China’s Richest Man to Buy More ‘Movies’

Wang Jianlin, 61 years old, is the Chairman of the Dalian Wanda Group, China’s largest real estate developer, as well as the world’s largest movie theater operator (Wiki).

1.jpg

Highlights

1

Reuters: Chinese property and investment firm Dalian Wanda Group has agreed to acquire a majority stake in Legendary Entertainment, valuing the U.S. movie studio company at between $3 billion and $4 billion, according to a person familiar with the matter.

Founded in 2000, Legendary has produced hits such as “The Dark Knight,” “Jurassic World,” “Man of Steel,” and the 2014 remake of “Godzilla,” as well as “The Hangover” film franchise.

Legendary generally provides half the financing for movies whose budgets can run up to $200 million or more. It also has an agreement with China Film Co, the largest and most influential film company in China, to co-produce movies.

1

Quartz: What’s the real reason for Dalian Wanda’s cinema acquisition spree? Leverage with film studios. A successful acquisition in Europe—industry rumor pinpoints Odeon & UCI Holdings or Vue Entertainment as the likely candidates—would give Wanda a presence on three continents, in three of the biggest movie theater markets. That could alter the balance of power between Dalian and the Hollywood studios, which typically negotiate distribution deals on a regional basis. “Exhibition has tended to be a territorial business,” Screen Digest analyst David Hancock told the WSJ. “A major global chain could change the dynamics.” In addition to mulling a European acquisition, the company is currently exploring plans to build multiplex cinemas in India

1

2

 

New York Times: Thomas Tull, a former laundromat owner, founded the production company in 2000 and turned it into a Hollywood powerhouse, producing films such as “Godzilla” and “Pacific Rim.” The management and Mr. Tull will continue to own the rest of the company.

Industry experts say the deal is beneficial on both sides. Legendary makes big-budget, special-effects-driven movies that are popular with Chinese audiences, and Wanda owns the AMC cinema chain as well as the biggest cinema chain in China. Wanda could provide Mr. Tull with money, a growing audience and a champion in China that can get more of his films into a tightly controlled market.

Financial Highlights (Gurufocus):

Dalian Wanda Commercial Properties Co Ltd (HKSE:03699)

P/E ratio: 5.21

Net Margin: 16.81

Return on Equity: 6.72

D/E ratio: 1.12

Wanda Cinema Line Co Ltd (Shenzen:002739)

P/E ratio: 108.97

Net Margin: 15.69

Return on Equity: 27.09

D/E ratio: 0

1

Additional news: Dalian Wanda to invest $2.3bn in hospitals (Financial Times).

References

Forbes http://www.forbes.com/china-billionaires/

Wikipedia https://en.wikipedia.org/wiki/Wang_Jianlin

Reuters http://www.reuters.com/article/us-legendaryentertainment-m-a-dalianwand-idUSKBN0UJ01B20160105

Quartz http://qz.com/71934/whats-the-real-reason-for-dalian-wandas-cinema-acquisition-spree/

New York Times http://www.nytimes.com/2016/01/06/business/dealbook/dalian-wanda-legendary-entertainment.html?emc=edit_dlbkam_20160105&nl=dealbook&nlid=72974237&_r=0

Financial Times http://www.ft.com/fastft/2016/01/06/dalian-wanda-to-invest-2-3bn-in-hospitals/?nl=dealbook&emc=edit_dlbkam_20160106

Disclosure: I do not have shares in any of the companies mentioned in this article and don’t plan to initiate purchase within the next 24 hours. I would not receive any compensation for doing this article. I am not a professional financial analyst. This is just a hobby. Lastly, my work is not error-free, but I strive for it to be. Do not consider as a buy or sell advice. Invest at your own risk.

If you are interested in this similar approach to investing and would seek updates or share ideas, I wish to invite you to this Facebook group SEEKING VALUE (https://www.facebook.com/groups/SeekingValue/?ref=bookmarks)

Happy investing.

Mark Y.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s