bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Zheng Yangpeng

Wanda Group’s surprising disposal of US$9.3 billion worth of assets to Sunac China Holdings has raised plenty of unanswered questions among China’s business circles after official explanations from the two companies failed to fully convince a sceptical market.
At the centre of the mystery is the enormous costto Wanda of its divestment, with chairman Wang Jianlin’s only official explanation being to “reduce debt” and adopt an “asset-light” business model. Previously he has not given any indication of the intended asset sale.
China’s wealthiest man sells hotel portfolio for US$9.3 billion
Just a week ago, Wang was guest of honour at a banquet hosted by Yunnan province’s Party Secretary when the billionaire revealed a 32 billion yuan (US$4.7 billion)plan to create a city-size project combining health care services, holiday resort and business facilities. And at the end of June, Wang announced the opening of the nearly 40 billion yuan Wanda City development in northeast Harbin.
Now, these two projects are among the 13 that Wang offloaded for 29.6 billion yuan – despite Wanda’s total investment of 430 billion yuan – with Sunac paying another 33.6 billion yuan for 76 Wanda hotels.
Ambitious Sunac is buying its way to the top of China’s property league
The Sunac deal is even more surprising given that Wang had pinned hopes for his company’s diversification from property development on the Wanda Cities projects.
Just a year ago, Wang described his chain of theme parks as a “pack of wolves” that would encircle and overpower Walt Disney’s US$5.5 billion Shanghai Disneyland. With Wanda retaining only a 9 per cent stake in the theme parks and Shanghai Disneyland turning profit one year after opening, analysts don’t see how Wang can deliver on his promise.
Wang says Disney is no match for Wanda’s ‘wolf pack’
Adding to outsiders’ concerns is the apparent urgency of the deal – with the two companies agreeing to sign detailed agreements before the end of July. Sunac China said in a filing to the Hong Kong bourse on Tuesday that the final payment of 29.57 billion yuan to complete the deal will be made within two days after it receives a loan worth 29.6 billion yuan, funded by Wanda.
Dick Clark sale to Wanda worth US$1 billion terminated
Analysts said the arrangement will help Wanda partly offload the asset-related investment risks.
By lending funds to Sunac, Wanda is turning part of its equity interest into loan interest, said Chen Shujin, chief financial analyst with Hong Kong-based Huatai Financial Holdings.
China’s richest man builds world’s biggest indoor ski resort, giving Harbin year-long winter
“The risks brought by asset management will be shifted to Sunac through this arrangement. While Wanda will rest on loan interest income, which is less risky,” she said.
The risks brought by asset management will be shifted to Sunac through this arrangement. While Wanda will rest on loan interest income, which is less risky
Chen Shujin, Huatai Financial Holdings
Three relatively convincing reasons for the sale of assets to Sunac have emerged based on a study of the facts and available data.
First is the recent probe by the banking regulator and the subsequent funding pressure that put on the company. Wanda Group was among the five big overseas deal makers that were investigated by the banking regulator last month for their overseas borrowings. Although no wrongdoing has been alleged or found, the probe rattled China’s rumour-sensitive creditors. Hedge funds sold Wanda bonds after being tipped off about the probe, triggering a slump in bond prices.
China’s banking regulator orders loan checks on Wanda, Fosun, HNA, others
Two managers within the corporate banking departments of mainland lenders told the South China Morning Post that they were sceptical of Wanda City’s business model even before the regulator’s probe. One asset manager said he wouldn’t buy Wanda bonds.
Wanda takes on Shanghai Disney with series of new theme parks across China
When looking at the official balance sheet of Wanda, the company’s debt ratio is not elevated, especially compared with other debt-fuelled mainland developers. Dalian Wanda Commercial Properties, the property unit that generates 55 per cent of the group’s revenue, had 544.6 billion yuan of liability by the end of the first quarter. But given its larger assets of 771.3 billion yuan, the debt-to-asset ratio of 70.6 per cent is on par with the industry average and the 86.7 per cent for Sunac China.
Ratings agency S&P last December downgraded the property unit’s rating to one notch above “junk”, with a negative outlook, citing increased financial leverage due to larger-than-expected capital expenditure. In January Moody’s did the same.
A second reason relates to Wanda’s planned IPO on the A-share market. At the end of September 2016, Wanda paid shareholders US$4.4 billion to delist the company from the Hong Kong stock exchange, with the aim of relisting it on the mainland at a higher valuation. Leaked agreements with creditors showed that Wanda agreed to buy back the shares at a premium price – equal to an 8 and 10 per cent annual return for domestic and overseas investors – if the relisting plan failed two years later.
Wanda has not yet received approval to be relisted on mainland exchanges.
Analysts said if Wanda continues to apply for the relisting as a “property company” it would be difficult to get approval due to China’s property market clampdown. Such failure would risk a stampede among creditors, fearing Wanda would lose its financing channel.
“Shedding these so far unprofitable assets would not only reduce the company’s debt ratio, highlighting the asset-light model, but also raise its chance of being listed as a non-property company,” said Yan Yuejin, an analyst with E- house China R& D Institute.
A third reason revolves around speculation that Wanda may buy Sunac’s ownership in Leshi Internet Information &Technology Corp, an asset that could have synergy with Wanda’s entertainment pivot.
An asset manager with a state-owned bad asset management company, who declined to be identified, said Wanda may have reached an agreement with Sunac to take over the troubled Leshi, which Sunac bought for US$2.2 billion in January.
The source said Wanda Film had long been seeking an opportunity to buy streaming video sites.
Additional reporting by Xie Yu


