Wanda Core Property Is Being Hit By Electricity Suppliers: Debt Rate Continues To Rise
With the Alibaba landing on the New York stock exchange in September this year, Mawoon Edo ranked the top of the mainland rich list.
However, the throne of the richest man in the mainland is afraid that he will soon give over to others.
In September 16th, Wang Jianlin's Dalian Wanda Commercial real estate Limited by Share Ltd (hereinafter referred to as "Wanda Commercial real estate") disclosed the listing plan at the HKEx.
Media reports said Wanda Commercial Real Estate fund-raising scale from 5 billion to 6 billion U.S. dollars, the company's total valuation of 50 billion dollars up and down.
According to the 64.41% stake held by the Wang Jianlin family, the shares of the Wang Jianlin family will be worth more than US $20 billion, which is likely to surpass Ma Yun, who has just over 20 billion dollars with Alibaba listing, becoming the new richest person in the mainland of China.
This seems to be a lively battle for the richest man in the mainland of China.
But the purpose of Wang Jianlin's listing seems not to run to the richest man.
Wang Jianlin, chairman of Wanda Group, said in an internal speech this year that this year's goal is to push the listing of two major companies. Its main purpose is to let the outside world see the pparency of Wanda.
The prospectus reveals that the debt ratio of Wanda Commercial real estate is rising and its profitability is mediocre.
In addition, Wanda's marketing mode is also encountering the impact of Internet business boom and property market cooling.
Wanda Commercial real estate profit is equivalent to Vanke.
Indebtedness keeps rising
In the 800 page IPO prospectus issued by HKEx, Wanda Commercial real estate is not yet known in terms of the number of shares allocated and the amount of funds raised.
However, the prospectus seems to be trying to describe an attractive blueprint for investors.
The prospectus first mentioned that as of June 30, 2014, Wanda Commercial real estate had 178 property projects in 112 cities in 29 provinces of the mainland, with a total construction area of 93 million 500 thousand square meters, including 14 million 700 thousand square meters of completed investment properties, 2 million 100 thousand square meters of hotels and 76 million 700 thousand square meters of land reserve.
In these 178 property projects, there are three types of projects. One is investment property that is held for a long time and used for leasing. One is the development of sales property, including residential, commercial apartments and other sales properties, and another is the hotel industry.
As of June 30, 2014, the total investment of the completed investment properties reached 14 million 700 thousand square meters, including 10 million 200 thousand square meters of shopping centers. The sales volume of commercial and residential sales in 2011 was 90 billion 200 million yuan, sales in 2012 were 101 billion 200 million yuan, sales in 2013 were 126 billion 400 million yuan, sales in 2014 first half were 56 billion 700 million yuan, and as of June 30, 2014, 48 hotels had been completed.
Wang Jianlin and Ma Yun are the richest people in mainland China?
According to the listing plan, Wanda Group only packaged and listed its commercial real estate, and the Movie Theatrical and cultural tourism projects of Wanda Group were not among them.
According to media reports, commercial real estate is Wanda Group's strong profitability business.
In 2013, the total income of Wanda Group was 186 billion 640 million yuan, of which the total income of commercial real estate was 145 billion 620 million yuan, while the total number of cultural groups, theaters and KTV that were not included in the listed companies amounted to less than 30 billion yuan.
However, the profitability of Wanda Commercial real estate is not outstanding because of the overall profitability of the local industry.
Prospectus shows that the first half of Wanda Commercial real estate revenue was 23 billion 250 million yuan, net profit of 4 billion 920 million yuan, profit margins close to 20%, in the industry in the upper and middle levels.
In the first half of last year, the net profit of Wanda Commercial real estate was 10 billion 90 million yuan, while the net profit of Wanda Commercial Real Estate dropped 50% in the first half of this year.
The 2014 semi annual report released by 000002.SZ, the leading housing company, showed that net profit attributable to shareholders in the first half of 2014 was 4 billion 810 million yuan, an increase of 5.6% over the same period last year of 4 billion 560 million yuan.
Hongkong real estate listed in Longhu real estate announced that in the first half of 2014, the profit attributable to shareholders (i.e. net profit attributable to shareholders) was 4 billion 10 million yuan, an increase of 4.2% over the same period last year.
Wanda Plaza
Prospectus also shows that as of June 30, 2014, Wanda Commercial Real Estate payable amounted to 144 billion 900 million yuan, in addition to 172 billion 300 million yuan of bank loans and other liabilities.
Its debt ratio is rising. The debt ratio of Wanda Commercial real estate is 47.4% in 2011, 45.9% in 2012, 49.4% in 2013 and 51.6% in 2014.
