Wanda’s property business slows as it focuses on service sector

Wanda Group, one of the largest conglomerates in China, posted a 17.9 per cent revenue growth in the first half of this year, as its traditional property business languished in spite of the recent property boom before government curbs began to bite.

Gross revenue of the group, with businesses ranging from property to entertainment to financial services, totaled 134.8 billion yuan(US$19.8 billion) in the first six months, compared with the year-earlier period.

Share of the group’s property sector in its total portfolio declined to 42.1 per cent from 45 per cent at the end of 2016, as it gravitates towards increasing its focus on the service sector.

Wanda’s property business, once among the top three nationwide a few years ago, saw lacklustre growth in contrast to the aggressive expansion of its rivals.

Property revenue grew 11.3 per cent year-on-year to reach 56.34 billion yuan in the first half, with contracted sales totaling 49 billion yuan. The rest came from rental income of its commercial properties.

Wanda’s property earnings paled in comparison to most of China’s big developers, which have capitalised on the country’s property boom in the second half of 2016 and early 2017.

China Vanke recorded a 277 billion yuan in contracted sales in the first six months, up 45.9 per cent from a year ago. China Evergrande Group saw its first-half contracted sales surged 72 per cent to 244 billion yuan.

Wanda’s property business slid to the 12th spot in terms of sales value, based on data compiled by the China Real Estate Information Corp.

Among the Wanda units, the financial service sector recorded the fastest growth, with 46.8 per cent increase to 20.6 billion yuan in the first-half. Its cultural sector grew 31 per cent to 30.8 billion yuan.

While Wanda had featured its overseas business in previous statements, the latest statement omitted the sector.

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To add insult to injury, it has become one of the few conglomerates to be probed by China’s banking regulators last month in a crackdown on capital outflows and for being over leveraged.

At home, Wanda is pushing to expand in the theme park and tourism sector by opening the third “Wanda City” last week in Harbin. The park involves an investment of nearly 40 billion yuan.

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On Monday it signed agreement with southwest Yunnan province to build a 32 billion yuan Wanda City in Kunming.