Wang Mood, the beginning of the third transformation

Wang is in a good mood.

December 23, 2014, 9:30, Wang sounded the HKEx opened the gong, Wanda Business (3699. HK) is listed at HKEx. The world's largest real estate IPO, Hong Kong's largest IPO in nearly three years, and private enterprises in Hong Kong's largest IPO, Wanda Business hit many of the best. A few minutes before the opening, he picked up the hammer in the air, simulate the posture of bell, and smile to let reporters take photos, rare to see him so humorous moment.

Wanda

This moment, Wang waited 10 years. As early as 2005 Wanda planned to go to Hong Kong listing, and then two times in the domestic a-share application listing. 10, there are policy factors, but also on the success of Wanda on the "rental" model to question the factors. As a leading commercial real estate, Wanda's commercial property rental contribution rate is very low, mainly by selling properties. If it is not available, Wanda, without capital support, sits on the barrel of gunpowder, and the Wanda model will always be questioned. And this danger is not ruled out, Wanda Grand Industrial layout has never been a solid foundation.

Over the past 10 years, Wanda has constantly refreshed its understanding of the people. 500 billion of the asset scale, the magnificent diversification of investment and large acquisitions, Wanda is recognized as a traditional industry dominate. Even with the hottest internet companies, Wanda is no less: the core of China's 123-line city is the Wanda complex, which also has a huge online consumer and is expanding its online business. Internationally, the private enterprise Wanda has become a part of China's image, Wang is a very few entrepreneurs in the Western world.

Now, it is difficult to use a sentence to sum up what is a company. "Wanda is a comprehensive platform provider for China's life consumption," Wang said at a news conference on the day of the listing. Wanda evolved from a developer into a platform. This platform has these new businesses: culture, tourism, finance, O2O. Wang said they will become the backbone of the future Wanda industry.

"Given its unique model and connotation, (Wanda listing) is a milestone in the world's big consumer sector." Huang, head of CICC investment banking, said. So what kind of new stories can be told about Wanda after the IPO?

Is Wanda underestimated?

December 23 8:45, Wang from the Four Seasons Hotel Hong Kong, walking to the HKEx, along with the Lu Zhiqiang, MA, Xipei, Chao, Mingzhu and other 30 famous entrepreneurs. They have come to witness Wanda's listing.

"As a veteran who spent 20 years in an investment bank, I have attended countless listing ceremonies, but it is the first time that so many of China's top entrepreneurs have arrived." Huang, head of CICC investment banking, said. Goldman Sachs, UBS, DTZ and many other well-known intermediary agencies to congratulate the attendance of the listing ceremony of the total number of guests close to 100. HKEx chairman Li, CEO Zhou Songgang and all the heads of departments attended, such a grand courtesy not every company can get.

Despite the pomp, Wanda's debut fell below its IPO price – the opening stock surged to a 48.2 Hong Kong dollar high, falling nearly 9% per cent and closing at HK $46.75, down 2.6%. Wanda Choice of the timing is not very good, the day of the stock market plunged, Hong Kong stocks recently also continued to fall, investor sentiment is depressed, and Christmas holiday nearly also affected the transaction activity. Wanda in the capital market setbacks have been more. This year's listing is the best one, and the result is catching up with Hong Kong's ' occupy the event ', which has an impact on the timing of the IPO. Said an executive at Wanda.

"I'm not at all worried about Wanda's share price," an executive at UBS said in a statement to the Economist on the site, "Wanda Business will soon become Hong Kong's Hang Seng index stock, because big investment banks will basically match." "The Hong Kong Hang Seng Index shares are among the most powerful and background companies in Hong Kong and mainland China, such as Hutchison Whampoa, Wharf, China Resources and overseas, and no mainland private enterprises have been selected." He is optimistic about Wanda mode, that Wanda mode can not replicate, although many people imitate, but only Wanda can be made. December 24, Wanda shares rebounded, closing close to HK $48.65, up 4.06%.

