The China Securities Regulatory Commission asked Wanda Commercial Management: With a cumulative dividend of 13.2 billion yuan in three and a half years, why should it go public?
Tencent News "First Line" author Li Hai
Zhuhai Wanda Commercial Management, which submitted the filing materials again after the third lapse of the prospectus, was recently issued supplementary materials by the International Department of the China Securities Regulatory Commission.
The International Department of the China Securities Regulatory Commission issued six major questions about Wanda Commercial Management, and Tencent News "First Line" noted that the most fatal problem was about the existence of Wanda Commercial Management's perennial huge dividends. According to the prospectus, Wanda Commercial Management recorded a cumulative cash dividend of RMB13,273 million from 2019 to 2021 and the first half of 2022, while net cash flow from operating activities was RMB11,548 million for the same period. In addition, the general meeting of shareholders on September 23, 2022 also deliberated and approved a proposal for dividends of 3.478 billion yuan. After listing, the board of directors also intends to recommend at the general meeting that at least 65% of the annual distributable profit be used for dividends.
In response to the aforementioned dividend issue, the International Department of the CSRC stated that Wanda Commercial Management needs to supplement the amount of cash dividends during the reporting period and the reasonableness of the future cash dividend policy, whether there is a significant impact on the company's solvency and ability to continue operations, and the necessity and reasonableness of implementing this financing in the case of large cash dividends.
As early as 2021, Wanda Commercial Management applied to the China Securities Regulatory Commission for Hong Kong stock listing, which was accepted on October 11, 2021, and submitted its listing application to the Hong Kong Stock Exchange on the 21st of the same month. Thereafter, Wanda Commercial Management submitted listing application materials on the Hong Kong Stock Exchange on 22 April 2022 and 25 October 2022 respectively. However, in April 2023, the prospectus of Zhuhai Wanda Commercial Management expired again, and the road to IPO was bumpy.
Bai Wenxi, a special tutor at the Graduate School of the University of the Chinese Academy of Social Sciences, previously issued an article saying that Wanda Commercial Management has obtained the "small road" of the China Securities Regulatory Commission to list in Hong Kong and completed the pre-registration process for Hong Kong stock listing. However, Wanda Commercial Management has been slow to get the so-called "big road" for listing, which has set the slowest record for private enterprises to list overseas. Under normal circumstances, it only takes 3-6 months for Hong Kong listed companies to obtain "small roads" to "big roads", and in the past, there were few enterprises with a listing cycle of more than half a year due to approval reasons.
2023 is the peak period of Wanda's debt repayment, and the delay in completing the IPO of Wanfa Commercial Management has made Wanda Group's life difficult. Wang Jianlin said internally that the group encountered phased difficulties due to the delay in the listing of commercial management.
Previously, Wanda Group and the overseas debt syndicate totaling US$1.3 billion agreed that if Wanda Commercial Management failed to complete its listing in Hong Kong by May 8, 2023, Wanda needed to notify the participating banks as soon as possible, and if most of the lending banks required Wanda Group to repay the loan, Wanda would need to return the loan stock principal and the corresponding interest. In addition, Wanda Commercial Management must complete the listing by 2023 at the latest, otherwise it will carry out share repurchase and cash compensation.
The following are the specific requirements for the International Department of the CSRC to issue supplementary materials for Zhuhai Wanda Commercial Management:
1. Please provide additional information on the operation of corporate governance and internal control, whether the internal control system is sound and effective, whether there are situations in which funds are occupied by controlling shareholders or other related parties, and whether there are external guarantees and guarantees for controlling shareholders. Please also describe the relevant internal controls and safeguards to prevent the appropriation of funds of related parties and avoid providing guarantees to controlling shareholders.
2. According to your company's prospectus, the average occupancy rate of your company's commercial plaza under management from 2019 to 2021 is 98.8%. Please explain the calculation and accuracy of the above occupancy rate based on the actual collection of your company's commercial management service fees and rent during the reporting period, and the comparison of companies in the same industry during the same period (if any); Please explain whether your company has effective measures to prevent internal personnel from falsely reporting occupancy rates and collection rates and the actual implementation in terms of assessment and internal control system.
3. Please explain the related party transactions and capital exchanges between your company and the controlling shareholders and other related parties during the reporting period, the proportion of such related party transactions to your company's operating income or operating costs during the reporting period, and the independence of your company's business.
4. Please explain the reasons for the significant increase in revenue and profit during the reporting period and the recovery of relevant receivables after the period in combination with the changes in the operating mode of the controlling shareholder's project, the receivables during the reporting period, and the cash flow of economic activities during the reporting period. Please explain the short-term debt repayment risk of your company's controlling shareholders in combination with the external arrangements made by your company and the controlling shareholders related to your company's listing time and achievement of performance.
5. Please specify the strengthening of the management of the use of raised funds, and refine the safeguard measures and relevant arrangements adopted for the purpose of the raised funds; and issued a commitment that the funds raised by this offering and listing will not flow directly or indirectly into the real estate development sector.
6. According to the prospectus, your company's cumulative cash dividend during the reporting period (2019 to 2021 and the first half of 2022) was 13.273 billion yuan, which exceeded the total net cash flow of operating activities in the same period of 11.548 billion yuan. In addition to the above-mentioned splits, on September 23, 2022, the general meeting of shareholders deliberated and passed the proposal to pay dividends of 3.478 billion yuan; After listing, the board of directors also intends to recommend at the general meeting that at least 65% of the annual distributable profit be used for dividends. Please explain the amount of cash dividends during the reporting period and the reasonableness of the future cash dividend policy, whether there is a significant impact on the company's solvency and ability to continue operations, and the necessity and reasonableness of implementing this financing in the case of large cash dividends.
7. Please supplement and update the filing materials in a timely manner in conjunction with the updated content of the prospectus.