38 billion yuan! Wang Jianlin’s ＂crisis＂ lifted

On December 12, the official website of Dalian Wanda Group announced that PAG and Dalian Wanda Commercial Management Group jointly announced the signing of a new investment agreement. PAG will cooperate with other investors to reinvest in Zhuhai Wanda Commercial Management after its investment redemption period expires in 2021.

Existing investors invested about 38 billion yuan in Zhuhai Wanda Commercial Management in August 2021, of which PAG’s investment is about 2.80 billion US dollars (about 18 billion yuan), and existing investors enjoy redemption rights in the original investment arrangement.

For the listing issue that is concerned by the outside world, the new investment will no longer have a gambling agreement. This means that the pressure of Wanda’s listing and gambling has been "eliminated" before the deadline for Zhuhai Wanda Commercial Management to list in Hong Kong.

According to the information disclosed in the previous prospectus, the institutional investors of Zhuhai Wanda Commercial Management include Zheng Yutong Family, Country Garden, CITIC Capital, Ant Financial, Tencent, Pacific Alliance Investment Group and 22 others. Among them, some investors have signed a gambling agreement with Wanda Commercial Management. According to the agreement, Zhuhai Wanda Commercial Management needs to complete the listing by the end of 2023, otherwise it will pay investors an equity repurchase at an annual internal rate of return of 8%. It is reported that the repurchase payment will reach 30 billion yuan.

However, due to the weak environment in the Hong Kong stock market, the listing of Zhuhai Wanda Commercial Management has been delayed repeatedly. And as the "limit" of gambling is approaching, this new investment agreement can be described as solving Wanda’s "urgent needs".

But Wanda will also pay a high price for this – losing the absolute controlling stake in Zhuhai Wanda Commercial Management.

According to the new agreement, Dalian Wanda Commercial Management holds 40% of the shares, making it the single largest shareholder. Several existing and new investors such as Pacific Alliance participated in the investment, and held a total of 60%. Previously, Dalian Wanda Commercial Management directly owned about 69.99% of the total issued shares of Zhuhai Wanda, and indirectly owned about 8.84% of the total issued shares through Zhuhai Wanxin, Zhuhai Wanying and Yinchuan Wanda; 22 companies and six executives held 21.15% of the shares.

After the signing of the new agreement, the shareholding ratio of Dalian Wanda Commercial Management Group in Zhuhai Wanda Commercial Management decreased by at least 29.99%, while the shareholding ratio of the aforementioned investors increased by 38.85%.

It is reported that Zhuhai Wanda Commercial Management currently manages 494 large commercial centres in 227 prefecture-level and above cities across the country. In the past two years, the number of commercial centres managed by Zhuhai Wanda Commercial Management has grown from 417 to 494, an average annual growth rate of about 9%. Zhuhai Wanda Commercial Management is now the world’s largest commercial management company in terms of commercial area under management.

Since existing investors invested in 2021, Zhuhai Wanda Business Management has exceeded its performance targets for three consecutive years. After-tax income in 2021 is 23.50 billion yuan, 27.10 billion yuan in 2022, and 29.30 billion yuan in 2023 (estimated), with an average annual growth rate of about 12%. After-tax profit in 2021 is 5.30 billion yuan, 7.50 billion yuan in 2022, and 9.50 billion yuan in 2023 (estimated), with an annual growth rate of 34%. In the past three years, the company has paid a total of about 10 billion yuan in taxes, and dividends to shareholders are 4.60 billion yuan in 2021, 6.70 billion yuan in 2022, and 8.50 billion yuan in 2023 (estimated).

Wanda said that Wanda will work with important shareholders such as Pacific Alliance to further optimize the corporate governance of the company, maintain the stability of the management team, and jointly support the long-term development of the company. The new agreement reflects investors’ high recognition of the growth potential of Zhuhai Wanda Commercial Management and its operating capabilities.

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On the evening of December 12, Wanda Film officially announced that it was no longer Wang Jianlin’s company.

Wanda Film joint stock company (hereinafter referred to as Wanda Film) announced that Wanda Film indirectly holds Beijing Wanda Cultural Industry Group Co., Ltd. (hereinafter referred to as Wanda Cultural Group) and its wholly-owned subsidiary Beijing Hengrun Enterprise Management Development Co., Ltd. (hereinafter referred to as Beijing Hengrun), the actual controller of the company Wang Jianlin and Shanghai Ruyi Investment Management Co., Ltd. (hereinafter referred to as Shanghai Ruyi) signed the "Equity Transfer Agreement", which intends to transfer 20%, 29.8% and 1.2% of the equity held by Wanda Investment (a total of 51% equity held by Wanda Investment) to Shanghai Ruyi, with a total transfer price of 2.155 billion yuan.

The announcement shows that as of the disclosure date, Wanda Investment holds 435,873,762 shares of Wanda Film, accounting for 20% of the company’s total share capital, and is the controlling shareholder of the company. If the above transaction is finally implemented, Shanghai Ruyi will hold 51% of Wanda Investment. Ke Liming is the actual controller of Shanghai Ruyi and will indirectly control 20% of Wanda Film through Wanda Investment. The actual controller of the company is changed from Wang Jianlin to Ke Liming.

After this transaction, Wang Jianlin indirectly controls 10.9% equity of Wanda Film through Wanda Culture Group, Shenxian Rongzhi Xingye Management Consulting Center (Limited Partnership), and Lin Ning.

Wanda Film also disclosed that the company’s shares will resume trading from the opening of the market on December 13, 2023 (Wednesday). Previously, due to the planning of the change of control, trading will be suspended from the opening of the market on December 6, 2023 (Wednesday).

It is reported that Wanda Film achieved operating income of 11.347 billion yuan in the first three quarters of 2023, an increase of 46.98% year-on-year; realized net profit of 1.114 billion yuan. Among them, the third quarter realized operating income of 4.479 billion yuan, an increase of 60.97% year-on-year; realized net profit of 692 million yuan, an increase of 1340.97% year-on-year.

According to Beacon data, as of September 30, 2023, Wanda Film had 877 theaters and 7,338 screens in operation in China, including 709 directly-operated theaters and 6,159 screens, 168 light-asset theaters and 1,179 screens. The company’s cumulative market share in the first three quarters was 16.5%.

According to public information, Shanghai Ruyi is an agreed controlled subsidiary of China Ruyi (HK0136), which holds 100% of the actual interests of Shanghai Ruyi, and Ke Liming, chairperson of the board of directors of China Ruyi, holds 99% of the shares of Shanghai Ruyi.

China Ruyi, formerly known as "Hengteng Network", was jointly funded by Evergrande and Tencent. After Evergrande withdrew its investment in November 2021, Tencent went on to become the majority shareholder of China Ruyi through three rounds of additional issuance. Currently, Tencent Holdings (0700.HK) holds a 19.12% stake in China Ruyi through a wholly-owned subsidiary Water Lily.

The withdrawal of real estate leaders from film and television investment and the takeover of Internet Tech Giants are also regarded by the industry as a landmark acquisition event in the Chinese cinema industry. In the film and television industry, China Ruyi has carried out related business development with its subsidiary Ruyi Film as the main body. Although it is not well-known outside the film and television industry, Ruyi Film has also participated in the production of popular films such as "To Our Dying Youth", "Send You a Little Red Flower" and "Walking Alone on the Moon".

■ Integrated from the official website of Dalian Wanda Group Inc., Ltd., 21st Century Business Herald, Securities Times, Global Times, Red Star Capital Bureau, Daily Economic News, Shenzhen Business Daily

Editing: Yue Yue