A more terrifying Wang Jianlin

Original, Xie Zefeng, Giant Tide WAVE

Text | Xie Zefeng

Editor | Yang Xuran

Wang Jianlin, who had not been seen in public for a long time, was photographed in Luoyang for inspection. He went to the White Horse Temple, Luoyi Ancient City and other places successively.

Thinking of Wanda’s takeover of the Henan Jianye commercial project last year, it looks like he’s about to go big in Henan. The familiar and mysterious former richest man in China, who has been dormant for many years, seems to be coming back.

In 2017, during the last peak of real estate, Wang Jianlin completely "transformed", sold cultural and tourism assets, and implemented asset light. As we all know, the transformation and asset sale process at that time were full of doubts, rumors and ridicule.

Five years have passed. After surviving with a broken arm, Wanda once fell into a state of shrinking, but it was also lucky to escape in the era of real estate explosion. When Xu Jiayin and Sun Hongbin faced the "autumn of life and death", Wang Jianlin’s career quietly picked up.

Before his appearance this time, some media had already begun to calculate how much rent his Wanda Plaza could receive in a year. While he was named "China’s Strongest Charter Company", it also congratulated him for selling his assets well and paying off his debts early.

In addition to the real estate business, Wanda’s other heavy-duty film market is also rebounding. During the Spring Festival period (the first to the sixth day of the first lunar month), Wanda Film’s total account was 849 million yuan, ranking first in the cinema chain. Wanda Group (New Year’s Eve to the beginning of the *** 80 Wanda ** 160 million passengers, revenue 12.68 billion yuan.

Wang Jianlin frowned in the White Horse Temple. But outside the White Horse Temple, Wang Jianlin was already much more relaxed than most of his peers.

01

Surge, recovery after reboot

"If only I had given less money, I would have set an investment limit."

Three years of pandemic, consumer enterprises suffered the pain of cramps and bones. But once the lockdown was lifted, the recovery of consumption was like a flash flood.

During the Spring Festival, the beaches of Sanya were crowded with "Yangkang" people, and hotel prices soared, still unable to stop people’s enthusiasm for going out; the total box office of the Spring Festival in 2023 6.724 billion, setting a record for the second time in history; the tourism market recovered rapidly, and the number of domestic tourists 308 million, an increase of 23.1% year-on-year…

Wanda Group, which is closely related to the consumption trend, has made a strong comeback and its performance has soared all the way. Data show that Wanda Film’s cumulative comprehensive box office reached 976 million yuan during the Spring Festival (New Year’s Eve to the sixth day of the new year), and the cumulative box office reached 880 million yuan, ranking first among all theater companies.

Moreover, Wanda Film served as a co-producer in "The Wandering Earth 2", and served as the main producer in "Bear Haunting · Accompanying Me", which made a great fortune quietly. By pressing these two films, Wanda’s box office ranked first among all film investment companies.

It can be seen that Wanda has strong competitiveness in both upstream investment and downstream screening.

Especially after three years of epidemic, small-scale and weak cinemas, closed down due to the break of the capital chain, in the new round of industry reshuffle, Wanda’s market share has further increased.

In 2019, Wanda Cinema’s market share of China’s movie box office was 12.76%. In 2022, this figure rose to 17.26%, not only the strong are always strong, but also its downstream channels of Chinese movies has the voice over further enhanced.

At the same time, traffic counting has brought strong purchasing power to Wanda Plaza. According to Wanda’s official announcement, this year’s Spring Festival Eve to the sixth day of the new year, 480 Wanda Plaza passengers across the country 160 million, and sales revenue 12.68 billion yuan – this is only 7 days of data.

It can be seen from the performance curve of the past four years that Wanda Commercial Management has begun to gradually recover after bottoming out in 2020. According to the 2022 Annual Performance Express, Wanda Commercial Management’s total revenue in 2022 was 55.31 billion yuan, an increase of 17.4% year-on-year, rental income was 50.85 billion yuan, an increase of 8% year-on-year, and rent collection was 100% completed.

As Wanda has gone through the darkest moment, Wang Jianlin’s wealth status has also begun to recover. On the 2022 Hurun Rich List, Wang Jianlin regained the top spot in China’s real estate with 100 billion, ranking 32nd on the rich list, and he last topped the throne of China’s richest man in 2016.

As a very special industry, real estate, unlike mineral resources such as lithium nickel cobalt, can escape cyclical fluctuations through changes in the downstream demand side.

"Unlike other industries, property is particularly cyclical and’extremely immutable ‘," says Richard Chan, chairperson of Hang Lung, Hong Kong’s veteran property leader.

