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Wanda Film intends to withdraw huge amount of goodwill

来源:证券日报 2020-01-21 07 : 22Source : Securities Daily

Reporter Jie Xu

On the afternoon of January 20, Wanda Films released a preview of 2019 performance. The announcement shows that Wanda Film intends to make provision for impairment of goodwill, totaling about 4.5 billion to 5.5 billion yuan. In terms of actual business operations, Wanda Film's operating net profit for the whole year of 2019 is 1 billion to 1.2 billion yuan. However, the provision of huge goodwill caused Wanda's current net profit loss of about 3.3 billion to 4.5 billion yuan.

A person in charge of Wanda Film told a reporter of the Securities Daily: "The book loss caused by the financial accounting requirements of accounting standards does not affect the fundamentals of Wanda Film."

Carrying out a huge loss of goodwill

In the process of a listed company's acquisition, the difference between the transaction price and the fair value of the target being acquired is commonly known as goodwill.

On January 4, 2019, the Ministry of Finance published an advisory committee's discussion on amortization of goodwill, which led to market speculation that the accounting treatment of goodwill may be changed from “impairment testing to annual amortization”. Many listed companies worry that once the policy changes, The method of amortizing goodwill year by year will affect the company's performance for consecutive years. Even some companies' net profits are not enough to amortize at all, and losses for three consecutive years will face the risk of delisting. In the 2018 annual report, a number of companies with high goodwill withdrew huge amounts of goodwill in the year, which caused the company's net profit loss, but also helped the company eliminate this "dam lake" and will no longer suffer from it.

In the 2019 performance forecast, Wanda Film stated that in accordance with the relevant requirements of the China Securities Regulatory Commission, "Accounting Regulatory Risk Tips No. 8-Impairment of Goodwill" and "Enterprise Accounting Standards", Wanda Film intends to acquire the company in fiscal 2019. Studio City, Time Network, Mowell Fashion (renamed Beijing Wanda Media), and Propaganda GEM Ltd made provision for impairment of goodwill, totaling approximately RMB 4.5 billion to RMB 5.5 billion.

Wanda Film Announcement stated that during the preview period, Wanda Film's main casts and controlled films were fewer, lower volume and some box offices were less than expected, while the same period last year, there were more main casts and controlled films, and the box office performed well. As a result, Wanda's film and film production and distribution and related business revenue and profits decreased significantly compared to the same period last year. On the other hand, due to policy adjustments in the gaming industry, the launch of some products was delayed, and the current operating results of Wanda's film and game distribution and related businesses were below expectations.

Therefore, after preliminary calculations, Wanda Film is not expected to fulfill its 2019 annual performance commitments. According to the disclosed "Profit Forecast Compensation Agreement", the relevant shareholders will compensate the company for performance, and the final compensation amount shall be subject to audit confirmation data.

A brokerage analyst told reporters: "Before, the huge amount of goodwill overhang made Wanda's business performance indicators in the next few years have been unstable; according to the latest goodwill accrual rules, one-time settlement of large amounts of goodwill, there are It will help Wanda Film's future performance to progress steadily. "

Store opening rate continues to increase

"In December 2019, Wanda Film's main cast and main control film" Manslaughter "was close to 1.2 billion yuan at the box office, breaking the record for domestic crime dramas." Chinatown Detective 3 ", which is about to land on the Spring Festival, has been on sale since January 18 In just 23 hours, the box office exceeded 100 million yuan. As of yesterday, the pre-sale box office has exceeded 140 million yuan, which is significantly ahead of the films released in the same period. "Wanda Film related person in charge told reporters.

Wang Jianhui, an industry analyst at Cinda Securities, said: "The national box office for the Spring Festival is expected to erupt intensively. Wanda's box office share is bound to rise. The outstanding performance of Wanda Film's main investment and control movies will also increase Wanda's performance expectations."

After the acquisition of Wanda Film and Television in 2018, Wanda Films officially became a film and television culture industry company. In the first half of 2019, Wanda Films achieved box office revenue of 4.97 billion yuan, a decrease of 0.97% year-on-year; movie attendances were 108 million, a decrease of 9.36% year-on-year; of which domestic box office was 4.17 billion yuan, film attendances were 197 million, and the box office and film attendance declines They are all lower than the national average.

In terms of offline stores, from 2018 to 2019, some theaters in the industry contracted, and the store opening rate showed a negative growth. On the other hand, Wanda Movies maintained an upward trend. On December 30, 2019, the 600th store theater line opened in Guangzhou, and the number of Wanda Cinemas officially entered the 600+ era.

According to the data of Wanda Film's third quarter report for 2019, in the first three quarters, Wanda Film's sales expenses were 634 million yuan, a year-on-year decrease of 23.5%, and the sales expense ratio was 5.5%, a year-on-year decrease of 1.2%.

In this regard, the analyst of Zhongyuan Securities pointed out in the research report that Wanda Film is optimistic about its status as a leading theater channel. Under the circumstances that the theater industry is currently under great pressure, Wanda Film has demonstrated a strong operating advantage. Operating efficiency is at the head of the industry.

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(Responsible editor: Wei Jingting)