Editor's note: 2023 is the first year after the three-year epidemic of the Chinese economy. It is under many pressures from the external environment and internal development, but after experiencing difficulties, we should strengthen our confidence.
At the bottom of the valley, on the way up. Guandian New Media continues to plan and launch an annual series of reports - "The Year at the Bottom", in order to comprehensively and deeply focus on the strength and tenacity of outstanding corporate groups in difficult times. They have encountered ups and downs but have good intentions.
At the same time, we will continue to dialogue with a group of economists and industry leaders with global vision and rich knowledge to interpret the future development of China's economy and industry from their perspectives.
Guanwang.com On the evening of January 29, Wanda Film disclosed the resolutions of the 15th meeting of the sixth board of directors.
This includes the "Proposal on the Election of the Chairman of the Company's Sixth Board of Directors", which elects Chen Xi as the Chairman of the Company's Sixth Board of Directors, with a term of office that will expire when the term of the sixth Board of Directors expires. At the same time, according to the company's articles of association, the legal representative will be changed to Chen Xi.
This means that after changing ownership of China Ruyi, Wanda Film ushered in a new chairman and president from Ruyi.
Looking back on 2023, with the recovery of domestic consumption and strong support from national policies, Wanda Film, as the leading domestic cinema chain company, achieved operating income of 6.869 billion yuan in the first half of 2023, a year-on-year increase of 39.1%, and net profit attributable to shareholders of listed companies. 423 million yuan. Although
has turned a profit, Wanda Film's development over the past year has not been smooth.
In the capital market, Wang Jianlin has been put on the negotiation table many times, playing an important role in solving Wanda's urgent needs. Eventually, the Wanda Group lost control of Wanda Films, and Shanghai Ruyi Investment became the talker. In terms of
's core film business, although the projection business still occupies a leading position and the asset-light business has further developed, the output of high-quality film content is weak, and the film works it controls are not outstanding in terms of quantity or box office performance.
Facing the increasingly competitive film market, Wanda Film still needs to consolidate its advantages in the exhibition business and increase the output of high-quality content production in the new year. At this level, the newly acquired Shanghai Ruyi Investment, as a content production company, may be able to better leverage its advantages in the upstream film industry and achieve a win-win situation with Wanda Film.
Debt repayment chips
Wanda Plazas all over the country are basically equipped with a Wanda Cinema. The two complement each other and are an important part of Wang Jianlin's business empire.
After its establishment in 2005, with the support of capital and resources, Wanda Film has gradually become a leader in domestic cinema lines.
However, as the development of Wanda Group has suffered setbacks in recent years, Wanda Films has also been put on the negotiation table and has become an important bargaining chip. After all, in terms of theater resources and industry influence, Wanda Film can be regarded as the big brother in the industry, and the amount of funds it can exchange for it is considerable, which can be used to solve financial crises.
According to Viewpoint Index, in terms of debt repayment, as of now, the balance of Wanda Commercial Management’s domestic credit bonds is only 6.9 billion yuan. In contrast, Wanda Commercial Management has five domestic bonds due in 2024, with a bond balance of 1.878 billion yuan, and two domestic bonds due to exercise a total of 3 billion yuan, plus one that needs to be paid in installments in 2024 of US$600 million in overseas bonds, the total debt that needs to be repaid in 2024 is approximately 9.187 billion yuan.
Since 2023, Wanda Commercial Management has sold part of Wanda Plaza, and reduced and transferred Wanda Film's equity to raise funds to repay debts. The gambling pressure has been temporarily relieved, but the financial pressure still exists.
As a frequent visitor to the transaction table, Wanda Film’s most recent equity sale occurred in December 2023. Wanda Culture and Wang Jianlin transferred 51% of the equity held by Wanda Investment to Shanghai Ruyi Investment for a total transfer price of 2.155 billion yuan.
According to statistics from the Viewpoint Index, last year, Wanda Film was reduced and cashed out by the Wanda Group several times for an amount of approximately 10 billion yuan.
