Wang Jianlin once again sold his core assets, and Wanda Films may change hands

Behind Wang Jianlin's "selling, selling, selling", it is the financial pressure.

01

Change of Control

On December 6, Wanda Films (002739. SZ) announced that the company's indirect controlling shareholder Beijing Wanda Cultural Industry Group Co., Ltd. and its wholly-owned subsidiary Beijing Hengrun Enterprise Management and Development Co., Ltd., and the company's actual controller Wang Jianlin intend to transfer 51% of the company's controlling shareholder Beijing Wanda Investment Co., Ltd. to Shanghai Ruyi Investment Management Co., Ltd.

Wanda Film Suspension Announcement

According to the announcement, if the above matters are finally implemented, it will lead to a change of control of Wanda Films.

After the company's application to the Shenzhen Stock Exchange, Wanda Film shares have been suspended since the market opened on December 6, and the suspension is expected to last no more than 2 trading days.

It is worth noting that Wanda Film has undergone several equity changes since the beginning of this year.

In March this year, Wanda Culture Group, a person acting in concert with Wanda Investment, reduced its holdings of 43,565,300 shares of Wanda Film through the block trading system, accounting for 1.999% of the company's total share capital;

In April, Wanda Investment announced a shareholding reduction plan, planning to reduce its holdings of Wanda Film shares by no more than 65.38 million shares, accounting for 3% of the company's total share capital;

On July 10, Wanda Investment signed a share transfer agreement with Lu Lili, stipulating that Wanda Investment would transfer 180 million shares of Wanda Film held by Wanda Investment to Lu Lili, accounting for 8.26% of the company's total share capital;

On July 17, Wanda Investment transferred 177 million shares of Wanda Film held by it to Shenxian Rongzhi, accounting for 8.14% of the company's total share capital;

On July 23, Shanghai Ruyi planned to acquire 49% of the shares of Beijing Wanda Investment for 2.262 billion yuan.

It can be seen that Wanda Investment's equity sale was very intensive in July this year, when it was reported that Wang Jianlin was in order to repay the debt, and Wanda Group used the funds obtained from the sale to repay the principal of the $400 million debt due on July 23.

Behind Wang Jianlin's "selling, selling, selling" is related to the current financial shortage faced by Wanda and the short-term hopelessness of Zhuhai Wanda Commercial Management's listing on the Hong Kong stock market and the pressure of VAM repurchase.

Recently, Wanda Commercial announced that its subsidiary's US$600 million bond adjustment repayment plan was approved by bondholders, and it adjusted the maturity date of the bond from January 29, 2024 to December 29, 2024, and repaid it in four installments during the extension period.

According to the statistics of "Small Bond Market Watch", Wanda Commercial Management currently has 3 US dollar bonds with an existing scale of 1.4 billion US dollars, and the other two US dollar bonds will mature on January 20, 2025 and February 13, 2026.

Future debt service cash flows

In addition, the listing of Zhuhai Wanda Commercial Management, a subsidiary of Wanda Commercial Management, is a bigger mine.

On November 22, Wanda Commercial Management mentioned in a conference call with US dollar bond holders that the company is discussing with Zhuhai Wanda Commercial Management's pre-IPO round investors with nearly 5 billion yuan of equity investment, and intends to postpone the equity repurchase obligation of 4 billion to 5 billion yuan for 9 months to about September 2024.

Previously, it was reported that the pre-IPO investors of Zhuhai Wanda Commercial Management rejected Wanda's initial proposal to postpone the payment of 30 billion yuan and the interest due at the end of the year.

Earlier, Wanda had signed a VAM agreement with investors to complete the listing by the end of 2023 at the latest, otherwise it would have to repay more than 30 billion yuan in equity repurchases.

Since the beginning of this year, in the face of the imminent period of the listing VAM period and the large-scale debt due in a concentrated manner, Wanda has begun to sell and sell the model.

