Wanda is expected, Wanda commercial landing A shares in the mainland market will reach 20 times the price-earnings ratio, according to the price-earnings ratio of 20 times to calculate, the stock market value will reach 500 billion yuan. In the H-share failed to become a capital winner of Wanda Commercial, after the announcement of privatization seems to have been in the mind to draw a good landing in the A-share blueprint of the good market value.

On April 19, according to the Wall Street Journal, Wanda expects Dalian Wanda Commercial Real Estate Co. to return to the A market in the mainland market price-earnings ratio will reach as much as 20 times, which also means that the future market value of its shares will reach 500 billion yuan.

It is worth noting that, at present, Wanda commercial market in the Hong Kong stock market according to the total share capital calculation of market value is only about 220 billion Hong Kong dollars or so, some people in the industry pointed out that this is precisely why Wanda commercial in the H-share listing only one and a half years after the decision to end this "unhappy Hong Kong stock tour" of the root cause.

According to the viewpoint of real estate new media, Wanda business has failed to become a blue chip in the Hong Kong capital market, but also because the capital market for the Wanda business model has a lot of misgivings, one of which is doubtful about its debt ratio; the second is the cash flow; and the third is to think that its commercial profitability model is sustainable.

Therefore, some senior investors believe that Wanda privatization back to A, the future to achieve a high valuation of 500 billion "market value of the blueprint" Wanda commercial also need to make up a few lessons.

500 billion market value roadmap

April 19, according to the Wall Street Journal, Wanda Group Chairman Wang Jianlin has launched the acquisition of commercial real estate company Wanda Commercial Hong Kong-listed shares, and let the company re-listed on the stock exchange in mainland China procedures.

A senior Hong Kong investment banker also revealed in an interview with Viewpoint Real Estate New Media that Wanda Commercial has already locked up investors in the mainland, "to our understanding, they have already hired an investment bank for the privatization, and I believe that Wanda Commercial will soon put forward a formal privatization proposal."

It is reported that there are requirements for investors Wanda Commercial, and documents reported by the Wall Street Journal show that Wanda seeks private investors who are willing to write a check for at least $500 million and take on additional debt to boost returns. In addition, Wanda does not want investors to resell their holdings to small and medium-sized investors, as domestic securities regulators will conduct a full review of investors before listing on the mainland.

Wanda said it wanted the investor to already have funds outside the country because the mainland government has recently tightened capital controls, making it more difficult for investors to convert renminbi to Hong Kong dollars or US dollars to finance acquisition deals.

Despite the many requirements, according to the Hong Kong source, "the initial investor response has been relatively good so far."

In addition, reports from the capital markets also say that the founders of many Chinese companies are currently acquiring shares in the hands of foreign shareholders with the intention of selling them to local Chinese investors at higher valuations. "This is being driven by money from local investors who are eager to get a slice of the pie from overseas-listed firms, believing them to be of higher quality than those currently listed and traded on local exchanges. In the process, private equity funds and other investors will help raise capital to acquire shares before relisting them domestically."

Wanda has reportedly promised the private investors who joined the $4 billion stock buyout of its commercial real estate business that their investment will triple once Wanda Commercial is listed on the mainland.

Wanda expects that Wanda Commercial will have a price-to-earnings ratio of 20 times in the mainland market after it lands on the A-share market. According to the price-earnings ratio of 20 times to calculate, Wanda commercial landing A shares after the stock market value will reach 500 billion yuan. It's worth noting that Vanke, a domestic real estate company with a "Wan" name, currently has a P/E ratio of 17.15 on A-shares.

It's also worth comparing the current P/E ratio of Wanda Commercial on H-shares based on earnings over the past 12 months, which is about 6 times, with a market capitalization of only about HK$220 billion based on the total share capital.

Unhappy trip to Hong Kong stocks

Now, Wanda Commercial's blueprint for a better valuation of the A-share market in the future, on the other hand, also reflects Wanda management's "unhappiness" with the low valuation of the Hong Kong market. According to viewpoint real estate new media past reports, in March last year, the Wanda commercial results, the Wanda commercial executives present at the meeting had some "emotional" expressed: "Wanda in the mainland is very famous, but the Hong Kong media does not seem to be particularly understanding of the Wanda.

This is the first time I've seen a Wanda commercial company.

