Wang Jianlin let go, Shanghai Ruyi "takes over" Wanda Film

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On December 6, Wanda Film, which was temporarily suspended, issued a notice on the planning of the change of control rights, saying that the company’s indirect controlling shareholder, Beijing Wanda Cultural Industry Group, and the actual controller, Wang Jianlin, planned to transfer the 51% equity of the company’s controlling shareholder, Beijing Wanda Investment Co., Ltd. (hereinafter referred to as Wanda Investment), to Shanghai Ruyi Investment Management Co., Ltd. (hereinafter referred to as Shanghai Ruyi). If the matter is finally completed, it will lead to the change of the company’s actual control rights.

Since the beginning of this year, Wanda Investment has transferred shares several times. The outside world speculates that this may be related to Wanda Commercial Management. The prospectus submitted by Zhuhai Wanda Commercial Management shows that if the listing cannot be completed by the end of 2023, the issuer needs to pay about 30 billion yuan to the pre-listing investors for share repurchase.

Now, with less than a month to go before the agreed deadline, it is no small challenge to negotiate an extension with investors or raise funds to repay the money.

Shanghai Ruyi "takes over" Wanda Film

In fact, the story of Wanda Film and Shanghai Ruyi is not just beginning. On July 23 this year, China Ruyi Holdings Co., Ltd. (hereinafter referred to as "China Ruyi") announced that Shanghai Ruyi (the company’s controlled structural entity) bought 49% of Wanda Investment for 2.262 billion yuan, becoming the company’s second largest shareholder. At the same time, Ruyi indirectly holds 9.8% of Wanda Film’s shares.

China Ruyi said that after the completion of the equity transfer, although Shanghai Ruyi will directly hold 49% of the shares of Wanda Investment, Shanghai Ruyi currently has no intention of appointing directors of Wanda Investment, nor does it intend to participate in its daily operation and management. Wanda Investment will not be a subsidiary of China Ruyi, and its financial results will not be incorporated into China Ruyi’s consolidated financial statements.

According to Wanda Film’s third quarterly report, Wanda Investment is the controlling shareholder of Wanda Film, directly holding a 20% stake in Wanda Film.

Dahe Finance Cube reporter checked the industrial and commercial information and found that at present, Wanda investment is held by Shanghai Ruyi, Beijing Hengrun Enterprise Management Development Co., Ltd., Beijing Wanda Cultural Industry Group Co., Ltd., and Wang Jianlin, respectively. 49%, 29.8%, 20%, and 1.2% of the shares.

Due to the fact that Beijing Hengrun Enterprise Management Development Co., Ltd. and Beijing Wanda Cultural Industry Group Co., Ltd. are both affiliated with Wang Jianlin, Wang Jianlin actually controls 51% of Wanda’s investment, thereby indirectly controlling Wanda Film.

If this transaction is implemented, Wang Jianlin will transfer 51% of Wanda Investment to Shanghai Ruyi, and Shanghai Ruyi will control 100% of Wanda Investment, thereby effectively controlling Wanda Film.

Shanghai Ruyi is a wholly-owned subsidiary of Hong Kong-listed China Ruyi, with Ke Liming and Zhang Guoliang holding 99% and 1% respectively. The predecessor of Shanghai Ruyi is Hengteng Network, a joint venture established by Evergrande and Tencent. In 2020, Hengteng Network completed the acquisition of Ruyi Pictures; in 2022, Hengteng Network was renamed China Ruyi. In recent years, he has produced many popular film and television works such as "Hello, Li Huanying", "Send You a Little Red Flower" and "Langya List".

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Transfer of equity three times within a month

Before introducing Chinese Confucianism, Wanda Film had transferred shares twice in a month.

On July 11, Wanda Film announced that Wanda Film, the controlling shareholder of Wanda Film, intends to transfer its shares 180 million shares to Lu Lili through the transfer agreement, accounting for 8.26% of the company’s total share capital, and the transfer price is 12.07 yuan/share.