According to the Wanda Prospectus, Wanda Commerce's IPO plan is to sell 600 million shares, of which only 30 million shares are publicly available in Hong Kong, with 570 million shares in international placements. A 5.32 times-fold subscription to the Hong Kong public offering, with 8 times times oversubscribed international placements, of which 338 million were subscribed by 11 cornerstone investors, including the Kuwait Investment Authority, China Life, and Ping an asset management. In addition to the luxury shareholder team, Wanda's listing is a direct issue of H-shares, rather than a red-chip market normally issued by private companies. The direct issue of H-shares to circumvent a lot of regulatory policy, do a very cumbersome, so Longhu, Soho and other private real estate companies are listed red chips. This also explains Wanda's energy and strength from the side.

After the listing, Wanda Business Total capital will reach 4.4748 billion shares, at a price of 48 yuan, its total market value of about 171.4 billion yuan, the valuation is significantly lower than the international investment bank valuation. It is understood that most of the internationally renowned investment banks such as Goldman Sachs, Credit Suisse, HSBC and Citigroup are expected to surpass 300 billion yuan in the net worth of commercial assets. So is Wanda undervalued?

can be calculated in an intuitive way: At present, Wanda has 10 Wanda City, each project investment is more than 20 billion, only this one will exceed 200 billion, in addition Wanda has 159 Wanda Plaza, of which 100 have opened. The conclusion that Wanda commercial real estate is grossly undervalued can be reached by simply calculating. But such valuations also have intrinsic reasons.

According to the Wanda Prospectus, in 2011, 2012 and 2013, Wanda commercial real estate revenues were 50.8 billion, 59.1 billion and 86.8 billion, respectively, from property development and sales, rather than property leasing and management. 2013, the property sales revenue accounted for 86.4% of the revenue, property rental and management income accounted for 9.8%, the hotel operating income accounted for 3.7%. But this "to sell the rent" mode premise is the real estate development, the sale business produces the huge cash flow. In 2011, Wanda commercial real estate operations generated a cash flow of 35.9 billion (mainly from property sales), but in 2012, the cash flow from operating activities fell sharply to 11.5 billion, 2013 further down to 6.8 billion, the first half of 2014 had a negative 8.95 billion. In addition, before July 2017, Wanda's construction project still needs to invest 238.9 billion yuan. Wanda Commercial Real Estate also has 144.9 billion payables and a total of nearly 180 billion bank loans and outstanding bonds. Wanda's bank account, which now has 74.8 billion cash, is staggering.

Industry comments, Wanda "to sell the rent" model has been unsustainable, reduced to "to foster rent." It is the uncertainty of the business model transition and the huge funding gap that has dragged down Wanda's valuation.

Relevant sources said, Wang to Wanda valuation, financing amount are not very satisfied. According to the original plan, Wanda plans to finance 4 billion-6 billion dollars, and eventually actually raise 3.7 billion dollars. But not listed Wanda is always Wang Heart. Commercial real estate relies more on capital than housing, and does not solve the problem of capital, Wanda is sitting on the barrel of gunpowder. Domestic real estate financial instruments are very scarce, and the financing cost is very high. Although the listing of financing is not ideal, but Wanda has opened the overseas financing channel, the listing after the international debt to get cheap money is very easy.

Wanda Diversified, international industrial layout is grand. But without capital support, it cannot form a closed loop in value. In addition, the more transparent the greater the security, the external constraints will help it grow, large Wanda if the long-term opaque state, the risk factor will increase. Since 2013, Wang has repeatedly said that "listing is to make Wanda more and more transparent." Wang's goal is to make Wanda an international company and not to go public to match the internationalization strategy.

Third transition

In fact, the listing is not Wang 2014 "a project." Located in Wuhan Wanda Chu Franco Street Project A and film Park, is his heart of a project. The total investment of these two cultural projects is 7 billion yuan, which is one of the largest investment projects in the world culture industry.

Wang arrived in Hong Kong's first stop is Wuhan. On the night of December 20, Wanda's 5-year premiere of the Han show is more like a super Spec roadshow before the IPO. The more than 10-nation ambassadors, Zhang Yimou, Yang and other famous artists and Wang watched the show, directed by the world's top artists. Wang praised a "more than any foreign show." But many viewers did not understand it told the story, Someone spit groove, this is a vague implication of the experimental drama, magic, dance, acrobatics and diving with dazzling technology packaging, fully embodies the "rich self-willed."

This afternoon, Wanda Film Technology Park is also open to the media. Here can experience the 4D, 5D film technology brings unique feelings, although some of the content is rough, December 21 Wanda Movie Park officially open to receive more than 6,000 visitors. All two projects are difficult to find, the end of June 2015 has been sold out, 2015 estimated income of more than 1.5 billion yuan.

