Wanda Films was "sold off", and China Confucianism, backed by Tencent, took over.
Text: Daily Financial Report Lv Mingxia.
At the end of the year, under the pressure of liquidity, Wanda Films (002739SZ) is going to "change the door".
According to the announcement issued by Wanda Film at noon on December 6, Wang Jianlin, the actual controller of Beijing Hengrun Enterprise Management and Development Co., Ltd., a wholly-owned subsidiary of Beijing Wanda Cultural Industry Group, the indirect controlling shareholder of the company, intends to transfer 51% of the equity of Beijing Wanda Investment to Shanghai Ruyi Investment Management after the news is announced, China Ruyi (00136HK) soared 9% at one point.
As we all know, Wanda Film has been the leading domestic cinema chain for a long time, has always been the core asset of Wanda, and is also the "big brother" of A-share film companies. Now it has been "sold" by Wang Jianlin.
Why did Wang Jianlin decide to sell Wanda Films?Buying a 51% stake in Wanda Investment at one time, what is the origin of China Confucianism?Become the focus of market attention.
Tencent has transferred shares several times this year
This deal with China's Confucianism has been foreshadowed for a long time. Since the beginning of this year, Wanda Film has undergone several equity changes. According to the 2022 annual report, Wanda Investment directly holds 3899% shareholding.
In March, Wanda Investment Concerted Action Person Wanda Culture Group, through the block trading system, ** its holdings of Wanda Films 4356530,000 shares, accounting for 1999%。In April, Wanda Investment announced a plan to offer no more than 65.38 million shares of Wanda Film, accounting for 3% of the company's total share capital.
In July alone, Wanda Film issued relevant announcements three times. On July 11, Wanda Film announced that its controlling shareholder, Wanda Investment, intends to transfer its shares in the company to Lu Lili through an agreement transfer1800 million shares, accounting for 826%, and the transfer of this share transfer** is 2172.6 billion yuan. After the completion of the transaction, Lu Lili became the second largest shareholder of Wanda Films.
On July 18, Wanda Film announced that Wanda Investment intends to transfer its unrestricted tradable shares of Wanda Film to Shenxian Rongzhi7.7 billion shares, accounting for 814%。
On July 23, Wanda Film announced that Wanda Culture, the indirect controlling shareholder of Wanda Film, intends to transfer 49% of the equity held by Wanda Investment, the company's controlling shareholder, to Shanghai Ruyi.
According to the latest announcement of Wanda Film on December 6, Shanghai Ruyi will once again acquire 51% of the equity of Wanda Investment, which will also lead to Wanda Film changing hands.
Those familiar with the film and television industry are no strangers to the Chinese Confucianism helmed by Ke Liming. With popular film and television dramas such as "Langya Bang", "The Legend of Miyue", "Sewing Machine Band", "Send You a Little Red Flower", "Hello, Li Huanying" and other popular film and television dramas, Ruyi Pictures has risen rapidly and won the favor of capital.
Penetrating China's Ruyi equity structure, the largest shareholder behind it is Tencent. China Ruyi was formerly known as HengTen Network, which was a joint venture between Evergrande and Tencent. In October 2020, HengTen Networks wholly acquired Ruyi Pictures through allotment and issuance of shares, equity subscription, etc., with a total transaction value of approximately HK$7.2 billion (equivalent to approximately RMB6.2 billion at the time).
In November 2021, with the departure of Evergrande, Ke Liming, the actual controller of Ruyi Pictures, became the largest shareholder of HengTen Network, and Tencent Holdings and United Resources Investment Holdings ranked first.
2. The third largest shareholder. In February 2022, HengTen Network changed its name to China Ruyi.
On July 4, 2023, China Ruyi raised HK$4 billion, 90% of which is intended to be used to develop and expand its film and game business. According to the announcement of the Hong Kong Stock Exchange, Tencent, through its subsidiary Waterlily, completed the subscription of new shares of China Ruyi on the same day, and the shareholding ratio rose to 2545%。
Some industry insiders believe that Tencent may take advantage of this move to compete with Ali Entertainment and its Ali Pictures, and both sides have landed in online literature, film and television, streaming, ticketing, etc., and after the completion of the transaction, there is another more cinema advantage.
