Wanda Commercial plans to be privatized and delisted, moves to A-shares to seek higher valuation

Wanda Commercial announced on the Hong Kong Stock Exchange on the evening of March 30 that Wanda Group is initially considering making a voluntary general takeover offer for H shares, which if implemented may lead to the company's privatization and the company's delisting on the Stock Exchange.

Wanda Commercial announced on the Hong Kong Stock Exchange on the evening of March 30 that Wanda Group is initially considering making a voluntary general takeover offer for H shares, which if implemented may lead to the company's privatization and the company's delisting on the Stock Exchange. Wanda Group stated that the offer price of H shares will not be lower than HK$48 per H share.

The heavy news instantly exploded in the media circle.

According to Wanda Commercial's disclosure yesterday, Wanda Commercial's controlling shareholder has informed the company that it is initially considering making a voluntary general takeover offer for H-shares. Wanda Commercial also stated very cautiously that given that the above preliminary considerations are still in progress, there is no guarantee that this voluntary comprehensive takeover offer, privatization and delisting will proceed. Subject to relevant laws and regulations, whether and how to make an offer to shareholders of domestic shares of the company are also under consideration.

The controlling shareholder of Wanda Commercial also stated that if a voluntary general takeover offer is made and a formal offer is issued, the offer price of H shares will not be lower than HK$48 per H share in cash. According to investigation, on March 30, Wanda Commercial's total issued share capital was 652547600 H shares and 3874.8 million domestic shares. The controlling shareholder owns 1979 million domestic shares of Wanda Commercial (accounting for approximately 43.71% of the company's total issued shares).

It has only been more than a year since Wanda Commercial landed on the Hong Kong Stock Exchange. Why are major shareholders determined to launch a privatization action? Media people, experts and scholars expressed their views one after another.

Credit Suisse analyst Du Jinsong and others reported that Wanda's decision to privatize commercial may mean that the company believes that the A-share listing is sufficient to meet its financing needs. Listing on A-shares has become the company's first choice, and the company may also hope to obtain a higher valuation on A-shares. The rapid development of China's domestic bond market and the rising volatility of the RMB exchange rate may reduce the attractiveness of overseas bond issuance and overseas listings, but it is not expected that many real estate developers will follow Wanda's lead in delisting.

Liu Jipeng, dean of the School of Capital and Finance at China University of Political Science and Law, believes that property managers like Wanda are usually valued overseas than real estate developers, and the general P/E ratio is between 10 and 15 times. However, as of today, Wanda's net profit is 17 billion yuan, and earnings per share is as high as 6.62 yuan. However, the P/E ratio is only about 6 times, and the value is seriously undervalued.

Market analysts pointed out that once privatization is implemented, it will lead to the privatization of Wanda Commercial and the delisting of Wanda Commercial on the Stock Exchange. The long-planned plan to return to A-shares will also appear.

It is reported that on December 23, 2014, Wanda Commercial Real Estate was listed for trading on the main board of the Hong Kong Stock Exchange. The offering price was set at HK$48 and the raised funds reached HK$28.8 billion. Wanda Commercial's business is concentrated in three major segments: investment property leasing and property management business, hotel business, and property development and sales business. According to the company's latest financial report, Wanda Commercial's total revenue in 2015 reached 124.2 billion yuan, an increase of 15.14% from 2014; the company's core profit was 17.016 billion yuan, an increase of 14.79% from 2014.

Famous scholar Liu Jipeng: A

famous scholar, professor and doctoral director Liu Jipeng, a famous scholar, professor and doctoral director, said that when he heard this news, it seemed unexpected. At the beginning, Wanda Commercial was not popular in the A-share market. Despite years of hard work, it did not succeed in the A-share market, so it chose to list on the Hong Kong Stock Exchange in December 2014. It is certainly unexpected that it will be delisted in just one year and three months after listing.

