prospectus released a few days ago, PAG invested US$1 billion (a total of 6.384 billion yuan), holding 3.57%; Country Garden invested 3.23 billion yuan, with a shareholding ratio of 1.79%; Tencent Tencent invested a total of 1.512 billion yuan through Huang River InvestmentLimited and Shenzhen Gaodeng Computer Technology Co., Ltd., holding 0.84%; Ant Technology invested 0.84% through Accelerator I Ltd., Shanghai Yunxin Venture Capital Co., Ltd. invested a total of 2.595 billion yuan, accounting for 1.44% of the shares. There are also CITIC Capital, Starsmith, United Life Insurance, Chow Tai Fook Cheng Yu Tong family and other participating in the investment, a total of 22 companies participated in the investment.
In addition, there are six senior executives xiao Guangrui, Wang Zhibin, Han Yang, Sun Yaya, Pan Taonan and Xu Fan participating in the investment, and the above companies and executives hold a total of 21.17% of the shares. Among these investors, PAG has the right to nominate directors.
However, it is worth noting that Wanda Commercial Management has also seen investors withdraw in advance.
In March this year, the official information of the Tianjin Property Rights Exchange Center showed that 42 million shares of Wanda Commercial Management were listed and transferred, and the proportion of the proposed transfer accounted for 0.9277% of the total share capital, and the transfer reserve price was 2.184 billion yuan. The deadline for disclosure is April 21, 2021. The transaction is a one-time payment, requiring a deposit of 43 million yuan.
It is worth mentioning that the transferors of this share are Tianjin Yinyuanjia Equity Investment Fund Partnership and Jiaxing Yinhong Yongchu Investment Partnership. Tianyan's investigation shows that the major shareholders of both are Tibet Tianjun Biotechnology Co., Ltd., and the actual controller of the latter is Chen Chunmei. And Chen Chunmei is the wife of Gong Hongjia, who is known as the "god of shares", "China's Sun Zhengyi" and "A-share cash-out king".
In fact, Gong Hongjia's withdrawal of shares is not unique, and many shareholders have pledged their shares. Does this mean that shareholders have insufficient confidence in the subsequent development of Wanda Commercial Management?
In addition, according to the prospectus, Wanda has a VAM agreement with investors, and Wanda agrees to guarantee that the actual net profit of Zhuhai Wanda Commercial Management from 2021 to 2023 will be no less than 5.19 billion yuan, 7.43 billion yuan and 9.46 billion yuan respectively. If this is not achieved, Dalian Wanda Commercial and Zhuhai Wanying will transfer the relevant number of shares at zero consideration or pay cash to the investor to compensate the investor.
Seeing this agreement, Ichiichi Jun only wanted to say that it was worthy of Jianlin Zong, and he really loved to "gamble".
However, in the two VAM agreements involved in Wanda before, one has failed, and after the failure, it still pays some price; one is still in progress, and it is accelerating to catch up, if there is a problem, then the listing deadline of 2023 may not be so easy to complete.
At this time, the arrogant Wang Zong set up a new VAM agreement, I don't know if it is full of confidence or forced?
Profitability declined and cash flows shrank
According to the prospectus, Zhuhai Wanda Commercial Management is the largest commercial operation service provider in China, mainly engaged in the operation of commercial squares. Its business consists of three areas, namely business management services, property management services and value-added services.
According to the data, from 2018 to 2020 and the first half of 2021, Wanda Commercial Management's revenue was 11.023 billion yuan, 13.437 billion yuan, 17.196 billion yuan and 10.636 billion yuan respectively, while the profit (net profit) for the period was 2.022 billion yuan, 1.248 billion yuan, 1.112 billion yuan and 655 million yuan (817 million yuan in the same period of 2020), which was lower year by year.
From the perspective of profitability, from 2018 to the first half of 2021, the gross profit of Wanda Commercial Management was 4.55 billion yuan, 4.58 billion yuan, 6.34 billion yuan and 4.51 billion yuan, respectively; in the same period, the gross profit margin was 41.3%, 34.1%, 36.9% and 42.4%, respectively; the net profit margin was 18.3%, 9.3%, 6.5% and 6.2%, respectively.
It is worth noting that in 2019, the gross profit margin of Wanda Commercial Management fell sharply, from 41.3% in 2018 to 34.1%, and Wanda mentioned in the prospectus, mainly because it stopped allowing merchants to share the loss fees in the transmission process in 2019.
However, until 2020, Wanda Commercial Management's gross profit margin has not returned to the level of 2018, an increase of only 2.8 percentage points compared with 2019.
Overall, Wanda Commercial Management's operating income showed an upward trend, but its net profit was declining year by year. From this point of view, Wang Jianlin still has some pressure if he wants to reach a VAM agreement.