Chinese man devotes life to helping young drifters find their way home

How did Wanda founder Wang Jianlin escape the wave that swept away embattled Evergrande property tycoon Hui Ka Yan?

Wang Jianlin’s Wanda unit gets a US$8.4 billion capital injection from PAG-led consortium

Cash-starved Chinese property group Dalian Wanda sells Shanghai luxury hotel to Indonesian billionaire

Wang Jianlin

Three reasons why Wang Jianlin gave up on his boast to beat Disney in China

Wanda Theme Park. Harbin Wanda Cultural Tourism City opens on Jun. 30, 2017, in the city of Harbin in north-eastern China. With a 20 million yuan investment, it features attractions, most notably the word's largest indoor skit resort, Wanda Snow Park which allows ski-lovers to ski all year round. The project also includes Wanda Theme Park, Wanda Movie Park, Central Grand Theatre, Wanda Mall etc. Mr. Wang Jianlin, Chairman of Dalian Wanda Group gave a speech at the opening ceremony. 30JUN17 SCMP/Simon Song

The official opening of Wanda City in Harbin on June 30, attended by Wang Jianlin (centre, right). Just over a week later Wang announced the sale of the assets to Sunac. Photo: Simon Song

Ambitious Sunac buys its way to the top of China’s property league

The new Harbin Wanda City, which features the world’s biggest indoor ski slope, is among the assets included in the deal. Photo: Simon Song

Harbin Wanda Cultural Tourism City opens on June 30th, 2017, in the city of Harbin in northeastern China. With a 20 billion yuan investment in cultural tourism, our unique project features many remarkable attractions, most notably the world’s largest indoor ski resort, Wanda Snow Park, which will allow ski-lovers from across China and the wider region to ski all year-round. Located in Harbin’s Songbei New District, the project also includes Wanda Theme Park (the largest outdoor theme park in Northeast China), Wanda Movie Park, Central Grand Theater, Wanda Mall and high-end hotels. Mr. Wang Jianlin, Chairman of Dalian Wanda Group, gives a speech at the ceremony. SCMP/Simon Song

Sunac China Holdings Limited Chairman of the Board and Executive Director Sun Hongbin attends Sunac China Holdings Limited 2016 Annual Results at the JW Marriott Hotel in Admiralty. 28MAR17

China developer Sunac rides to rescue cash-strained sausage maker Yurun

Sunac has turned very aggressive in acquisitions over the past two months as the developer seeks to quicken expansion to more second-tier mainland cities. Photo: AFP

China developers Sunac and Greentown resolve dispute

Sun Hongbin, the chairman of Sunac China Holdings, has said his company will continue to cooperate with Greentown China Holdings. Photo: Jonathan Wong

China’s Sunac abandons bid to take over beleaguered developer Kaisa

Sun Hongbin, Chairman and Chief Executive of Sunac China, as the company announced on Thursday it is abandoning its bid for troubled developer Kaisa. Photo: Jonathan Wong 

Developer Sunac China plans to buy Kaisa sites in Shanghai

Uncertainty surrounds a number of Kaisa property projects after home sales in Shenzhen were blocked by the city government. Photo: Reuters