Data source: public information, opinion index compilation
Different from the past, after the completion of this transaction, the actual controller of Wanda Film will no longer be Wanda Group, but will become Shanghai Ruyi Investment, which holds 51% of Wanda Investment's equity, indirectly Controls 20% equity of Wanda Film.The
opinion index believes that the impact of the above changes on Wanda Movies is undoubtedly significant. First of all, the new controlling shareholder Shanghai Ruyi may bring new management concepts and operating strategies, which is both a challenge and an opportunity for Wanda Film. According to
data, Shanghai Ruyi Investment is a company specializing in film and television production and distribution. After taking ownership, it may promote content creation further. Previously, Wanda Movies mainly relied on the screening revenue brought by theaters.
According to Viewpoint Index, the movies "Exchange Life", "Keep You Safe" and "Hot" produced by Shanghai Ruyi 2023 have received box office of 393 million yuan, 700 million yuan and 913 million yuan respectively. Looking back on the past, Shanghai Ruyi has also participated in the production of hit theater movies such as "Hello, Li Huanying" and "Walking Alone on the Moon". It also has many well-known representative works in the production of film and television dramas, including "All Quiet in Peking" and "Nirvana in Fire". wait. For Shanghai Ruyi,
will own the cinema chain with the largest domestic market share after controlling Wanda Film, and may be able to open up the downstream film industry.
Turn a loss into a profit
In the past year, Wanda Film has experienced a performance recovery, turning a loss into a profit in the first half of 2023. However, the performance recovery is more due to the overall recovery of the film industry, and development still faces many challenges.
According to the 2023 Chinese film market data released by the National Film Administration, the movie box office for the whole year of 2023 will be 54.915 billion yuan, second only to 2019, 2018 and 2017.
Against this background, Wanda Film has also achieved performance recovery and growth. In the first half of 2023, its operating income was 6.869 billion yuan, a year-on-year increase of 39.1%. The net profit attributable to shareholders of the listed company was 423 million yuan, achieving a turnaround from losses to profits.
According to Viewpoint Index, Wanda Film’s current main business can be divided into six categories. In addition to film-related screening, production and distribution businesses, there are also income from additional products such as merchandise sales and advertising, as well as TV series production and distribution and games. Distribution and other businesses outside the film industry. Among all
products, movies and related businesses are the core business types.
Source: Company announcement, opinion index compilation
This is also clearly reflected in the income structure distribution.
In the first half of 2023, movie viewing revenue was still the main source of Wanda Film’s revenue, recording 4.042 billion yuan, accounting for 58.84% of total revenue; followed by merchandise and catering sales revenue, recording 983 million yuan, accounting for approximately 14.31% ; The proportion of revenue from other categories of products does not exceed 10%.
Data source: company announcement, opinion index compilation
Looking at the most critical movie viewing income, this income is directly linked to the movie box office. Data in the first half of the year show that Wanda Cinema’s domestic theaters achieved a box office of 3.65 billion yuan (excluding service fees), a year-on-year increase of 49.7%, returning to 93.5% of the same period in 2019; the number of moviegoers was 88 million, a year-on-year increase of 54.4%, returning to 2019. 96.4% over the same period.
However, compared with 2019 before the epidemic, there is still a certain gap, and this is not a stage where we can relax.
extended the timeline to the past five years and found that Wanda Film’s revenue and net profit performance were relatively dismal. From 2020 to 2022, due to the epidemic, revenue performance was not as good as that of 2019. Although there is an obvious rebound trend in 2023, it has not surpassed it. In terms of net profit,
has been in a state of negative growth for a long time. Except for 2023, only a slight net profit of 116 million yuan was recorded in 2021 in the five years, and the remaining total losses were approximately 13.521 billion yuan, while Wanda Film’s latest market value did not exceed 30 billion yuan.
Data source: corporate announcement, opinion index compilation
In terms of gross profit margin, movie viewing revenue, the core of Wanda's film business portfolio, is actually low. The latest gross profit margin is only 5.02% in the first half of 2023, which is the same as merchandise and catering sales revenue. 62.94% is a far cry from the 30.72% of film production, distribution and related business income. The
opinion index believes that the low gross profit margin of the main business and the greater impact of the market environment are one of the constraints to the development of Wanda Film.
Data source: corporate announcements, opinion index compilation
As for the asset-light business that has been actively promoted in recent years, there was further development during the period, with the market share increasing to 1.4%.The latest third-quarter data shows that as of September 30, 2023, Wanda Film has 877 theaters and 7,338 screens in operation in China, including 709 directly operated theaters and 6,159 screens, and 168 asset-light theaters and 1,179 screens. The
opinion index believes that as the domestic traditional cinema market becomes saturated, the demand for light assets in the market is also increasing. Companies such as Wanda Film can obtain relatively stable income through exporting brands and management.
