Wang Jianlin's e-commerce dream is hidden in Wanda Commercial Real Estate

Do you still remember the news that Wang Jianlin, Ma Huateng and Robin Li joined forces to build the 5 billion Wanda e-commerce?

For several months, the joint venture seemed to have been silent, leading to outside doubts that Wanda's e-commerce efforts were always loud but little effective.

Don't underestimate Wang Jianlin's ambition. Not only that, in half a month, with the help of Wanda Commercial Real Estate's IPO, Wanda e-commerce will even step into the Hong Kong capital market.

[Wanda E-commerce injects 35% of its shares into listed companies, strengthening Wang Jianlin's holding]

Wanda Commercial Properties' prospectus clearly states: In order to acquire a stake in the proposed Wanda E-Commerce, Wanda Commercial Properties and Wanda Investment Holding Co. Limited established a company called Wanda Information to hold Wanda Group and its affiliated companies' 70% stake in Wanda E-Commerce.

Wanda Investment Holding is a wholly-owned company owned by Wang Jianlin, and it and Wanda Commercial Properties each hold 50% of the shares of Wanda Information.

This means that Wang Jianlin and Wanda Commercial Properties each hold 35% of Wanda e-commerce shares. The prospectus shows that Wang Jianlin holds 51.07% of Wanda Commercial Properties' shares. This means that his Wanda e-commerce shares account for nearly 53%.

It seems that Wang Jianlin's e-commerce dream has not only not been broken, but his personal will has become stronger. So why did he hide his e-commerce dream in Wanda Commercial Real Estate?

My view is that this is a key chess piece he has laid out for Wanda Commercial Properties and even Wanda Group. It will not only help enhance the valuation and investment value of Wanda Commercial Properties, but is also expected to serve as a platform for the future O2O transformation of the entire Wanda Group.

As you know, Wanda Commercial Properties has started its IPO roadshow yesterday and is expected to be listed on the Hong Kong Stock Exchange later this month. It will issue 600 million new shares, with a price range of HK$41.8-49.6 per share, and the maximum fundraising scale will not exceed US$4.411 billion (about RMB 27 billion). Some pure real estate analysts said that Wanda Commercial Properties' selling point is still commercial real estate and retail concepts, which are not sexy and its valuation may be suppressed.

This view may be too pessimistic and narrow-minded. Commercial real estate is not as sluggish as imagined. According to the data of the National Bureau of Statistics, since 2009, the cumulative increase of commercial business housing investment has been above 20%; after 2012, the growth rate of commercial investment has been higher than that of residential investment. As of now, the proportion of commercial investment in the total investment in the real estate industry is still relatively low, and there is considerable room for growth. The recent central bank's interest rate cut and other factors are expected to gradually warm up the entire market.

Wanda Commercial Real Estate has strong fundamentals. The prospectus shows that from 2011 to 2013, Wanda Commercial Real Estate's revenue was 50.77 billion, 59.1 billion, and 86.8 billion, respectively, and its net profit was approximately 19.8 billion, 27.3 billion, and 24.6 billion, respectively.

[Wanda Commercial Real Estate Market Value May Exceed 300 Billion]

If Wanda Commercial Properties cannot outline a new blueprint, it may continue to be questioned. In my opinion, placing 35% of Wanda E-commerce's shares in the hands of Wanda Commercial Properties is exactly the dream that Wang Jianlin has buried for the listed company.

Previously, Wang Jianlin had outlined a plan to integrate the technologies of Tencent and Baidu with the offline resources of Wanda Group and its affiliated companies, including department stores, cinemas, karaoke halls and hotel businesses, to establish a huge O2O platform based on big data operations.

In my eyes, Wanda Plaza is the core foundation of this platform. Take a look at this data: in 2013, the number of visitors to Wanda Plaza exceeded 1.2 billion.

I believe that there is no other company in the world that can come up with similar figures. Moreover, among the 1.2 billion people, there are already more than 30 million members, and this is the data accumulated before Wanda e-commerce officially started operations. Industry insiders believe that after the Wanda e-commerce platform is put into operation, the number of members is expected to exceed 100 million.

If you look beyond the tangible aspects of Wanda Plaza, it is actually very similar to Alibaba's Taobao and Tmall. It may not be a core profit platform, but it is an indispensable and huge traffic platform. This is Wanda's brand spillover effect, and many intangible services are born in the process of attracting this traffic.