But unlike Vanke, Hengda, Sunac, Country Garden and other large real estate companies, Wanda divested the cultural tourism hotel, the e-commerce failed and had no choice but to dissolve, and the financial collapse sank, Wang Jianlin cleaned up his mind and returned to the main business of business management.

At Wanda Group’s 2017 annual meeting, Wang Jianlin admitted defeat. He concluded: "In the past, I always wanted to do scale. If I only did Wanda Plaza and tourist resort from the beginning, I might have made a name for myself long ago." He also said that he made a mistake and gave Qu Dejun too much money. "If only I had given less money, I would have set an investment limit."

At present, Qu Dejun, who has moved to Xincheng Holdings, suddenly lost contact, according to anecdotal sources, or during his tenure at Wanda.

On the other hand, unlike residential real estate, commercial real estate is more suitable for asset-light transformation, and Wanda has long known the value.

Wang Jianlin chose to partner with insurance companies, which have large amounts of capital and seek long-term investment returns. Wanda Plaza in Nanchang West Lake determined that the property belonged to Pearl River Life when the project was signed, and handed over the property rights to Pearl River Life after completion. Wanda is responsible for site selection, construction, brand licensing and day-to-day operations, and the net rent collected is shared with the financiers.

02

Broken arm, the hardest choice

The darkest hour five years ago.

2017 was a crucial watershed year for China’s real estate industry.

This year, Xu Jiayin became the richest man in China with a net worth of 290 billion yuan, and his wealth was almost four times that of the previous year. At that time, the boss Xu was in high spirits: "We want to become the largest real estate company in the world and rank among the top 500 in the world."

Just when Xu Shoufu was complacent, Wang Jianlin was in a dark moment.

Under the strict supervision, Wanda suffered a "double kill of stocks and debts". Lao Wang was only named "the richest Chinese in the world" by Forbes a year ago, and this year he will be exhausted by 420 billion debts. There are even rumors that the "richest man" is actually the "first negative".

On July 19 of that year, Wang Jianlin sold 63.75 billion asset package in one breath, among which Sunac Shun Hongbin won 13 cultural tourism cities for 43.844 billion yuan; R & F Li Silian ate Wanda 77 hotels for 19.906 billion yuan. At the price at that time, Sunac and R & F both picked up big bargains.

The three protagonists of the shocking sale that year

According to rumors, when the signing was approaching, Li Silian did not forget to lower the price, and the angry old Wang threw the cup and quarreled. The signing background board was also repeatedly removed. In the end, Li Silian cut the price of the previous 76 hotels to 60% off, and another hotel became 77.

After that "deal of the century", R & F Properties has 89 hotels, making it one of the largest luxury hotel owners in the world.

According to the transaction details at that time, Wang Jianlin also did not hesitate to lend 30 billion to Sun Hongbin to acquire his cultural tourism assets, which is basically breaking his teeth and swallowing it in his stomach. You know 63.80 billion assets, almost one-tenth of Wanda Group’s total assets in 2016, equivalent to a quarter of the group’s total revenue at that time.

For the overseas assets that regulators are focusing on, Wang Jianlin has made an iron-fisted choice – clearing. The flagship World Ironman in the sports sector; the Vista Tower hotel in Chicago in the United States in the real estate sector; AMC, which has high hopes, has almost all been cleared.

AMC cinema chain was originally a representative of Wanda’s overseas assets

In addition to cultural tourism and hotels, Wanda sold 37 general merchandise stores to Suning and a stake in Wanda Cinema to Alibaba. In this year alone, Wanda "sold off" 130 billion assets.

By the end of 2018, Wanda had reduced its debt by 215.80 billion yuan, about a third less than the previous year’s total debt, and its debt ratio was reduced to a safe line of less than 60%.

After the severed arm survived, Wanda landed smoothly. Wang Jianlin became the most envious person of Xu Jiayin, Li Silian, and Sun Hongbin. Now Evergrande is struggling to survive, R & F is living like a year, and Sunac is in danger.

In 2022, Wang Jianlin began bottom fishing against the trend. In April last year, he joined forces with Hu Baosen, "the first brother of Henan Real Estate", to take over the 10-year operation rights of Jianye’s commercial projects, and Wanda was fully operated. Five months later, two Wanda workshops in Zhengzhou opened at the same time.

In addition, Wang Jianlin also cooperated with Xinyuan Zhang Yong and Shanxi Tian Sen Du Yinwu, and took over the operation rights of Beijing Blue Harbor and Wukesong Zhuozhan Shopping Center.

In addition to the commercial base, Wanda’s residential real estate has also re-started. Wanda Real Estate (residential sector) focuses on the development of Wanda’s commercial periphery, and has been located in Wuhan, Guiyang and other places. "It does not pursue scale, but exists for business management. It digests Wanda Plaza residential facilities every year and maintains sales of tens of billions." As early as 2018, Wang Jianlin repositioned the residential business.

