Wanda continues its big sale: 2.7 billion to clear out insurance, and reduce debt by 215.8 billion in 15. How much debt is left?

Wanda of Wang Jianlin continues the sell-sell model. In addition to selling the Wanda City project, it has also sold all its shares in Centennial Life Insurance. On December 17, Greentown China announced that the company signed a share transfer agreement with the seller to acquire 900 million shares of Centennial Life for 2.718 billion yuan in cash, accounting for 11.55%. Greentown China stated that the acquisition of Centennial Life is in line with the company’s business philosophy as an “integrated service provider for ideal life in China” and will enable it to diversify its business types. Greentown China's stock price fell today, with Greentown China falling 10.6% and quoting HK$5.48.

Wanda Financial Group has business sectors such as insurance, investment, asset management, online small loans, and private equity funds. The insurance sector refers to Centenary Life. Now Wanda has chosen to liquidate its shares in Centennial Life. Once the transaction is finalized, it means that Wanda no longer has a financial license for insurance business. Now it seems that Wanda has begun to eliminate fast money. Will finance become Wang Jianlin’s abandoned son after cultural tourism? Is Wang Jianlin’s purpose in doing this really for Wanda Commercial Management’s IPO and asset-light transformation?

Financial business has been placed high hopes by Wanda Group Chairman Wang Jianlin, who proposed taking "Internet + Finance" as the profit direction and relying on Wanda's characteristic commercial O2O open model to create a trillion-level market value by 2020. However, the above-mentioned vision is becoming more and more distant as the Internet Technology Group lays off employees and the quick money business may be sold. On November 26, 2018, a reporter from the Associated Press exclusively learned that Kuaiqian Company, a subsidiary of Wanda Financial Segment, is gradually moving multiple Wanda Plaza projects it holds to Wanda Commercial Management Group, and at least four projects have been successfully transferred. "Under normal circumstances, if Kuaiqian plans to change hands, it will gradually withdraw from the Wanda Plaza it invests in," said a person close to Wanda Group.

At the same time, Wanda is also actively trying to slim down and save itself. It has begun a large-scale debt reduction and deleveraging process, starting from buying and selling in the past. According to the financial reports of Dalian Wanda Commercial Management Group Co., Ltd., a subsidiary of Wanda Group, in the past two years: Wanda Commercial Management reduced its debt by 215.8 billion yuan in 15 months, which was about one-third less than the total debt at the end of June 2017. Wanda's debt ratio has dropped below 60%. The company's only overseas projects include Wanda Tower in Chicago, and there are less than 10 overseas real estate employees.

Last year, at the press conference "Wanda, Sunac and R&F signed a strategic cooperation agreement", Wanda Group Chairman Wang Jianlin publicly stated that Wanda did have more than 400 billion yuan in debt, but this did not pose any threat to Wanda Group. Wang Jianlin said that Wanda Commercial’s assets are around 600 billion yuan, and its net assets have reached 190 billion yuan. Insolvency is empty talk. But Wanda is indeed making great efforts to reduce leverage and reduce debt this year.

In fact, if we carefully analyze Wang Jianlin's overall business development model, we will find that Wang Jianlin currently adopts a development model of light vehicles, simplicity, and light travel. He is selling off some of the original high-liability assets at all costs to obtain enough cash flow to support the development and transformation of the entire enterprise, gradually evolving the original asset-heavy business into an asset-light business, so any unprofitable industry may be abandoned by Wang Jianlin.

Behind the reduction of liabilities and implementation of asset-light, Wanda Commercial Management intends to IPO. In March this year, Wanda Commercial Real Estate Co., Ltd. announced that the company had changed its name to Dalian Wanda Commercial Management Group Co., Ltd. Wanda Group has been thinking about listing on the A-share market, but the IPO has not gone smoothly. Wanda's IPO ranking has been falling. The main reason is due to the nature of the company, because Wanda has always been a company that relies on real estate, and IPOs are not very friendly to real estate companies. In February this year, Wanda Real Estate changed its name to Wanda Commercial Management, and now the income brought by real estate to Wanda is also constantly decreasing.

On December 4, Wanda Group’s official WeChat public account announced that in December 2018, there were 12 newly opened Wanda Plazas across the country. By the end of this year, the total number of Wanda Plazas opened across the country will increase to 285. In 2017, Wanda's rental income reached 25.5 billion. Currently, Wanda's rental income is growing at an annual rate of approximately 30%. Wanda's rental income is estimated to exceed 30 billion this year.

Wanda’s industrial adjustment in the past year has two main purposes: leverage reduction and asset-light transformation. The latter is de-realization, and the purpose may be to promote the A-share listing of Wanda’s core asset, Wanda Commercial Management. Wanda's debt ratio has dropped below 60%, a target that few real estate developers can reach. De-realization and leverage reduction, including the sale of Centennial Life shares to recover 2.7 billion in capital, should all be part of the asset-light strategy.