In addition to the equity of the film company, Wanda has also put its Wanda Plaza, financial licenses, Infront Sports and other products on the shelves.

According to incomplete statistics, including Guangxi Hepu Wanda Plaza and Shanghai Zhoupu Wanda Plaza, Wanda has sold at least 5 Wanda Plazas this year.

02

Liquidity pressure is high

According to the official website, Wanda Commercial Management, founded in September 2002, is the world's leading commercial property holding, management and operation enterprise, and is also the only business platform for Wanda Group's commercial property investment and operation.

As of the end of 2022, Zhuhai Wanda Commercial Management managed 472 commercial plazas, with a construction area of 65.6 million square meters under management.

Wanda Commercial Management official website

From the perspective of equity structure, the controlling shareholder of Wanda Commercial Management is Dalian Wanda Group Co., Ltd., with a shareholding ratio of 44.99%, and Wang Jianlin directly holds 5.24% of the shares, which is the actual controller of the company.

Shareholding structure chart

Since 2018, due to the impact of the decentralization of the real estate business, the profitability of Wanda Commercial Management has continued to decline.

In the first half of 2023, Wanda Commercial Management's total rental income increased by 4.5% year-on-year to RMB26.32 billion, net rent increased by 7.2% year-on-year to RMB13.01 billion, and net rent from comparable Wanda Plaza increased by 3.8% year-on-year. The occupancy rate was 98.2% and the rental collection rate was 100%.

In terms of performance, in the first three quarters of 2023, Wanda Commercial Management's revenue and net profit were 38.826 billion yuan and 11.057 billion yuan, respectively, a year-on-year increase of 6.55% and 1.38%.

Changes in net profit

It is worth noting that Wanda Commercial Management's operating cash flow declined significantly in 2022, halving from 22.514 billion yuan in 2021 to 9.686 billion yuan, and 17.037 billion yuan by the end of the third quarter of 2023.

Operating cash flow

As of the end of the third quarter of 2023, Wanda Commercial Management's total assets were 6,115.83 yuan, total liabilities were 303.36 billion yuan, net assets were 308.224 billion yuan, and the asset-liability ratio was 49.6%.

From the perspective of financial leverage, the highest asset-liability ratio of Wanda Commercial Management occurred in 2012 and 2013, when the indicator data exceeded 73%, and its financial leverage has been declining since the asset-light operation.

Debt-to-asset ratio trends

According to the analysis of the debt structure of "Small Debt Market Watch", Wanda Commercial Management mainly consists of non-current liabilities, accounting for 64% of the total debt.

As of the same reporting period, Wanda Commercial Management's non-current liabilities were 193.861 billion yuan, mainly long-term borrowings, and its total long-term interest-bearing liabilities were 124.561 billion yuan.

In addition, Wanda Commercial Management also has current liabilities of 109.499 billion yuan, mainly non-current liabilities due within one year, and its total short-term liabilities are 66.209 billion yuan.

From the perspective of liquidity, Wanda Commercial Management has 13.269 billion yuan of monetary funds on its books, a further decrease from the end of 2022, which cannot cover short-term debt, and the cash short-term debt ratio is 0.2, and the company has greater short-term debt repayment pressure.

In terms of standby funds, as of the end of March 2023, Wanda Commercial Management Bank had a total credit line of 364.5 billion yuan and an unused credit line of 265.4 billion yuan.

Line of credit

On the whole, Wanda Commercial Management's rigid debt is 190.771 billion yuan, mainly long-term interest-bearing debt, with an interest-bearing debt ratio of 63%.

Since 2014, Wanda Commercial Management's interest-bearing liabilities have gradually risen, and after peaking in 2016, the scale has declined due to strategic adjustments, but has soared again since 2022.

In recent years, while Wanda Commercial Management's various operating costs have been reduced, only financial expenses have continued to soar, and the indicators from 2021 to the end of the third quarter of 2023 are 10.662 billion, 14.694 billion and 10.839 billion yuan respectively, which has greatly eroded profits.

