From the WSJ:
China’s richest man, Wang Jianlin, has just signed a deal to buy U.S. Legendary Entertainment and boasts a raft of property projects abroad. But headwinds at home could put a dent in his ambitions.
Two ratings firms in the past two days downgraded bonds issued by Dalian Wanda Commercial Properties Co. Ltd., the real estate arm that Mr. Wang controls, on expectations that falling sales revenue in 2016 and 2017 will not be sufficient to support the firm’s spending plans.
…China’s largest shopping mall owner, known for its namesake Wanda Plazas around the country, is grappling with a supply glut of properties in lower-tier cities, a slowing economy and turmoil in China’s financial markets. While larger property players have been better able to weather the property downturn that started in 2014 compared to their smaller cousins, it appears that pressure is piling on the behemoths, too.
Wanda has been looking to transition to an “asset-light” model that would see it manage shopping malls rather than own them, part of Mr. Wang’s strategy to turn the firm into an investment and services company. Firms that pursue such a model usually shed their debt burden — but analysts noted that Wanda’s debt levels are still high.
Nice little metaphor for the larger macro picture there: former star of China’s investment economy seeking to become a virtual manager or services firm, but being held back by swiftly declining credit quality that may gobble him up before the transition can be completed.
Meanwhile, in Australia, from January:
Chinese billionaire Wang Jianlin’s Dalian Wanda Group, which is planning to build a theme park on the Gold Coast, is reported to be closing in on a deal to buy a stake in Legendary Entertainment, one of the producers of Jurassic World.
Wanda, which already owns US chain AMC and purchased Australia’s largest cinema company Hoyts, is in negotiations with the state government to build a theme park which could threaten the earnings of rival operators Ardent Leisure and Village Roadshow, according to Citi analysts.
The developer has already committed $1.7 billion to the Australian property market with a $900 million residential and hotel project called “Jewel” on the Gold Coast. It has also partnered with Jetstar to operate two Dreamliner flights between the Gold Coast and the city of Wuhan from September last year.
Let’s hope he can get it away before China’s FX crackdown pulls his depositors.