However, Wanda's privatization is reasonable. First of all, Wanda Commercial, as the best and most growing commercial real estate developer in China, has not been affected by policies like residential real estate in the past few years, but has maintained a growth rate of 30% in the past few years. Since Wanda implemented its asset-light transformation, it has shifted its development focus from building and selling houses to leasing of its main brands, design and commercial real estate. This is reflected in its profit composition. Rental income has increased from 15% to 35%, and in 2016, Wanda's rental income will reach 55%, fully realizing the successful transformation from selling houses from heavy assets to leasing light assets.

Property managers like Wanda are usually valued overseas than real estate developers, with a general P/E ratio of 10-15 times. However, as of today, Wanda's net profit is 17 billion yuan, and earnings per share is as high as 6.62 yuan. However, the P/E ratio is only 6 times. About. The value is seriously underestimated. From the perspective of Wanda shareholders, whether it is Wanda's major shareholders or minority shareholders, it may be difficult to accept it emotionally and rationally.

Secondly, the political, economic and social situation in Hong Kong has been unstable in the past two years, and it is culturally difficult for Hong Kong people to understand mainland listed companies. For stocks with good growth potential such as Wanda Commercial and China CRRC, the Hong Kong stock market is generally seriously undervalued.

Third, since Wanda's value is seriously undervalued in the Hong Kong stock market, its price has also hovered below the IPO price for a long time. This is unbearable for both Wanda shareholders and Wang Jianlin's concept of making all shareholders investing in Wanda make money.

Fourth, after careful analysis, 86% of Wanda's existing shareholder structure come from the mainland, and only 14% of its shares come from Hong Kong. From the perspective of Wanda Commercial's promoter shareholders being able to circulate one year after listing, due to the current exchange rate policy of the mainland of China, capital accounts are not fully open to the outside world. Even if they are circulated, it will be difficult for these 86% mainland shareholders to circulate, realize and use them independently.

Fifth, from Wang Jianlin's perspective, whether it is commercial real estate or Wanda Theater Lines, as well as Wanda Sports and Wanda Finance in the future, he must be the first to do it. If he wants to raise shares, he will inevitably make investors make money. However, given that the Hong Kong stock market so underestimates Wanda's business, this goal is difficult to achieve in the short term. Judging from his personality and values, this decisive delisting was carried out at a market price far exceeding the market price of 38 yuan, but at an IPO price no lower than 48 yuan per share a year ago. As a privatization price, he can also see the leopard. It is in line with Wang Jianlin's personality.

Finally, it should be pointed out that judging from the growth trajectory of Wang Jianlin and Wanda, this is an entrepreneur with both ideals and rationality. Since he dares to decisively delist in Hong Kong, he does not rule out the idea of returning to the mainland and then listing A shares.

Wanda's privatization and withdrawal from the Hong Kong stock market lead to the following thoughts.

First, the Hong Kong Stock Exchange and the Securities and Futures Commission should reflect. Wanda Commercial, which has excellent growth, performance and governance structure, has such a low valuation in the Hong Kong stock market. A company with an average growth rate of more than 30% in the past five years has a P/E ratio of about 6 times. As a result, the Hong Kong stock market cannot be retained and should cause reflection. Allowing mainland companies to delist and develop in Hong Kong will only put Hong Kong at a disadvantage in competition with Shanghai's financial center.

Second, reflection on mainland companies that have been or will be listed in Hong Kong. Will the valuation of an excellent company like Wanda in the Hong Kong market be so low that other excellent listed companies will also adopt delisting methods? More importantly, Wanda's delisting in Hong Kong will definitely have an adverse effect on mainland companies 'listing in Hong Kong. Such a chain reaction, as the Hong Kong securities market, should cause reflection.

Third, mainland securities regulatory authorities should also reflect. What policy prevented Wanda from listing on domestic A-shares in the past ten years, but was forced to leave Hong Kong? China's securities regulatory authorities and the National Development and Reform Commission should seriously reflect on their listing policies. Market matters should be decided by the market, and the painful lesson of countless good China companies fleeing overseas should not continue.

In short, whether Wanda Commercial delisted in Hong Kong or re-listed in mainland China in the future, it will be a major event that attracts the attention of all parties at home and abroad.