In terms of financing channels, in addition to bank and bond financing, Wanda Commercial Management also provides financing through accounts receivable, equity pledge and trust.

Among them, the balance of loans and credit bonds of Wanda Commercial Management Bank accounted for 6% and 3% respectively.

From the perspective of cash flow, Wanda Commercial Management's financing cash flow has continued to have a net outflow in recent years, with this indicator of -11.269 billion yuan and -30.036 billion yuan in 2021 and 2022, respectively, and -11.842 billion yuan in the first three quarters of 2023.

Financing cash flow

In terms of asset quality, Wanda Commercial's receivables are as high as 23.212 billion yuan, three times that of the end of 2021, and the total proportion of the top five at the end of the period is relatively high.

In addition, Wanda Commercial Management's restricted assets pledged for borrowing are relatively large, with 362.34 billion yuan as of the end of 2021, mainly investment properties, which has a certain adverse impact on asset liquidity.

If the market environment changes in the future, there is a risk of fair value change in the investment real estate held by the company, which will adversely affect the company's asset position and operating income.

Generally speaking, Wanda Commercial Management's interest-bearing liabilities are high, financing channels are not smooth, and the company's refinancing pressure is relatively large, and the scale of restricted assets is relatively large, which has a certain adverse impact on asset liquidity.

03

Listing VAM

In 2000, Wanda Group entered the field of commercial real estate and was one of the earliest enterprises involved in commercial real estate in China. In the following 20 years, Wanda Commercial expanded rapidly and has now developed into a national commercial real estate enterprise.

In 2014, Wanda Commercial was listed on the Hong Kong stock market, but the stock price was unsatisfactory after the listing, and Wang Jianlin believes that the company's commercial value is seriously undervalued.

Two years later, Wanda Commercial was delisted from Hong Kong and signed a VAM agreement, promising to complete the A-share listing by August 31, 2018, but the final listing plan did not materialize.

In January 2018, Wanda Commercial introduced strategic investors, and four shareholders, Tencent, Suning, JD.com, and Sunac, acquired 14% of the shares held by investors when it was delisted in Hong Kong for 34 billion yuan.

According to the agreement signed at that time, Wanda Commercial Management will complete the A-share listing by October 31, 2023 at the latest.

Due to the difficulty of real estate enterprises in A-share listing and financing, Wanda Commercial was split into Wanda Commercial Management and Wanda Real Estate.

In February 2018, Wanda Commercial announced that it would change its name to Wanda Commercial Management in order to implement the company's development strategy, and its business scope includes real estate development and sales, investment and management of commercial service facilities.

In addition to changing its name to establish a commercial management group, Wanda Commercial Management has carried out a "de-real estate" asset-light business model. It is no longer engaged in new real estate development and sales and has become a pure commercial property holding and operation manager, resulting in higher market valuations.

Wanda Commercial Management's "asset-light" development model is invested by a third party, Wanda is responsible for site selection, design, construction, investment and management, using the Wanda Plaza brand and commercial information management "Huiyun" system, and the rental income is shared proportionally between the investor and Wanda.

Among the three core businesses of Wanda Commercial Management, the hotel operation business was gradually divested after most of it was sold to R&F, and the revenue from real estate sales was also decreasing year by year due to the "de-real estate" strategy.

In March 2021, Wanda Commercial Management withdrew its A-share listing application, and subsequently established a subsidiary Zhuhai Commercial Management with asset-light commercial operations, and introduced more than 10 investors through the transfer of part of the equity of Zhuhai Commercial Management during the same period, and submitted an application for listing on the Hong Kong Stock Exchange.

According to the investor agreement, Wanda Commercial Management must complete the listing by the end of 2023 at the latest, and the company's actual net profit from 2021 to 2023 must not be less than 5.19 billion yuan, 7.43 billion yuan and 9.46 billion yuan respectively, otherwise share repurchase or cash compensation will be carried out.