Wanda Commercial Management internal and external high pressure: was asked by the CSRC about short-term debt risks, and employees were notified when playing mobile phones at lunchtime

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Recently, an employee of Wanda Group was reported internally while eating while playing on his mobile phone at lunch, which aroused the attention of netizens.

The screenshot of the online notification shows that the words "Jinhua employees eat while playing during lunch" are written on the left side of the notice. According to media reports, this is the news reported by the commercial management side.

Zhuhai Wanda's prospectus expired for the third time, and the company was under pressure from being unable to go public and gambling hugely. Now there is news within Wanda that employees are being notified of eating and playing on their mobile phones, which also reveals the tense and high-pressure atmosphere of Wanda Commercial Management.

On June 2, the CSRC announced the requirements for supplementary materials for the filing of overseas offerings and listings, requiring Zhuhai Wanda to explain the company's internal control, related party transactions, and the use of raised funds.

Wanda's listing process is still progressing normally, but whether it can be approved by the CSRC and when it can be released is beyond Wang Jianlin's control.

01. The problem of occupancy rate is inquired again

At the end of February, an employee who claimed to have worked in Wanda Commercial Management for more than 2 years posted a breaking news article entitled "Talk about Wanda Business in 2023" on Zhihu.

The news mentioned that Zhuhai Wanda Commercial Management has falsified data in many aspects such as sales performance, live broadcast, customer flow, short-term rental, vacancy rate, rent collection rate, and investment promotion rate.

According to the article, Wanda's 98% commercial management occupancy rate and 100% rent collection were achieved through artificial water injection by the project company - as long as the system showed that there were no empty shops, all the rent could be paid. The large amount of expenses arising from this will be mostly advanced to merchants by local projects or made up through other means.

According to Wanda's announcement, in 2022, Zhuhai Wanda's commercial management revenue will be 55.3 billion yuan, with a target completion rate of 99.6%, rental income will be 50.8 billion yuan, a year-on-year increase of 8%, the rental rate of shops will be 98%, and the rent collection rate will be 100%.

Previously, on May 26, Wanda Commercial Management issued the "Explanation on Market Rumors" on the Shanghai Stock Exchange specifically responded to the occupancy rate.

According to Wanda Commercial Management, the occupancy rate is calculated by dividing the leased area by the total leasable area. The total leasable area is the total area under management minus the common area and the facility area, and the leased area is calculated based on the lease signed by the tenant, and there is no fraud in performance.

In this request for additional information, the CSRC inquired about the occupancy rate of Zhuhai Wanda.

According to the requirements of the CSRC, Zhuhai Wanda is required to explain the calculation and accuracy of the above occupancy rate based on the actual collection of Zhuhai Wanda's commercial management service fees and rent during the reporting period, and the comparable situation of companies in the same industry (if any) during the same period; Please explain whether Zhuhai Wanda has relevant 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.

Rating agency Standard & Poor's has said that Wanda Plaza's high occupancy rate is mainly due to its rental model, because more than 90% of its tenants use fixed-rent lease contracts, which allows rents to be locked in early.

But whether Wanda and external agencies can convince the CSRC may have to produce excellent data.

02. Short-term debt risk and high dividends are concerned

In addition to the occupancy rate of shopping malls, issues such as Zhuhai Wanda's high dividends and short-term debt repayment risks have also attracted the attention of regulatory authorities.

On May 16, some media reported that Dalian Wanda Group was in talks with domestic banks to try to extend the maturity of some of Wanda Real Estate Group's project loans. It currently wants to defer the repayment of the loan principal due this year, but the interest payment is not deferred and it is still willing to pay interest. Wanda hopes that its subsidiaries can also obtain new loan lines from banks to retain as many lines of credit as possible.

According to DM data from the Debt Investigation Connect, for domestic bonds alone, Wanda Group and its equivalent actual controllers had a principal of RMB4.163 billion to be repaid during the year, and the interest to be repaid was about RMB714 million.

If Zhuhai Wanda fails to complete the listing during the VAM period, Wanda will need to pay about RMB30 billion in share repurchase and US$1.3 billion in loans to pre-IPO investors.

Due to the lapse of the prospectus, Wanda Group and the syndicated lending bank have previously adjusted the listing date agreed in the contract to November 30, 2023, temporarily easing the pressure of high loans.

However, the CSRC requires Zhuhai Wanda to make external arrangements such as equity repurchase and early debt repayment related to the listing time and achievement of performance of the company and its controlling shareholders, and explain the short-term debt repayment risk of the company's controlling shareholders.

In addition, Zhuhai Wanda has paid dividends many times in recent years, and continues to pay dividends to shareholders under the pressure of debt today.

From 2019 to 2021 and the first half of 2022, Zhuhai Wanda's cumulative cash dividend was RMB13.273 billion, exceeding the total net cash flow from operating activities of RMB11.548 billion in the same period. In addition to the above-mentioned splits, on September 23, 2022, the general meeting of shareholders deliberated and passed a proposal to pay dividends of 3.478 billion yuan, and after listing, the board of directors also intends to recommend at least 65% of the annual distributable profit to dividends at the shareholders' meeting.

In this regard, the CSRC required Zhuhai Wanda to 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.