Debt and gambling pressure are pressing, and assets are sold off to put out fires
Wanda Movies is a high-quality asset among Wanda's assets, why does Wang Jianlin have to endure the pain of love?
According to the data of Maoyan Professional Edition, as of December 6, the total box office of domestic films in 2023 will reach 51.4 billion yuan, much higher than the total box office of about 30 billion yuan in 2022.
According to Wanda Film's financial report, the revenue in the first three quarters was about 1134.7 billion yuan, an increase of 46 percent year-on-year98%；Net profit is about 111.4 billion yuan, even higher than the level of the same period in 2019;Operating cash flow was approximately 379.6 billion yuan, an increase of 127 percent year-on-year69%。
As of September 30, Wanda Film had a total of 877 opened theaters in China, with 7,338 screens, including 709 directly operated theaters and 168 asset-light theaters, with a cumulative market share of 16 in the first three quarters5%, continuing to rank first in the industry.
The sale of high-quality assets is likely to stem from Wanda's current huge financial pressure. In 2021, Wanda withdrew its A-share IPO and sought to list in Hong Kong, and this year is the third year that Wanda has hit the Hong Kong stock IPO, and there is still no definite news. According to the VAM agreements signed between Wanda and 22 institutional investors, if the listing is not completed by the end of the year, Wang Jianlin will need to pay about 30 billion yuan to investors for equity repurchase.
It is reported that Wanda Commercial Management intends to postpone its listing in Hong Kong to 2026 at the longest, and is currently discussing with investors, but the investors refused.
It is worth noting that at present, there are 9 outstanding bonds of Dalian Wanda Commercial Management, with an existing scale of 690.2 billion yuan, of which 18 will expire within one year7.8 billion yuan.
On November 21 this year, Wanda Commercial Management issued an announcement announcing that the repayment period of the US$600 million bond due in January 2024 of its subsidiary Wanda Real Estate International *** will be adjusted to December 29, 2024. The company said in the announcement that the reason for the postponement is that the company is facing certain difficulties in refinancing and needs to reduce liquidity pressure. Including this debt, Wanda Commercial Management has three outstanding US dollar bonds totaling US$1.3 billion, and the other two US dollar bonds will mature on January 20, 2025 and February 13, 2026.
Wanda has at least 5 Wanda Plazas this year. At the end of September, Wanda transferred its Guangxi Beihai Hepu Wanda Plaza to Hepu Wanghe Real Estate, a local real estate company in BeihaiIn October, Wanda Commercial Management transferred 100% equity of Shanghai Wanda Plaza Real Estate.
The intent behind the "takeover".
In recent years, China Ruyi has begun to diversify its layout and enter the online stream and game business, and the company said that China Ruyi has continued to increase its R&D investment in content and copyright since its comprehensive layout of streaming.
The last time the members were announced was at the end of 2021, and the cumulative number of registered members of Pumpkin Movies reached 70.84 million, and the cumulative number of paid subscribers reached 28.68 million.
In addition, China Ruyi has established a game R&D and publishing team, and will increase its layout in game categories and themes in the future, and will focus on the development of head IP cooperation projects. On February 22, Jingxiu Games, a game business brand owned by China Ruyi, renewed its game cooperation agreement with Tencent Computer, and the two sides said that they would further expand diversified cooperation such as game publishing cooperation.
From the layout of increasing investment in businesses such as streaming ** and successively eating shares of Wanda Films, Ruyi is obviously ambitious, and it is likely that he hopes to integrate cinemas, streaming ** and game resources to create a complete set of closed loop of the industrial chain.
However, this model has not yet been run by any company in China. According to the semi-annual report, in the first half of 2023, China Ruyi achieved a revenue of 80.4 billion yuan, an increase of 22 percent year-on-year85%；But net profit turned from a profit to a loss, from 1$4.7 billion decreased to -26.4 billion yuan. According to the announcement, the decline in performance is mainly due to the increase in fixed costs incurred by the company's various sectors in the second half of the year and next year's business development.
It seems that this money-burning game may require more "strategic losses" to play. Will the ambitious Confucianism be the first to be killed?It's worth the wait.