However, despite some pressure, the pace of Wanda's commercial management expansion has not slowed down.
As of June 30, 2021, Zhuhai Wanda Commercial Management managed 380 commercial plazas with a gross floor area of 54.2 million square meters under management. Among them, the number of commercial squares from independent third parties was 106, accounting for 27.9% of the total number of commercial squares under management; the number of commercial squares provided by the parent company was 274, accounting for 72.1%. In addition, Zhuhai Wanda Commercial Management has 162 reserve projects and 133 independent third-party projects.
In fact, in the process of Wanda Commercial Management's transformation to asset-light, independent third-party projects have always been its focus on development.
According to the prospectus, zhuhai Wanda Commercial Management has two asset-light operation models, namely the entrusted management model and the leasing operation model. The entrusted management model means that Wanda is entrusted with full responsibility for the management of the commercial plaza and provides various commercial management services, property management services and value-added services.
The leasing operation model means that Wanda leases the property from the owner and leases the commercial space in the commercial square to the merchants, while taking full responsibility for managing the commercial square. The service scope of the leasing operation model and the entrusted management model is generally the same.
As far as the current operation status of Wanda is concerned, the entrusted management model is mainly used for the parent company group commercial plaza, while the leasing operation model is mainly used for independent third-party commercial squares.
According to the prospectus, from 2018 to the first half of 2021, the revenue of the entrusted management model accounted for 87.9%, 79.1%, 51.4% and 62.5% of the total revenue, respectively; the income of the leasing operation model accounted for 12.1%, 20.9%, 48.6% and 37.5% of the total revenue, respectively.
Wanda also mentioned in the prospectus that it will continue to strengthen cooperation with independent third-party owners. This is the key to its comprehensive asset-light transformation, market expansion and enhanced sustainability. However, despite efforts to expand, more than 60% of Zhuhai Wanda Commercial Management's revenue still comes from the parent company group.
According to the prospectus, as of the first half of 2021, its revenue from the parent company group was 7.168 billion yuan, accounting for 67.4% of the total revenue; revenue from independent third parties was 3.468 billion yuan, accounting for 32.61%.
At present, although Wanda has declared that it will let Zhuhai Wanda Commercial Management after the divestiture of heavy assets be lightly equipped, however, in terms of its debt situation, there has not been much change from before. According to the prospectus, from 2018 to the first half of 2021, the asset-liability ratio of Zhuhai Wanda Commercial Management was 80.5%, 80.4%, 95.8% and 80.4% respectively, all of which remained above 80%.
At the same time, as of June 30, 2021, the total current liabilities of Zhuhai Wanda Commercial Management were 15.175 billion yuan, the total liabilities were 15.535 billion yuan, and the total assets were 19.324 billion yuan.
It is worth noting that at the end of 2020, Zhuhai Wanda Commercial Management held 9.364 billion yuan in cash, and by the middle of 2021, its cash and cash equivalents will decrease to 6.551 billion yuan, shrinking by nearly 3 billion yuan.
Zhuhai Wanda Commercial Management, which divested heavy assets and lightly loaded, did not peel off much debt, but reduced cash by nearly one-third, which is likely to cause some pressure on its debt repayment and operation.
Overall, Zhuhai Wanda Commercial Management is listed in this stall, on the one hand, or affected by the VAM agreement, Boss Wang, who has been in the A-share for 6 years, seems to be unable to wait; on the other hand, he also sees that the light asset outlet is booming, and wants to seize the outlet and fight a turnaround battle.
Bai Wenxi, chief economist of IPG China, believes that in the six years since Wanda has continuously adjusted its business model to re-list in A-shares and successfully transformed into an asset-light commercial property management company, the concept of light asset management in the property service category has become an outlet.
However, although Zhuhai Wanda Commercial Management has advantages in asset-light operation, this does not guarantee that its future development will be smooth.
According to Frost & Sullivan, the total market share of China's top five commercial operation service providers is 12.7% according to the statistics of GFA under management. Overall, China's commercial operation services market is relatively fragmented. This also means that outreach capabilities are key to the continued development of commercial operations service providers.
However, Wanda also pointed out in the prospectus that due to the consumption capacity of the population in third-tier cities and below, the oversupply of commercial squares in some expanded cities, the errors in market assessment and the changes in the supply and demand and competitive pattern of the industry, Zhuhai Wanda Commercial Management may not be able to successfully expand its business and achieve a landing growth strategy.
There are opportunities in the industry, but there are also challenges. Under the big waves, will the listing road of Zhuhai Wanda Commercial Management be smooth? A city of finance and economics continues to observe.
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