Immediately after, on July 17, Wanda Film once again issued an announcement saying that Wanda Investment intends to transfer its holding of Wanda Film unlimited sale conditions 177 million shares to Shenzhen Rongzhi, accounting for 8.14% of Wanda Film’s total share capital, and the transfer price is 13.17 yuan/share, and prompts that the transfer of the agreement is a share transfer between the company’s controlling shareholders and their concerted actors, which does not involve the situation of increasing or reducing the company’s shares to the market, and will not lead to changes in the company’s controlling shareholders and actual controllers.

A week later, Shanghai Ruyi bought 49% of Wanda Investment’s shares. Wanda Film’s July 23 announcement on the change of indirect controlling shareholders’ equity shows that after the relevant equity changes with Shanghai Ruyi are completed, Shanghai Ruyi indirectly holds 214 million shares of the company through Wanda Investment, accounting for 9.8% of the company’s total share capital. At the same time, Wanda Culture Group indirectly holds 222 million shares of the company through Wanda Investment, accounting for 10.2% of the company’s total share capital. Wanda Culture Group and its concerted actors directly and indirectly hold 460 million shares of the company’s shares, accounting for 21.1% of the company’s total share capital. Wanda Film’s controlling shareholder is still Wanda Investment, and Wang Jianlin is still the actual controller of Wanda Film.

Why did Wang Jianlin shoot Wanda Films?

In 2015, Wanda Cinema was successfully listed on the Shenzhen Stock Exchange and became the first stock of our country’s cinema chain. In 2017, Wanda Cinema was officially renamed Wanda Film. Wang Jianlin opened up the film industry production and distribution and cinema chains, and the goal of fully covering the entire film industry chain began to appear.

Four years before listing, Wanda Film achieved a net profit of 5.363 billion yuan, which can be described as a real "cash cow" in Wang Jianlin’s hands.

But in 2018, Wanda Film’s net profit declined; in 2019, the acquisition of Studios, Time Network, Muwei Fashion (renamed Beijing Wanda Media), and Propaganda GEM Ltd totaled 5.90 billion yuan, and Wanda Film’s net profit further declined. During the epidemic, Wanda Film, which is deployed upstream and downstream of film and television, suffered "two losses" in content and theaters. In 2022, among many listed film and television companies, Wanda Film suffered the largest loss, reaching 1.923 billion yuan.

In 2023, the film industry will experience a strong recovery, especially during the summer and National Day holidays, which far exceeded expectations.

Wanda Film’s third quarterly report shows that in the first three quarters of this year, Wanda Film’s operating income was about 11.347 billion yuan, an increase of 46.98% year-on-year; the net profit attributable to shareholders of listed companies was about 1.114 billion yuan, and the net profit attributable to shareholders of listed companies excluding non-recurring profits and losses was about 1.103 billion yuan; the net cash flow generated by operating activities was about 3.796 billion yuan, an increase of 127.69% year-on-year. From January to September 2023, the company’s domestic theaters achieved box office of 6.22 billion yuan (excluding service fees), an increase of 67.6% year-on-year, an increase of 5.2% over the same period in 2019. From July to September, the company’s domestic theaters achieved a box office of 2.57 billion yuan (excluding service fees), an increase of 102.1% year-on-year, an increase of 21.2% over the same period in 2019, and the overall performance was better than the industry average.

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%.

Although Wanda Film’s performance is recovering rapidly, Wanda Film’s share price is still at a historical low. Some industry insiders believe that in order to deal with the crisis, Wang Jianlin can only "fire-sell" high-quality assets. As of December 6, Wanda Film’s share price was 12.45 yuan/share.

In the Wanda business management matters, Wanda had earlier signed a gambling agreement with investors, Zhuhai Wanda Business Management to complete the listing by the end of 2023, otherwise Wanda needs to repay investors more than 30 billion yuan of equity repurchase money.

Although Wanda Commercial Management is seeking opinions from investors, it plans to postpone the IPO time to 2026 at the latest, and postpone the repayment of 30 billion yuan in equity repurchase funds, etc., but there is no new progress in the negotiation results between Wanda and investors.

Top News · Dahe Financial Cube, reporter Xu Jiao

Original title: Wang Jianlin let go, Wanda Film will change hands