Our reporter Zhang Jingchao reports from Beijing.
On the evening of December 12, WANDA CINEMAS announced that WANDA CINEMAS’s indirect controlling shareholder, Beijing Wanda Cultural Industry Group Co., Ltd. (hereinafter referred to as "Wanda Culture") and its wholly-owned subsidiary, Beijing Hengrun Enterprise Management Development Co., Ltd. (hereinafter referred to as "Beijing Hengrun"), and the company’s actual controller, Wang Jianlin, Signed the Equity Transfer Agreement on Beijing Wanda Investment Co., Ltd. (hereinafter referred to as "Equity Transfer Agreement") with Shanghai Ruyi Investment Management Co., Ltd. (hereinafter referred to as "Ruyi Investment"), and planned to transfer 51% equity of Beijing Wanda Investment Co., Ltd. (hereinafter referred to as "Wanda Investment") to Ruyi Investment. According to the Equity Transfer Agreement, the total transfer price was RMB 2.155 billion.
If the above transaction is finally implemented, Ruyi Investment will hold 51% equity of Wanda Investment, and Ke Liming, as the actual controller of Ruyi Investment, will indirectly control 20% equity of WANDA CINEMAS through Wanda Investment. In addition, China Ruyi Film and Television, which is controlled by Ruyi through an agreement, holds 49% of Wanda Investment, and Ke Liming also holds 16.34% of the total share capital of China Ruyi. Wang Jianlin indirectly controls 10.9% equity of WANDA CINEMAS through Wanda Culture, Shenxian Rongzhi Xingye Management Consulting Center and Lin Ning. Colliming will eventually become the new actual controller of WANDA CINEMAS.
The reporter of China Business News learned that China Confucianism was formerly known as Hengteng Network. In October 2020, Hengteng Network wholly acquired Ruyi Film through allotment and issuance of shares and subscription of equity, with a total transaction amount of about HK$ 7.2 billion (at that time, it was about RMB 6.2 billion). However, in November 2021, with the departure of Evergrande, Ke Liming, the real controller of Ruyi Film, became the largest shareholder of Hengteng Network, while Tencent Holdings and United Resources Investment Holdings ranked second and third. In February 2022, Hengteng Network was renamed as "China Confucianism".
According to China Ruyi’s mid-year report in 2023, the company’s business mainly includes film and television drama production, online streaming platform pumpkin movies and games. After holding WANDA CINEMAS, it means that China Confucianism and Italy will open up the downstream film industry, and its strength should not be underestimated.
The whole process of transfer
Two equity transfer transactions with Ruyi Investment contributed to the change of WANDA CINEMAS’s actual controller, but in addition, Wanda Investment has transferred WANDA CINEMAS shares several times in 2023.
In April this year, WANDA CINEMAS issued the Announcement on Pre-disclosure of Shareholding Reduction by Controlling Shareholders. According to the announcement, Wanda Investment, the controlling shareholder of WANDA CINEMAS, holds 849,811,931 shares, accounting for 38.99% of the company’s total share capital. Wanda Investment plans to reduce its shareholding by no more than 65,381,064 shares through centralized bidding and block trading, accounting for 3% of the company’s total share capital. The reduction will be completed within 6 months, and the reason for the reduction is "own capital demand".
On July 12th, WANDA CINEMAS issued another announcement to remind Wanda, the controlling shareholder, to invest in the transfer of equity. According to the announcement, Wanda Investment transferred 180 million shares of the company to Lu Lili through agreement transfer, accounting for 8.26% of the company’s total share capital. Lu Lili is a legal person of Shanghai Oriental International Film and Television Culture Communication Co., Ltd. Subsequently, on July 17, Wanda Investment and its concerted action person, Shenxian Rongzhi, signed the Share Transfer Agreement on WANDA CINEMAS Co., Ltd., stipulating that Wanda Investment would transfer 177,352,994 shares of WANDA CINEMAS unrestricted shares held by it to Shenxian Rongzhi, accounting for 8.14% of the company’s total share capital.
On July 20th, WANDA CINEMAS announced that Wanda Culture, the indirect controlling shareholder of the company, transferred its 49% equity of Wanda Investment to Ruyi Investment at a transfer price of 2.262 billion yuan. After changes in equity, Confucianism and Italian Investment indirectly held 216 million shares of WANDA CINEMAS through Wanda Investment, accounting for 9.8% of the total share capital.