Famous financial commentator Shuipi: Wanda's "king fried", returned to A-shares, and Hong Kong's delisting in one go

. Famous financial commentator Shuipi said that everything about Wang Jianlin is news. What's more, this is a major change in Wanda's business, so it is impossible not to become a "king bomb".

Yes, it's true. Wanda Commercial is about to delist from Hong Kong. It's only 15 months since Wanda Commercial was listed in Hong Kong and a little more than half a year since Wanda Commercial announced that it would issue A shares. The war is extremely important and the vast majority of investors would never have dreamed that Wanda would do it at such a speed.

However, anyone who knows the twists and turns of Wanda's commercial listing will know what ten thousand years are too long to seize the day. Wanda once had a long queue for A-shares, and some real estate companies were desperate to list due to macro-control. Because of this, Wanda had no choice but to choose to list in Hong Kong on December 23, 2014, issuing 652 million Hong Kong stocks. The issue price per share was HK$48, and Wanda's total share capital was as high as 4.527 billion shares. In other words, the vast majority of them did not circulate in Hong Kong stocks.

However, even so, Wanda Commercial, the flagship of China's business and the foundation of Asia's richest man, Wang Jianlin, has performed poorly in Hong Kong stocks. The highest price has only exceeded HK$78, while the lowest price has been as low as HK$31.10. Based on today's closing price, it is only HK$38.30. It not only fell below the issue price, but also fell below the net assets. The P/E ratio is only 4.91 times and the P/B ratio is only 0.82. Wanda Commercial's performance per share was 6.62 yuan, with a dividend per share of 1.05 yuan, and a dividend yield of 3.07%.

In a word, Wanda Commercial is undervalued in Hong Kong stocks. It is not a general undervaluation, but a serious undervaluation. Continuing to stay alive in Hong Kong stocks has damaged Wanda Commercial's overall image.

The reasons don't need to be further elaborated. Wanda is not the only one that is undervalued in Hong Kong stocks. Due to limited trading volume, Hong Kong stocks have become the region with the lowest P/E ratio in the global market, with an average of less than 7 times. However, the contrast between Wanda is even greater. In contrast, investment banks 'valuation of Wanda. Even at the beginning of this year, Citi's buying price was HK$81.50, Nomura's buying price was HK$67.24, and Credit Suisse's buying price was HK$60, and the lowest Merrill Lynch's price was HK$55.

Obviously, Wanda Business, which is a household name in the mainland, still lacks public awareness in Hong Kong.

Wanda's revenue from leasing business increased by 26% last year, accounting for 35% of total profits. This growth and performance are beautiful. The market is also worried about Wanda Commercial's asset-light model and completely ignores it. It is this transformation that not only allows Wanda to achieve 100% growth and expansion of 50 Wanda Plazas per year, but also avoids the adjustment risks of commercial real estate.

No matter how blooming the flowers inside the wall are, you will only smell the fragrance outside the wall but not the fragrance. If Wanda Commercial is listed in the mainland, this gap will naturally be eliminated. Although mainland A-shares are also adjusting their cycle, Wanda's delisting from Hong Kong is itself optimistic about A-shares. The new atmosphere brought by the replacement of the chairman of the mainland China Securities Regulatory Commission has undoubtedly given Wang Jianlin confidence to accelerate his return. Based on the mainland's valuation of major real estate leaders, Wanda is expected to have a price-to-earnings ratio of 20 times, and the valuation is expected to be close to 500 billion yuan. Mainland investors also have the opportunity to participate in the dividends of Wanda's growth. Wanda's return will also constitute a major benefit for A-shares.

It must be pointed out that Wanda's return model is a win-win model. Choosing the tender offer price at the original issue price demonstrates Wanda's sincerity and gratitude to Hong Kong stock investors, and the choice of equity by mainland investors is also a reward for its followers. According to statistics, mainland investors currently account for 84% of shareholders, and the return to A shares is also the result of their strong call.

There is no doubt that Wanda Commercial is the kind of high-growth blue-chip market that A-shares lack. It is an indicator company that reflects the transformation and upgrading of the real estate industry. Its return will definitely create new investment hotspots for A-shares, and may even become a leader in leading the market to bottom out.

Editor: vian