These two cultural projects have a symbolic meaning to Wanda. 2011 Wanda Set up the cultural industry group, the 2013 revenue has reached 25.5 billion yuan, the plan is to achieve income of 32 billion yuan in 2014. Wang's ambition is more than that. In this day's press conference, Wang said, "The goal of Wanda Culture is to reach 100 billion yuan in 2020." He specifically stressed that Wanda is doing is a cultural industry rather than cultural undertakings, Wanda is to use large inputs, large output of the way to subvert the current domestic cultural industry model. He said very frankly, "Wanda has no feelings for culture, we are in business." The reason Wanda values culture is to make money. Cultural business is the government to engage in, we engage in cultural industry. ”

Wuhan Chu Franco Street project is Wanda's fourth generation of complex products, in 2012 interviewed by the Economist, Wang said the project made him really find the feeling of doing cultural industry. Wanda's fifth generation of products is more than 20 billion investment in Wanda City, these mega-cultural tourism real estate projects, will replicate the "show" and the film park, such as cultural product form. From the first generation of single shop to the second generation of combination stores, the third generation of urban complex to the fourth generation of integrated products, the 10-year Wanda model has been changing. In the first to second generation industry, relying on the order model and the "Rent by Sale" mode, Wanda enjoys the huge dividends of China's high-speed development. Starting from the fourth generation Wanda complex, Wanda has made a great adjustment to the content of the industry, such as: no longer business-oriented, but mainly cultural entertainment, retail accounted for less than 25%. The fifth generation Wanda complex, or it will be a new mode of aggravating experience.

Up to now, Wanda has undergone two important transformations: one is to take the lead from the housing transformation to do commercial real estate in 2000, the other is the first time since 2008 to make tourism real estate. In the second transformation, in order to support these huge cultural tourism real estate projects, the birth of the "a", film park, such a huge cultural project. These cultural projects, which are extremely tall and gimmick, have become the selling point of Wanda and the driving force of the transformation. "A" by Las Vegas "Shui Xiu", "O Show" the famous director Frank Degon directed, 3 years ago Wanda and Frank Degon signed an exclusive cooperation agreement, in the next few years, the famous director can only and Wanda cooperation. When he was making Wanda Movie Park, Wanda dug up the vice president of Disney. Through the power of capital, Wanda has the international cultural industry resources, which also stimulates the Wang ambition. "All industries have boundaries, except for the cultural industry," he said. "As early as 2011, Wanda hired the world's top consulting firms to comb the world's largest companies in the cultural industry and Wang the cultural industry."

In the second transformation, Wanda's industrial layout expanded rapidly. "The plan will be to acquire all the core travel agencies in 10-20 provinces in the future." Wang said in an interview. In 2013, Wanda acquired 4 travel agencies, and in 2014 it acquired 11 travel agencies, operating income reached 7.5 billion. At the opening conference of Kunming Wanda Plaza in October 2014, Wang said Wanda was likely to enter the aviation industry.

Wanda has done all these years, almost point to one o'clock: Wanda is gradually weakening the real estate business, entertainment, tourism and so is the future of the main direction. 2013 China's real estate experienced a historic peak, 2014 years it irreversibly to the other side of the parabolic slide. It is a dangerous signal for Wanda's "Rent-for-sale" model, and now Wanda is facing a third transition.

"The period of rapid development of real estate is over, based on various considerations, Wanda is going to make a new transformation," Wang said, the direction of Wanda transformation is culture, tourism, finance, electricity business. Wanda's size and potential energy have long been the top role of the food chain, and it is only a matter of time before it reaches finance. Wanda has already acquired a successful IPO in the United States, with the acquisition of two famous companies from AMC, the United Kingdom, and the company, which already contains a large number of financial operations. 2014 Wanda and Tencent, Baidu's cooperation produced "Teng million", is exploring the line under the O2O mode.

Wang revealed that Wanda has a very clear transition plan, "January 17, 2015 will be officially announced." This point of time is just after the listing. For many of the slow-shifting property companies, the pattern is over, and Wanda is just in midfield. For many companies, listing often means stereotypes; for Wanda, listing means the start of more possibilities.