WSJ wealth editor Wei Gu looks at the Chinese movie industry, and sees they are doing well. Wanda founder Wang Jianlin started to sell shares of his Legendary Entertainment to local investors to strengthen his cash position, but that is not a sign he is in trouble, she writes in the Wall Street Journal.
Wanda Group’s billionaire founder Wang Jianlin personally owns 20% of Wanda Pictures. Wanda Culture, which includes Wanda theaters, AMC theaters and other entertainment assets, owns 55%, and the remaining 25% is owned by Wanda Group, according to the document. Investors buying into the deal will receive a mix of new shares in the entity buying Legendary Pictures and existing shares in Wanda Pictures.
Even after last summer’s stock-market debacle, Chinese movie companies trade at lofty valuations—Shenzhen-listed Beijing Enlight Media Co., for example, at 74 times estimated 2015 earnings; and U.S.-listed Bona Film Group Ltd., which has received a going-private offer from Alibaba Group Holding Ltd. and other investors, at a whopping 1,261 times 2014 earnings.
Chinese companies have gone on a global buying spree. Acquisitions of U.S. companies set a record last year, according to Dealogic—which has already been broken in 2016.
A year ago Wanda Group snapped up Swiss sports-marketing company Infront Sports & Media AG for $1.2 billion and World Triathlon Corp., organizer of the Ironman Triathlon, for $650 million. In 2012 it spend $2.6 billion for U.S. movie-theater chain AMC Entertainment Holdings Inc.
Wanda’s global expansion comes as its cash flow at home slows. Earlier this month, Moody’s Investors Service lowered the outlook to negative from stable for Dalian Wanda Commercial Properties Co., Ltd., the conglomerate’s Hong Kong-listed property arm, citing cash-flow pressure. Dalian Wanda Commercial Properties is China’s largest commercial developer.
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