Wanda'S Self Rescue In The Post Crisis Era: Completing Business Sorting And Losing The Scale Bonus

Last weekend, Wanda Group held its annual meeting in 2019. Unlike previous years, Wanda did not release details about the annual meeting, but its two messages still caused concern.

In twenty-first Century, the economic report was informed that after the complicated and arduous work and the huge cost of stripping, Wanda business management group completed the stripping of the real estate business at the end of 2019. At this point, Wanda Commercial Management of the remaining real estate business all handed over to Wanda real estate group, and Wanda business management to become a real sense of commercial operation and management enterprises, that is, light asset company.

In 2019, Wanda business management group achieved an income of 43 billion 480 million yuan, achieving a target of 100.3%. Rental income of 38 billion 480 million yuan, an increase of 17.8% over the same period, of which light assets rental income grew 43.9% over the same period last year. There are 62 new development Wanda Plaza (including 4 commercial centers), among which 40 are light assets.

Wanda, as one of the four major business groups of Wanda Group, is responsible for landing the capital market. According to the information of the SFC, the company's listing application was accepted in September 2015, and the audit status is still in the "feedback".

But it is still of great significance to complete the stripping of the real estate business. Analysts believe that after experiencing the liquidity crisis from 2017 to 2018, Wanda has been implementing self-help. At present, asset sorting has come to an end, and light asset strategy has also been effective. However, from the perspective of traditional real estate, Wanda's scale growth is weak, and the ranking decline is inevitable.

The pace of listing will accelerate.

Wanda business management predecessor is Wanda commerce. In December 2014, Wanda business, which was made up of a large number of domestic commercial real estate projects, was listed on the HKEx and became the largest IPO in Hong Kong stock. By September 2016, the company formally completed privatization and sought to be listed on A shares.

For the reason of "back to A", Wang Jianlin, chairman of Wanda Group, has made many statements that Wanda's commercial valuation is low, and that A is due to consideration of market value management.

However, as the A share market has strict regulatory requirements for the financing of real estate enterprises, Wanda business needs to first complete the stripping of the real estate business, and then apply for the light assets company to get greater opportunities.

In early 2017, Wanda Group announced the full implementation of the strategy of "light assets", aiming at reducing the scale of capital occupied, increasing liquidity and making the company develop better. The so-called "light assets", that is, Wanda investment funds not out of the project, only export brands, and responsible for the design, construction and operation, and the proceeds.

But then, Wanda's liquidity crisis broke out. In July 2017, Wanda business transferred 77 hotels to Fuli at a price of 19 billion 906 million yuan, transferring 91% equity of the 13 Wen brigade projects to 43 billion 844 million yuan, and two transactions total 63 billion 750 million yuan. Since then, Wanda has also sold overseas real estate projects and other assets.

After the "century deal", Wanda's strategy of light assets increased further and became more firm. To this end, Wanda Commercial not only introduced strategic investors, but also formally launched asset mobilization.

In January 29, 2018, Tencent, as the main sponsor, signed a strategic investment agreement with Beijing Suning, Jingdong, Rong Chuang and Wanda business in Hongkong. It plans to invest about 34 billion yuan to acquire about 14% of the investors when Wanda Commercial H-share delisted. At the same time, Wanda business changed its name to Wanda business management group and withdrew from real estate development business.

Wanda real estate group, which was founded in that year, continued to develop Wanda Plaza heavy assets and other real estate businesses.

So far, Wanda Group has formed four major business segments: business management group, cultural group, real estate group, investment group. Among them, business management group and real estate group are engaged in real estate related businesses. Their operation modes are light assets and heavy assets.

Wanda said that in recent 3 years, Wanda's "light assets" strategy has achieved remarkable results, and by the end of 2018, it has opened 23 light assets. Of the 43 Wanda Plaza opened in 2019, 29 were "light assets". Of the 50 Wanda Plaza planned to open in 2020, 37 are light assets. Of the 133 Wanda Plaza under construction, 107 are light assets.

At the same time, Wanda hotels in recent 3 years are all "light assets" projects. Wanda has now announced the "Wen Li" project, with the exception of 2 projects, all of which are "light assets" projects. Wanda sports events in China are all "light assets".

Yan Yuejin, director of the think tank center of Shanghai Yi Ju Real Estate Research Institute, told the twenty-first Century economic report that Wanda's asset sorting work has basically been completed, and the business lines are more clear. Among them, after stripping the real estate business, the listing of Wanda business management is likely to accelerate.

Scale lag is inevitable.

But in terms of foreign investment, Wanda began to become prudent after losing blood.

According to incomplete statistics of the twenty-first Century economic report, from September 2018 to May 2019, Wanda has successively landed four places in Yanan, Lanzhou, Chaozhou and Shenyang. The total contracted investment has exceeded 150 billion, most of which have been invested in the cultural tourism projects. From the size of the cultural tourism project and the scale of individual investment, it seems to have returned to the level before the "century deal".

Among them, in May 15, 2019, the Shenyang municipal government and Wanda Group signed a comprehensive strategic cooperation agreement. Wanda will reinvest 80 billion yuan on the basis of its investment of 25 billion yuan, covering projects including 4000 yuan of cultural tourism projects, hospitals, schools and 5 Wanda Plaza.

But after this round of investment, Wanda's actions in the brigade seem to be stagnant, and so far, no new travel projects have been acquired. Yan Yuejin pointed out that there are multiple factors affecting this: first, Wanda's foreign investment ideas are more cautious; secondly, due to the massive loss of personnel, Wanda restarted the cultural tourism project.

But Yan Yuejin still believes that the financial pressure of Wanda has eased significantly. From the perspective of investment in 2019, business, cultural tourism, culture, sports and other businesses have been promoted, indicating that the company is gradually coming out of the trough.

But the cost is stalling.

In the 2017 of "Century Trading", the assets of Wanda Group calculated by cost method were 700 billion yuan, down 11.5% from the same period last year. In 2018, Wanda Group's assets were 625 billion 730 million yuan, down 11.5% compared with the same period last year.

As the main focus of light asset strategy, the scale of Wanda's real estate business has dropped sharply, or even missed the bonus of the real estate market. According to the data of Shanghai Yi Ju Real Estate Research Institute, the sales amount of real estate in Wanda reached 56 billion 700 million in 2019, ranking fifty-eighth in the domestic housing enterprises.

In the current round of the real estate market "boom" before 2015, Wanda sales amount of 151 billion 260 million yuan, ranking fourth.

You can't have both fish and bear's paw. Yan Yuejin believes that with the increasingly fierce competition in the real estate industry, Wanda is almost impossible to restore the scale of the past, and its ranking in the industry is also difficult to rise again. But from the perspective of transformation, Wanda can be regarded as one of the sample housing companies in the light of asset strategy in China. In the future market adjustment, this will help to enhance the company's risk resistance and maintain the stability of its performance.