China Ruyi said in the announcement at that time that although Ruyi Investment would directly hold 49% of the shares of Wanda Investment, it had no intention of appointing directors to Wanda Investment and would not participate in the daily operation and management of Wanda Investment. Wanda Investment will not be a subsidiary of China Confucianism and Italy, and its financial performance will not be incorporated into the comprehensive financial statements of China Confucianism and Italy. At that time, the actual controller of WANDA CINEMAS was still Wang Jianlin, but after the signing of the Equity Transfer Agreement, the actual controller of WANDA CINEMAS will be changed from Wang Jianlin to Ke Liming.
China’s Confucianism reappears and capital operation is generous
The reporter learned from the information provided by a number of third-party organizations that WANDA CINEMAS is one of the few companies in China that has realized the integration of film and television production, distribution, cinema, film management and film projection, and its market share has also occupied the first place for a long time at the screening end. On the content level, WANDA CINEMAS is equally strong. According to public information, the "Beijing Love Story" controlled by Wanda Cinema in 2014 accumulated a box office of 406 million yuan; In 2015, the master controller produced 9 films, including Searching for the Dragon, goodbye mr. loser and Pancake Man, among which 7 films exceeded 100 million at the box office. In 2016, the master controller produced 9 films, including "Love Saint" and "Grand Prix"; In 2017, there were 16 films such as "Journey to the West" and "Master of Memory"; In 2018, in addition to the "Chinatown Detective 2" with a cumulative box office of 3.397 billion yuan, there are 10 master film projects such as "Get My Brother Away"; In 2019, there were 15 master movies including Sheep Without A Shepherd’s Flying Life; In 2021, Detective Chinatown 3, the master producer, ranked seventh in the box office list of Chinese movies with a box office of 4.523 billion yuan.
However, this year, WANDA CINEMAS’s only film projects are Space Exploration Editorial Department, Countdown Love You, Shen Jilan and Three Battalions, which will be released on December 15th. Among them, Cosmic Exploration Editorial Department has a cumulative box office of 67.043 million yuan, Countdown Love You has a cumulative box office of 26.37 million yuan, and Shen Jilan has only 4.565 million yuan. According to WANDA CINEMAS’s semi-annual financial report for fiscal year 2023, although WANDA CINEMAS achieved operating income of 6.869 billion yuan in the first half of the year, the income from cinema screening accounted for over 60%, while the income from film production and distribution and related businesses was only 202 million yuan, accounting for less than 3% of the total revenue. The cinema screening sector is undoubtedly the core asset of WANDA CINEMAS.
The momentum of WANDA CINEMAS’s projection in the cinema will help China’s Confucianism. Before Ke Liming became the actual controller of WANDA CINEMAS, China Confucianism and Italy had included three major businesses: film and television drama production, online streaming media and games. Among them, Shanghai Ruyi Film and Television Production Co., Ltd., a subsidiary, participated in films such as Hi, Mom, A Little Red Flower and Moon Man, and participated in the production of dramas such as No War in Peiping, nirvana in fire and My Fireworks on Earth. In 2023, the main films included Exchange of Life, Keeping You Safe and Warmth. China Ruyi also owns Pumpkin Movie, a streaming media platform. The business segment had 70.84 million registered members when the data was last published in 2021, of which 28.68 million were paid subscription members. The game business of China Confucianism began in 2022, and Beijing Confucianism Jingxiu Network Technology Co., Ltd. was established to lay out the game business. China Confucianism said in the announcement at that time that it would get Tencent’s support in technology, channels and funds.
Before WANDA CINEMAS changed hands, there had been many large-scale capital operations of Confucianism and Italy in China. In 2020, when Hengteng Network acquired Ruyi Film, the two sides signed a three-year gambling agreement, and Ruyi Film was required to achieve an annual net profit of 400 million yuan, 500 million yuan and 600 million yuan respectively from fiscal year 2021 to fiscal year 2023, with a profit of 1.5 billion yuan in three years. After the transaction is completed, the shareholding ratio of Evergrande and Tencent in Hengteng Network is 45.55% and 16.9% respectively. Ke Liming became the third largest shareholder of Hengteng Network, holding 12.5%.
In 2021, with a guaranteed price of 1.5 billion yuan, Ruyi Film bought out Hi, Mom’s share of the profits from the first producer, Beijing Culture. In the end, the box office in Hi, Mom exceeded 5.4 billion yuan. With this transaction, Confucianism and Italian Film successfully completed the above gambling agreement.
At the beginning of this year, among the four cornerstone investors introduced by Lehua Entertainment IPO, Sun Mass Energy, a wholly-owned subsidiary of China Confucianism and Italy, subscribed for 7.9 million US dollars in offering shares, making it the largest one.
(Editor: Zhang Jingchao Proofreading: Liu Jun)