Will Wang Jianlin, the ＂mass layoff＂, be the next Xu Jiayin？

A few years ago, Wang Jianlin said in a public speech that in a few years, Wanda’s rental income will reach 100 billion yuan. He also proudly chanted at the scene: "Let the wind and waves rise, sit on the fishing boat."

Since last year, Wanda Group has been running rallies and bottom fishing on a large scale. During the real estate shock period, it has posed as a white knight and successfully landed. However, it has recently been reported that Wanda Group is negotiating with banks to postpone debt repayment, and the cash flow pressure caused by Zhuhai Wanda Commercial Management’s tortuous listing has once again attracted attention from the outside world.

Some people close to Wanda Group said that the group will start large-scale layoffs before June to reduce personnel costs. Wanda is also "throwing money" around by pledging financing, reducing holdings and cashing out. Will Wanda and Wang Jianlin, who were once high-spirited, repeat the mistakes of Evergrande and Xu Jiayin?

Wanda Commercial Management’s short-term debt has surged

According to the latest market news, Wanda Group is discussing with major domestic banks the non-repayment and renewal plan for domestic loans. The core appeal is to modify the original debt repayment conditions and extend the principal repayment time of domestic loans.

A banker explained that if a company wants to apply for a deferral of the principal of a bank loan, there are generally two options. One is to renew the loan without principal repayment, that is, to borrow new money to repay the old one. "The bank will go through the application approval process again, and the bank will first pay a sum of money to advance the previous loan." The other is to extend the loan period, that is, to extend the loan time limit and continue to repay the corresponding interest on time.

Wanda Group’s move is seen by the outside world as the company’s liquidity pressure has been very severe. At an internal meeting held recently, Wang Jianlin also admitted that Wanda has encountered periodic difficulties.

So how difficult is Wanda Group to make this decision? According to the financial report of Dalian Wanda Commercial Management Group (hereinafter referred to as "Dalian Wanda Commercial Management"), as of the first quarter of 2023, Dalian Wanda Commercial Management’s short-term borrowings were 6.804 billion yuan, an increase of 1450% year-on-year, and the non-current liabilities due within one year were 73.037 billion yuan, an increase of 338% year-on-year. The total liabilities were nearly 80 billion yuan, and the monetary funds held by the company were 304.67 yuan, which could not cover short-term debts at all. The cash-to-short-debt ratio was only about 0.38.

Dalian Wanda Commercial Management is mainly responsible for the layout of Wanda Group in the field of business management, and Wanda Group’s other main business is mainly on the listed platform Wanda Film. According to the financial report, as of the first quarter of 2023, Wanda Film’s short-term loans are 3.133 billion yuan, and the non-current liabilities due within one year are 896 million yuan. The company holds monetary funds of 3.654 billion yuan, which is also insufficient to pay the short-term debt in full.

It is worth noting that Wanda Real Estate Group has been listed as "Lao Lai" before. According to the China Implementation Information Open Network, Wanda Real Estate Group was forcibly executed by the Shanghai No. 2 Intermediate Court on April 20, involving an amount of more than 1 billion yuan. The company was listed as a dishonest person subject to execution for failing to fulfill its obligations and was restricted from high consumption.

Wang Jianlin repeats the mistakes of Xu Jiayin?

The reason why Dalian Wanda Commercial Management’s short-term liabilities have surged is that the company has included the share repurchase funds of Zhuhai Wanda Commercial Management Group (hereinafter referred to as "Zhuhai Wanda Commercial Management") in the statistics. This is also the biggest hanging sword on Wanda Group’s head at present.

In March 2021, Wanda Group spun off the property management and business management businesses in Dalian Wanda Commercial Management and established Zhuhai Wanda Commercial Management, providing branding, design, construction and operation services for third-party projects and dividing from them.

According to the data, in 2022, Zhuhai Wanda’s business operations revenue was 27.12 billion yuan, the main business profit was 12.984 billion yuan, the total assets were 22.886 billion yuan, and the net assets were 7.233 billion yuan. It is estimated that Zhuhai Wanda’s business assets accounted for 3.84% of Dalian Wanda’s business management, but contributed nearly 55% of the revenue.

Zhuhai Wanda Commercial Management’s asset-light model was highly anticipated by Wang Jianlin, who soon launched the process of listing in Hong Kong and submitted the prospectus for the first time in October 2021. Before that, Wang Jianlin also launched Moments to introduce 22 star investors, including Country Garden, Tencent, Ant, CITIC Capital, etc., with an investment of 38 billion yuan.

