Behind the rumors of acquiring a Japanese AV company: Who exactly does Wanda want to buy?

Since the suspension of trading on May 13, Wanda Cinema Line has been caught up in a continuous "scandal storm". Everyone on earth knows that with Lao Wang's personality, if he doesn't take action, then it's fine, but if he does, he will definitely give the world a surprise.

Perhaps the market is afraid of overexcited investors and has forgotten about Wanda, which was suspended, amid the soaring market. In order to avoid being left out, the market has concocted one "scandal target" after another for this cinema giant. Some rumors even went beyond the cognition and imagination of the Chinese people.

On May 27, a piece of news that "the first A-share AV stock is about to be released" instantly ignited the entire social network after 11 a.m. From Weibo and WeChat to Xueqiu Stock Bar, such content was circulated everywhere:

It is said that Wanda Cinema Line (002739.SZ) issued a trading suspension announcement due to major matters involving the acquisition of 80% of the shares of Style, Japan's largest AV company. The company's actresses include: Aki Yoshizawa, Sora Aoi, Asami Yuna, Yuzuki Tuna, Sakura Sakura, Mika Kayama, Hatsune Nana, Fujiura Aru, Sasahara Aru, Nana Mimi, Kuramochi Yui, Haruna Nana, Rikawa Rina, Xiangxi Saki, etc.

At 16:00 that afternoon, Phoenix Entertainment posted an apology statement in a prominent position, saying: On May 27, Phoenix Entertainment published an article titled "Wanda Cinema Line (002739) announced suspension of trading due to acquisition of Japan's largest AV company". The source of the information was Weibo certified users such as "Internet That Thing". After verification, the content was inconsistent with the facts and was a false report. Phoenix Entertainment immediately took the article offline after discovering it.

Investing in AV may also be a good business

If I remember correctly, within the 15 days since the suspension on May 13, Wanda Cinema Line has been involved in scandals with four companies. The frequency and speed of the changes are comparable to Wang Sicong's online quarrels.

The latest one is naturally the largest Japanese AV company Style mentioned above. Maybe some viewers are too busy at work and rarely watch Japanese love action movies. It happens that Shuyu Jun has a wealth of industry knowledge and observation experience in this regard, so let's take you to see how good Style is. (The following content is purely for popular science. Male investors can save this post. Female investors please ignore it directly, but please don't report us.)

In fact, Style's full name is "S1 No.1 Style", a famous Japanese AV manufacturer located in Meguro, Tokyo. Style is affiliated with the Japanese Hokuto Group, and sells AV films through the Hokuto Group's retail network and the Japanese website DMM. Her first AV blockbuster was born in November 2004, and she is considered a rising star in the Japanese AV industry.

Due to the wealth of Style Company, it has a super ability to poach talents, from Aida Tomo, Aoi Sora, to the later joiners Asami Yuma, Honoka, Nishino Sho, as well as their own trained Ozawa Maria, and the super popular Yoshizawa Akiho, Ogawa Asami, Katase Mako, and MIHIRO.

In short, within one year after its establishment, Style Company had 55 actresses and dominated all major awards in Japan every year, and was known as the City of Angels in the Japanese AV industry.

From an industry perspective, Style not only has a strong dominance in market size and brand awareness, but also is very keen on technological innovation. In June 2010, Style used 3D technology to shoot AV films for the first time. The first work was the adult film "3D X Mika Kayama" starring actress Mika Kayama, which caused a huge sensation in Japan's AV industry at the time.

From the perspective of the cost of filming, when using 3D technology to shoot AV, the actresses are required to slow down their movements and new lighting facilities are required, which takes three times as long as the shooting time of a normal AV film.

Since it is not a listed company, I don’t know the annual revenue and net profit of Style. But from a purely financial perspective, investing in Japanese AV companies is a good deal. Why? In 2014, the output value of the Japanese AV industry was about 60 billion US dollars (about 372 billion RMB). Compared with the output value of Chinese movie box office in 2014, which was less than 30 billion RMB, isn’t it ten times that of the market where Wanda Cinema Line is located?

Are Wanda’s other “rumored girlfriends” reliable?

After talking about the AV industry in our neighboring Japan, let’s take a look at Wanda Cinemas’ other “rumored girlfriends”.

On May 26, there were rumors that Wanda Cinema Line would acquire 68.87% of LeTV Pictures and planned to issue no more than 12 million A shares to LeTV Holdings, Jia Yueting and seven other natural persons and pay a certain amount of cash to LeTV Holdings to subscribe for 68.87% of LeTV Pictures. At the same time, it would issue no more than 8 million A shares to Wanda Pictures to acquire 100% of Wanda Pictures.

Digital Entertainment discovered that during the last four days of Wanda Cinema Line’s suspension, the listed company’s stock price exploded to new heights, with a cumulative increase of more than 32% in four days, and Wanda Cinema Line’s market value also soared from the original 100 billion to more than 137 billion yuan. The 370% increase in market value did not arise out of thin air (Huace Film & TV’s current market value is only about 31.2 billion), and the “well-informed” capital market has indirectly reflected that Wanda Cinema Line is about to inject something "big."

So from this perspective, the previous rumors that Wanda Cinemas' acquisition target is Enlightenment are not entirely reliable. Digital Entertainment believes that even if Enlightenment will be incorporated into Wanda in this reorganization, it will be a bonus at most, because although Enlightenment has made great breakthroughs in film data, investment and financing, and information, it is still impossible to support a market value of more than 30 billion.

Another rumored target during the same period was Jinyi Cinema Line. In terms of scale, Jinyi Cinema Line and Wanda Cinema Line are both among the top ten cinema chains in the country. Jinyi Cinema Line has expanded at a high speed in recent years, and its rental level is also high in the industry, which has brought great financial pressure to Jinyi.

According to Jinyi's prospectus, Jinyi's revenue from 2011 to 2013 was RMB 886 million, RMB 1.274 billion and RMB 1.625 billion respectively, and its net profit attributable to parent company shareholders was RMB 34.37 million, RMB 44.85 million and RMB 46.50 million respectively. The high cost of building cinemas has slowed its profit growth and reduced its net profit margin.

From the perspective of demand, Jinyi definitely has the logic for the acquisition, but later, Jinyi denied the rumors of being acquired by Wanda, which made the rumors gradually fade from the outside world's view.

How reliable are the rumors about Wanda Film and LeTV Pictures? From Wanda's prospectus, we can see that Wanda Film was established in 2009 with a registered capital of 50 million yuan. As of the end of 2013, Wanda Film's total assets were 385 million yuan and its net assets were -77.53 million yuan.

According to the data in 2013, Wanda Film and Television is definitely not worth much money. However, since 2014, Wanda Film and Television has been catching up, producing 9 works such as "Hypnotist", "Police Story 2013" and "One Step Away". In the end, its market share even surpassed Huayi Brothers and squeezed into the top 4 of private film companies. In the 2015 film list, there are many popular films such as "Ghost Blowing Light and Lost Dragon" and "Monster Hunt".

If the capital market can give Baofeng Technology a valuation of more than 30 billion, then there is no reason why Wanda Film and Television cannot be worth 30 billion.

As for the rumors about the acquisition of 68.87% of LeTV Pictures’ shares, I would like to ask, do you still remember the promise made by Daming Lake after Jia Yueting returned at the end of last year?

In December 2014, Jia Yueting promised to inject LeTV Pictures into a listed company within a year. If he now transfers the controlling stake to Wanda Cinema Line, does that count as a violation of his promise? Is it going to be a traditional drama of "one woman marrying two husbands"?

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.