Wanda's traffic is not just the traffic of Wanda Plaza, it also includes Wanda Group's various cultural, entertainment, and commercial resources at home and abroad. It can be said that in China's real estate industry, Wanda is not only the largest in scale, but also has the richest offline forms. Take Wanda Plaza as an example. Its rich consumption forms do not worry about conversion rates at all. Almost everyone who appears in it will have consumption behavior.

This is the foundation for the birth of Wanda's e-commerce platform, and it was also the advantage that Wang Jianlin, Ma Huateng, and Li Yanhong repeatedly emphasized at the time. For Wang Jianlin, it is the entrance to the integration of the online and offline resources of the entire Wanda Group.

In my opinion, in the long run, the platform value of Wanda e-commerce will be far greater than its physical part. In a recent article, I said that Wanda's O2O concept can accommodate both physical and virtual, and it has a larger extension than Wanda's physical entity.

Of course, up to now, Wanda e-commerce, which has a huge amount of traffic, has not really made any efforts. Ma Huateng and Li Yanhong have not really helped. The prospectus shows that Wanda e-commerce has not yet been officially established.

However, Wanda Group has not ignored the hidden advancement of technology and business. It has been building the backend foundation and deploying a large number of WIFI hotspots in Wanda Plaza, enhancing consumer stickiness through mobile Internet networks and paving the way for big data operations.

Many people believe that Wanda's e-commerce has been in operation for two years but has not achieved any results because it lacks the e-commerce gene. I think this view is very unreliable. Their understanding of e-commerce is different from what Wang Jianlin said. Wanda's e-commerce is not like Alibaba's platform that mainly sells standardized physical goods, but a non-standard service platform that connects online and offline.

From the perspective of model, Wanda e-commerce is more like Dianping.com. However, it focuses more on integrating resources within the Wanda Group system and has strong regional business characteristics. Models such as Wanda e-commerce and Dianping.com cannot be quickly copied. They must go deep into the offline world and build an ecosystem.

In fact, the development of Dianping itself also confirms the complexity of building an O2O ecosystem. It was once regarded as a slow company, mainly focusing on first- and second-tier cities and lacking scale. The logic of slowness lies in its strong regional characteristics, which is different from Meituan, which mainly focuses on group buying and is mainly in the third- and fourth-tier markets.

So far, BAT has all penetrated the O2O field. Tencent invested in Dianping, Baidu acquired Nuomi.com, and Alibaba's Taobao officially announced a new strategy a few days ago, which is to create a life circle that includes goods and one-stop services, and to deepen offline development. In fact, before the IPO, Tmall established a cooperation with a commercial real estate project in Hangzhou, and the service it promoted was similar to Wanda's O2O model.

However, in the eyes of Internet insiders, as of now, apart from Dianping, there is no company in China that has clearly stated that it is an O2O model company.

This is a marathon. You can also see a hint of caution in Wanda Commercial Properties' prospectus, which shows that it has made long-term preparations. The prospectus shows that before 2017, Wanda Commercial Properties' capital investment in Wanda E-commerce will not exceed RMB 1.75 billion.

On the eve of Wanda Commercial Properties' IPO, Wang Jianlin hid his O2O dream in it, strengthening his direct controlling position while injecting new power into Wanda Commercial Properties. He must have seen the huge business opportunities and current status of Wanda O2O.

I think his move is much more sober and pragmatic than before. If Wanda expands in the way of JD.com, it may fall into the dilemma of blindly burning money. In my opinion, in the two-year cycle from now to 2017, Wanda e-commerce has the ability to cultivate a new ecosystem.

In the real estate industry in China and even in the world, we cannot find a richer business model than Wanda Group. Wanda e-commerce is expected to activate the source of Wanda's future profits - 1.2 billion passenger traffic and more than 30 million active users (members), becoming a force driving the valuation of Wanda's commercial real estate.

The PE ratio of Hong Kong's domestic real estate market is generally 5 to 7 times. However, most of them are residential real estate developers, lacking value-added and synergy effects. Wanda Commercial Properties has a richer profit model and development path, and its PE value should take Wanda e-commerce into consideration. I think that from the ambitions of Wang Jianlin and Wanda Group in Wanda e-commerce, commercial companies and some Internet companies that are closely connected with entities should be used as references, and its PE value should be around 20 times. Based on Wanda Commercial Properties' 2014 net profit forecast, Wanda Commercial Properties' valuation may reach 300 billion yuan. This figure is about twice the market value of Vanke A (000002.SZ).

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.