So far in 2017, Wang Jianlin has stayed out of the spotlight, not giving interviews, not making public appearances, and he has become low-key, silent, even a little mysterious. But five years later, China’s top real estate strongman has weathered the storm, become more rational, and his understanding of business has become more transparent, even more "scary".

03

Listing, the last hurdle

The Hong Kong IPO is expected to be completed in the second quarter of 2023.

"I’ve made a lot of investments, and many of my friends have made a lot of money with me. The only one, my friend lost money with me. I can’t feel sorry for my friends and shareholders."

In September 2016, Wanda Commercial, which had been listed in Hong Kong for less than two years, announced that it would be privatized and delisted. Wang Jianlin regarded the low valuation of Hong Kong stocks as "unbearable" for him.

Wang Jianlin, who is loyal, has been looking forward to returning to the capital markets. But the environment has been unfriendly since then. After giving up the class A share listing, Wanda business management went around and experienced many stories during the period.

Until October 2021, it was submitted to the Hong Kong Stock Exchange again, and after the Zhuhai State-owned 3 billion invested in Wanda Commercial Management, Zhuhai Wanda became the main body of the listing.

At present, with the continuous introduction of real estate support policies, it can be said that the time for re-listing is coming. At the roadshow of Wanda Commercial Managed US Dollar Bonds held on February 6, the management said that it is expected to complete the Hong Kong IPO listing in the second quarter of 2023.

This time point coincides with the gambling agreement signed by Wanda and investors. According to the agreement, it should complete the listing before October 31, 2023, otherwise Wanda Commercial Management is obliged to buy back 39.50 billion yuan of shares.

As a listed entity, Zhuhai Wanda Commercial Management also said in the updated prospectus that based on the operating fee model from 2021, "the company’s estimated actual net profit in 2021 has reached the target net profit requirements." This undoubtedly dispelled the anxiety of the capital markets.

Moreover, the latest version of the prospectus from October 25, 2022, the valid period is less than three months.

At present, the valuation level of HaiWanda Commercial Management lies in the recognition of its asset-light capital markets.

In 2019, Wang Jianlin led Wanda Commercial Management to completely divest all real estate businesses. He personally said that "not one square meter is left."

Wanda Commercial Management has officially launched an asset-light transformation, focusing on operation management and emphasizing service attributes. From 2021, Wanda Commercial Management will no longer invest in Wanda Plaza properties, but only engage in brand output, responsible for design, construction and operation, and earn profits.

At present, Wanda’s asset-light business management services are divided into entrusted management models and leasing operation models. The former is that the owner entrusts Wanda to attract investment, operate, and pay a certain service fee; the latter is that the assets of Wanda’s commercial management leasing owners are leased out. Similar to "one landlord" and "two landlords", but in essence, they are both property operations, but they adopt different models.

As of June 2022, 287 Wanda plazas managed by Wanda Commercial Management adopted the entrusted management model, and 45 of the 160 independent third-party commercial plazas adopted the entrusted management model. That is to say, high-value-added entrusted management accounted for more than 78%.

In the first half of 2022, Zhuhai business management revenue 13.48 billion yuan, an increase of 26.7% year-on-year; net profit 4.05 billion yuan, an increase of 517.3% year-on-year. The prospectus explained that the main reason is that the entrusted management fee increased by 2.3 times.

For Wang Jianlin, Wanda Business Manager is the trump card in his hand. After a round of baptism, he will add a golden bell and a safety lock to this trump card.

As of June 2022, Wanda Commercial Management Group’s interest-bearing debt is 35.641 billion yuan, of which about 10 billion yuan will mature at the end of 2023. At present, the group’s book cash is 34.194 billion yuan, and the debt repayment pressure is not high.

The listed entity Zhuhai Wanda Commercial Management’s asset-liability ratio has been reduced from 80.4% at the end of June 2021 to 68.1% at the end of June 2022, and does not consider 2 billion financial restricted funds, holding cash over 15.80 billion.

In terms of valuation comparison, the Hong Kong stock market also favors the asset-light model. Country Garden’s service market value once exceeded that of Country Garden, and China Resources Vientiane Life’s 41 times PE was much higher than that of China Resources Land’s 7 times. And Wanda Commercial Management is a giant in China’s business management field. In the first half of 2022 alone, Zhuhai Wanda’s revenue was 2.6 times that of China Resources Vientiane Life, and its profit was 4 times.

After surviving the life-and-death twists and turns of real estate regulation, Wanda has become more difficult to defeat, and it has also ushered in the best time to go public. For Wang Jianlin, this will be a battle of reputation.

The original title: "A More Terrifying Wang Jianlin | Giant Tide"

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