At that time, Dalian Wanda Commercial Management also signed a betting agreement with investors, mainly involving two contents: first, performance commitment, Zhuhai Wanda Commercial Management’s actual net profit from 2021 to 2023 is not less than 5.19 billion yuan, 7.43 billion yuan and 9.46 billion yuan, and the second is to ensure the IPO time.

However, to Wang Jianlin’s surprise, the listing road of Zhuhai Wanda Commercial Management was quite bumpy, and the first submission ended in failure. In April and October 2022, the company received the "small road" from the Securities Supervision Commission and submitted the form twice, but it was never able to wait for the "big road". The latest submission also expired in April this year, that is to say, Zhuhai Wanda Commercial Management’s three consecutive IPO applications were all without success.

Regarding the reasons why Zhuhai Wanda Commercial Management has been blocked for many times, Shen Meng, director of Chanson Capital, believes that as a business model closely related to commercial real estate, operating stability and expectations are highly sensitive to policies and markets, so there are uncertain risks for potential investors.

Once Zhuhai Wanda Commercial Management fails to successfully list before the end of this year, it may fall into a similar situation to the failure of Hengda Real Estate’s return to A bet. From Wang Jianlin’s personal point of view, he may also face lawsuits from investors like Xu Jiayin and step into the position of being executed.

In 2020, due to the failure of backdoor deep house to return to A, Hengda Real Estate 125.70 billion yuan strategic investors signed a supplementary agreement to convert to common shares, and the principal of 4.30 billion yuan equity strategic investors was repurchased after being paid by China Hengda Cash.

However, between 2016 and 2017, Hengda Real Estate received a total strategic investment of 130 billion yuan. Recently, some investors who were unwilling to convert shares and did not receive the repurchase money took Hengda to court. On May 12, China Evergrande announced that China Evergrande, its subsidiary Guangzhou Kailong and China Evergrande’s controlling shareholder and executive director Xu Jiayin became the executors.

Start layoffs, Wanda is "throwing money" to save itself

After the third filing expired, Wanda responded to the media by saying that the current failure of listing application materials does not affect the company’s listing process on the Hong Kong Stock Exchange. The company will update the submission materials as soon as possible according to the requirements of the Hong Kong Stock Exchange. The current listing progress is progressing in an orderly manner. Wang Jianlin said at an internal meeting that Wanda will not lie down and will not go bankrupt.

However, Shen Meng pointed out that although the new regulations on overseas listing were officially implemented in March this year, the management of corporate investment risks has not been relaxed. Under the filing system, even if Zhuhai Wanda Commercial Management resubmits the application, if the corresponding investment risks are not effectively resolved or controlled, it will still face tremendous pressure.

Wanda Group is running out of time. Under high pressure, the company began to take action from various aspects to save the decline. Within the company, cost reduction and efficiency have become the key words. People close to Wanda Group said that before June, the group will start large-scale layoffs, a conservative estimate of about 30%. Executives may be demoted and paid. In addition, senior vacancies will no longer be filled, and the company can only go in and out in principle.

Externally, Wanda has started to "rush money" to ease the liquidity crisis. On the one hand, in January this year, Wang Jianlin and his concerted actors pledged all 65.04% of Wanda Hotels’ shares to Singapore sovereign fund Temasek Holdings and its subsidiaries in exchange for loan financing provided by Temasek Holdings’ companies. If the stock price of Wanda Hotels at that time is estimated, the total value of the pledged shares is about 860 million Hong Kong dollars.

Dalian Wanda Commercial is the first domestic private company to resume financing in offshore capital markets in 2023. In January and February this year, Dalian Wanda Commercial Management issued a 400 million 2-year and a 300 million 3-year US dollar bond, both with a coupon rate of up to 11%. The funds are used to refinance existing debt. In March, Dalian Wanda Commercial Management planned to apply to issue 6 billion yuan of small public debt, but was questioned by the Securities Supervision Commission.

In addition to pledging financing and issuing bonds, Wanda also cashed out by reducing its holdings in the secondary market. In March this year, Wanda Film’s controlling shareholder, Wanda Investment, took the lead in reducing its holdings by 2% through block trade, cashing out about 583 million yuan. A month later, Wanda Investment announced that it plans to reduce its holdings by 3%. According to the stock price estimate of the day, it is expected to cash out about 953 million yuan.

In addition, there are market reports that Wang Jianlin has traveled to cities in Northeast China and China on several occasions to contact local governments for support, but the results are not optimistic.

Wang Jianlin once said that being the richest man is not his goal, his goal is to be a world-class multinational enterprise. But for now, Wanda Group still has a long and winding way to go from this goal.