In fact, Wanda Commercial in the H-share listing nearly a year and a half after its capital story has not yet been able to fully win the favor of foreign capital investors.

According to the viewpoint of real estate new media site records, December 23, 2014, as the year's largest IPO Wanda commercial in the H shares to achieve the listing. At that time, the stock code of 3699 Wanda Commercial opened the highest offer of 48.2 Hong Kong dollars, and then has been in the 48 Hong Kong dollars on some slight fluctuation, after the stock price performance is more stable.

And in the ensuing nearly one and a half years, Wanda Commercial shares reached a peak of HK$78 on June 30, 2015, but then fell to a low of HK$31.1 on February 29 this year because of the stock market downturn. Now its share price rebounded, and is now basically maintained at around HK$48.

It can be seen that although Wanda Commercial's 2015 revenue increased by 15.14% year-on-year to 124.203 billion yuan, but its valuation in the Hong Kong capital market did not rise with the size of the growth. And the important reason for this also has the market factors of the long-term downturn in the Hong Kong market.

According to market research organizations, the current Hong Kong stock has become the world's lowest market price-earnings ratio in the region, an average of less than 7 times, while the market generally believe that the A shares have a higher price-earnings ratio.

According to Viewpoint Real Estate New Media, as of the end of June 2015, the average price-earnings ratios of the mainland A-share main board, small and medium-sized boards and the Growth Enterprise Board were 16 times, 45 times and 68 times, respectively, while the average price-earnings ratios of Hong Kong's main board, the NASDAQ and the New York Stock Exchange were 11 times, 16 times and 16 times, respectively.

Wang Jianlin had promoted the H-share listing of Wanda Commercial and the A-share listing of Wanda Cinema Line around the end of 2014. At the beginning of the listing, Wanda commercial P/E ratio of only 8.2 times, Wanda Cinema P/E ratio of 20 times, since then it is up to 60 times.

Perhaps it is also to see the A-share market such a dividend, Wanda commercial in the last year again restarted the A-share listing program, and now in addition to Wanda commercial, including Fortune Real Estate and other Hong Kong-listed mainland real estate companies have thrown out the return to the A-share program.

What lessons does Wanda Commercial still need to make up?

However, the low valuation of Wanda Commercial's Hong Kong shares in addition to the Hong Kong market reasons, some industry veterans also believe that, or some of its own weaknesses are also closely related. According to the industry sources, Wanda business has failed to become a blue chip in the Hong Kong capital market, but also because the capital market for Wanda's business model has a lot of misgivings, one of which is doubtful about its debt ratio; the second is the cash flow; and the third is to think that its commercial profitability model is sustainable.

Some Hong Kong market analysts have told Viewpoint Real Estate New Media that although Wanda's commercial real estate has been very successful in the past, thanks to its "sell to rent" model, this model does not look so perfect for the Hong Kong capital market.

And in the Wanda commercial proposed asset-light transformation, the Hong Kong market also seems to have not yet been fully impressed by its capital story, a Hong Kong industry insiders to accept the viewpoint of the real estate new media interviews, "(Hong Kong market) did not fully recognize the acceptance of Wanda commercial described the prospects, although he put forward the asset-light model, but the investors feel that they still need to be observed! ".

Now, Wanda Commercial has said it will focus on developing investment property leasing and management as a way to make up for the reduction in the property sales component. However, according to the viewpoint of real estate new media inquiry, its 2015 investment property leasing and property management business segment revenue contribution accounted for only 10.9%, while the property sales side of the proportion still reaches 82.5%.

Accordingly, some analysts pointed out to the viewpoint of real estate new media, although Wanda commercial put forward light assets mode transformation, but the past formation of the "sale to rent" practice in the short term is still the company's development of the dominant mode, now light assets transformation is to determine the direction, but the results are still to be tested in time.

Similarly, some industry insiders also believe that the layout of the three or four lines of the city is Wanda commercial scale expansion in the past, but now a large number of three or four lines of the project also makes Wanda commercial can not get a high rate of return on assets, and the future inventory of three or four lines of the project for Wanda, is also a problem.

Therefore, market participants have suggested that, after Wanda commercial back to A, if you really want to achieve 20 times the price-earnings ratio, 500 billion yuan of market valuation, its future asset-light transformation, business model adjustment road is still full of challenges.