It was not all that long ago that Wang Jianlin, the founder of the Dalian Wanda Group, was the richest person not only in China, but in Asia as a whole. But now it is not so. He is still a billionaire with assets of $ 15 billion, however, he has not lost $ 32 billion from his fortune in the last six years. Today, Jianlin is also not among the top 30 richest people in China. Now he is focused on reducing his company’s $ 56 billion debt and is not only reviving but rejuvenating his entertainment and property empire. However, analysts are skeptical that he can accomplish this. Jianlin’s Wanda Group holds several bonds that are coming due for payment soon. This is not good news as Asian bond and credit markets have been witnessing a steady decline this month.
Jianlin was in a procurement race for years to expand the reach of his empire. One of the assets he acquired was the Spanish football club Atlético Madrid. He opened a theme park. He aspired to compete with Disney. Now, he is selling those assets. He has recently sold to AMC Entertainment Holdings. Formerly the largest movie theater chain in the world, AMC now represents less than 10% of movie theater chain revenue. The CEO of AMC announced that the company would be run by a group of shareholders, increasing its stock by 42% in the three days following that announcement. Unfortunately, it is too late for Jianlin.
In June, Wanda Group’s debt is the highest since 2017. The actions of companies expanding using credit by the Chinese government are partially flawed. The epidemic has certainly not helped Jianlin’s bottom line due to the closure of Wanda Group’s malls, movie theaters, theme parks, hotels and sporting events. In 2019, pre-pandemic, malls and hotels of the Wanda Group accounted for nearly half of the company’s revenue.
China has reopened movie theaters and malls, giving Jianlin the means to start her own ship. He is reconsidering a strategy he has been spying on for years – the asset-light model. This will allow him to reduce leverage by spending less as he cuts back on the purchase land. Dailan Wanda Commercial Management Group Co is one of the largest operators of shopping malls in the world. Wanda’s mall revenue brings about half of the subsidiary’s profits. In 2021, the company is going to refrain from buying new land for new balls and instead license its brand to partners – just as Westfield does with malls in the United States.
The truth is that Jianlin has no real choice but to go on its asset-light strategy as the debt the company currently holds is not sustainable. The epidemic is to blame for most of the problems of the Wanda group. The film production and movie theater division, Wanda Film Holding Company, racked up $ 1 billion in net losses in 2020. Wanda Commercial Management saw its sales and profit decline by almost 50% from January to September 2020. Wanda Sports Group, was dropped from. The stock exchange after losing two-thirds of its value since it started trading in July 2019.
Adding to the woes for Jianlin and Wanda Group is the fact that Chinese regulators have tightened up some of the country’s biggest and most successful companies by restructuring regulations for credit.