The reporter noted that in recent years, the current liabilities of Wanda Commercial real estate also surged rapidly. As at June 30, 2014, its current liabilities were still 219 billion 300 million yuan, and up to July 31, 2014, its current liabilities had been 232 billion 800 million yuan, and the current liabilities increased by 13 billion 500 million yuan in one month, exceeding the full profit of Wanda Commercial Real Estate in the first half of the year, while its current liabilities rate remained above 90%.
Some analysts suspect that such a high debt will bring pressure on the capital turnover of Wanda Commercial real estate.
If there was any pressure on the Wanda's capital chain, the reporter tried to interview Wanda Group, but it did not receive the Wanda Group's response before it was issued.
Core property is encountering
Online retailers
To attack
Wanda Commercial Real Estate prospectus shows that Wanda Plaza is the core investment property of Wanda Commercial real estate. In Wanda Plaza, the shopping center facing the retail market is the most important property type.
For the purpose of raising funds, 90% of the proceeds will be used for financing 10 property development projects, including Guangyuan Wanda Plaza, Harbin Hanan Wanda Plaza, Wuhai Wanda Plaza, Fuyang Wanda Plaza and so on, while the remaining 10% will be used for company operation funds or other general corporate purposes.
Yan Yuejin, a researcher at Shanghai Yi Ju Real Estate Research Institute, said that for this holding type of investment property, the possibility of its asset depreciation mainly comes from operational risks. The current impact on the operation of traditional shopping centers is the rise of e-commerce.
In a valuation report to Wanda, the famous real estate research institute, DTZ, said that the consumption of online shopping increased at an alarming rate every year. Its trading scale increased from 460 billion yuan in 2010 to 1 trillion and 850 billion yuan in 2013. The traditional retail industry is being affected by the development of e-commerce.
Reporter in
Beijing
Wanda Plaza, Wuhan Wanda Plaza and other projects have learned that only theaters and restaurants are relatively hot, and clothing, shoes and hats and other shopping areas are few and far between.
In view of this situation, Wanda is also seeking change.
At the half year working conference in 2014, Wang Jianlin said that he was looking forward to the electricity supplier. In 2013, he demanded that all executives should have Internet thinking and electricity supplier's thinking, and let Wanda's electricity supplier be developed. All Internet resources should be given to the electricity supplier company.
By 2020, Wanda will form five major business segments: real estate, cultural tourism, finance, retail and e-commerce.
Wang Jianlin also proposed that the Wanda electricity supplier should be pushed to the market as soon as possible, so that people can see the physical image of Wanda electricity supplier and find a profit model.
In August of this year, Wanda has worked strategically with Baidu and Tencent. The three party invested in building Wanda electricity supplier, the first phase of Wanda electricity supplier investment is RMB 5 billion yuan, Wanda holds 70% stake, Baidu and Tencent hold 15% equity interest, and are still pushing ahead.
Wang Jianlin revealed that the total investment in the future will exceed 20 billion yuan.
Sale of rent in the mode of property market downturn
As a main type of holding property, on the one hand, we need to invest a large amount of capital on one hand. On the one hand, we must face all kinds of risks brought by the impact of the electricity supplier. How do we resolve this risk?
In response, Wanda Commercial Real Estate said in its prospectus that its revenue came mainly from property sales. Since 2011, more than 70% of its revenue has come from sales and sales properties, with 70.1% of its revenue coming from property sales in the first half of 2014.
Reporters visited found that in Wanda urban complex projects, in addition to the configuration of holding investment properties, generally also configured residential, commercial sales properties, such as Wuhan Wanda Plaza near Wanda development of residential, commercial housing and other properties.
Yan Yuejin said that this is a typical development mode based on the sale of rent, that is, because Wanda's holding type investment property is large investment and the rent repayment period is long, it needs to occupy more funds, and the residential and commercial sales property realisation is fast. Through the sale of residential and commercial property, it can guarantee the development of the holding type investment property, but this mode also has certain risks. Especially since this year, the adjustment of the economic and real estate market, the residential and commercial property sales are cold, and the mode of selling the rent is bound to face challenges.
According to the data released by the National Bureau of statistics, from 1 to August this year, the area of commercial housing sales was 649 million 870 thousand square meters, down 8.3% from the same period last year. The residential sales area decreased by 10%, the sales area of office buildings dropped by 8.9%, and the sales volume of commercial housing reached 41661 billion yuan, a decrease of 8.9%, of which 10.9% of residential sales fell, and sales of office buildings dropped by 19.5%.
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