As far as models are concerned, traditional theaters are asset-heavy models, which usually have limitations such as long recovery cycles, high debt ratios, and slow market share gains. The asset-light theater business can reduce the funds caused by the above problems to a certain extent. pressure.
In addition to screenings
Although the screening business has obvious advantages, Wanda's film production and distribution-related businesses are not outstanding. According to the 2023 semi-annual financial report, Wanda Film achieved operating income of 6.869 billion yuan in the first half of the year, and income from film production, distribution and related businesses was only 202 million yuan, accounting for less than 3% of total revenue.
According to statistics from the Viewpoint Index, the film projects controlled by Wanda Film in 2023 include " Universe Exploration Editorial Department ", " Countdown to Say I Love You ", " Shen Jilan ", and " Three Brigades ".
Among them, "Universe Exploration Editorial Department" has a cumulative box office of 67.043 million yuan, "Countdown to Say Love You" has a cumulative box office of 26.370 million yuan, "Shen Jilan" has a box office of 4.565 million yuan, and "The Third Brigade" has a total box office of 628 million yuan in 26 days of release. Only this one.
Data source: public information, opinion index compilation
Looking back at the number of movies produced by Wanda Films in recent years, we can find that there is a clear downward trend, from a peak of 16 movies in 2017 to 4 movies in 2023.
In the past three years, among the films produced by Wanda Films, only "Detective Chinatown 3", "I Want to See You", "Miracles" and "The Third" have achieved high popularity and box office, but they have become the highest box office hits during the release period. Champions have fewer works.
Data source: public information, opinion index compilation
It can be seen that the lack of high-quality film content production is becoming a limitation to the development of Wanda Film.
From a business perspective, the profitability of theater screenings is not high. For example, the gross profit margin of the latest film screening business part of Wanda Film's semi-annual report is only 5.02%. Coupled with other costs and expenditures, it is difficult to obtain considerable profits. The
opinion index believes that if the content production business can maintain a high gross profit margin, it can make up for the low gross profit margin of movie viewing revenue to a certain extent, but the premise is that the former business contribution must account for a certain proportion.
Wanda Film is obviously aware of this problem. When projection revenue dominates and the content business has not yet formed a clear advantage, it is trying to increase revenue by developing other businesses, such as the sale of IP derivative products and the exploration of innovative experience formats. In terms of
ip products, it mainly focuses on derivative IP products related to released movies. Previously, Wanda Film stated on its investor relations platform that during the Spring Festival period, peripheral products of the "Fuji Rabbit" IP series, "Pokémon" IP series, "The Wandering Earth" and "Bear Bear" movies had good sales performance. The
experience format is mainly script-based. This type of business is closely related to the film and television industry and is highly popular among young consumers. Therefore, many theater movie IPs are now authorized to be developed into script-based movies. For the audience, it is also a good choice to play a game of script killing while watching the movie to gain a richer experience and increase social fun.
According to the opinion index, compared to traditional scripted killings, Wanda Cinema killings mainly use multimedia equipment to project such clues in front of players. In addition, it can also realize the conversion of more scene functions according to actual needs, with high flexibility.
Although Wanda Film’s exploration of diversified business formats has been successful, as a film company, film screening and content production are the foundation of development. The quantity and quality of film sources determine to a large extent theater chains and film projections The company's box office revenue still needs to be improved in these two parts of the business in the future.
In terms of the industry environment, although my country's film production has begun to take shape, the number of films with high commercial value is still lacking. This is an opportunity and a challenge for Wanda Film.
It is worth noting that the film industry is currently making more and more frequent attempts at "split distribution", that is, a film is no longer uniformly screened by theaters across the country, and the film studio can choose a theater chain or theater investment management company that provides better conditions. trade. The
opinion index believes that this means that the relationship between theater chains and film box office will be closer. Leading theater chains such as Wanda Movies may have more opportunities to obtain high-quality resources in the future, and Shanghai Ruyi Investment, a newly controlled company, will Content production companies can also better leverage the advantages of the upstream film industry to achieve a win-win situation with Wanda Film.
A year at the bottom | At the bottom, on the way up.
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