Sina Finance on the evening of May 18, Wanda MovieReply to the inquiry letter of the annual report of Shenzhen Stock Exchange, explaining the specific content of the asset group of goodwill, the process and method of goodwill impairment test, and the rationality of calculating large goodwill impairment.
In 2019, Wanda's film performance suffered a huge loss, and its mother deducted non-net profit of-4.847 billion yuan, mainly due to the company's provision for asset impairment of 5.909 billion yuan. among them, the impairment of goodwill is 5.575 billion yuan: the goodwill impairment of the merger and acquisition of studio business, advertising business and Mtime asset group is 2.34 billion yuan, 1.242 billion yuan and 1.993 billion yuan respectively.
Why did Wanda's goodwill "Thunder" not explode in 2018, but stay until 2019? In the reply, referring to the reasonableness of taking into account the impairment of large goodwill, Wanda Film said that the film and television industry had changed from prosperity to decline in the second half of 2018, and the tightening of regulation had led to a decline in the growth rate of the industry that year, making it difficult for the company to be left alone.
At the same time, macroeconomic growth slowed down in 19 years, affecting the performance of cinema business and advertising business. In 2019, due to high-level changes, business structure adjustment and other reasons, the actual revenue of Mtime Network is only 50% of the expected revenue, Wanda Film accordingly lowered its future forecast.
By the end of 2019, Wanda Film still had about 8 billion goodwill, including 3.418 billion yuan for overseas cinema business, 2.307 billion yuan for game distribution and related business, 985 million yuan for film production and distribution and related business, and 618 million yuan for TV drama production and distribution and related business. The inquiry letter of the Shenzhen Stock Exchange requires the company to explain the reasons and rationality of the non-provision for impairment of goodwill.
In this regard, Wanda Film replied that overseas cinema business by overseas subsidiary HG Holdco Pty Ltd. And its subsidiary HG Bidco Pty Ltd. Carry out. The revenue growth rate of cinema projection business, cinema advertising business and outdoor advertising business is relatively stable, and the revenue of cinema projection business increases with the increase of the number of cinemas and screens every year.
Another major part of the stock goodwill is 2.307 billion yuan of game distribution and related business goodwill. Wanda Film said that under the influence of the national game version control policy, only two new games were launched in 2019. At the end of 2018, the release of game version numbers gradually returned to normal, and the company expects 15 new games to be launched in 2020, of which 7 have obtained game version numbers.
The debt problem of the company is also the focus of the Shenzhen Stock Exchange. According to the annual report, the current assets of Wanda's total film assets are 9.324 billion yuan, accounting for 35.20 percent, including 2.463 billion yuan in monetary funds and 2.299 billion yuan in accounts receivable; of the total liabilities, current liabilities are 9.941 billion yuan, accounting for 80.5 percent, including 3.455 billion yuan in short-term borrows. the balance of non-current liabilities due within one year is 1,088 million yuan.
It can be seen that by the end of 2019, the cash on hand of Wanda Film is not enough to cover short-term debt, and there is some pressure on the capital chain. In response, Wanda said in its reply that the short-term loans due so far have been renewed, and those that are expected to mature later can also be renewed, and long-term loans due within one year have also been extended by adjusting the repayment plan.
At the same time, the company also said that the film accounts receivable in the accounts receivable is 315 million yuan, which can be recovered in a short period of time, which can provide protection for short-term solvency; in addition, while keeping the existing credit scale unchanged, the company has won new quotas from financial institutions, and the company will increase the amount received in advance through the sale of stored value cards and movie tickets in advance.
In the past two years, as the national screen growth rate is higher than the box office growth rate, the industry single-screen output has declined, and cinema performance growth has slowed down. In particular, it has been hit by the pneumonia epidemic this year, which has made the industry even worse. Although the State Council has recently issued guidelines to limit the opening of cinemas, the gradually reopened cinemas are still facing the plight of epidemic prevention and control and a shortage of excellent film sources.
However, for high-quality cinema stocks, especially the leading cinema line Wanda film, the organization still insists on bullish in the face of the trend. According to incomplete statistics of Sina Finance, since the beginning of this year, including Huatai SecuritiesTianfeng Securities, Soochow SecuritiesAnd other institutions to maintain a "overweight" or "buy" rating on Wanda films.
In fact, some institutions have taken action to ambush the resumption of work and production of the hospital line units. Among institutional investors, Huaan Fund significantly increased its position in Wanda Film in the first quarter, and the fund Huaan Media Internet Hybrid increased its holdings in Wanda Film 1.03% in the first quarter of this year, ranking fourth among the top 10 tradable shareholders with a 2.06% shareholding.
Huaan Smart Life, another fund, increased its stake by 1.02% in the first quarter of this year, rising to the fifth of the top 10 tradable shareholders with 1.73%. It is worth noting that Wanda Film is the third largest position in the above two funds.
In addition, both Beixiang Capital and Social Security Fund increased their holdings in Wanda Film in the first quarter. Among them, the social security fund 503 portfolio increased by 0.87%, with the top ten newly circulating shareholders ranking ninth. Land Stock Tong ranked seventh with a proportion of 1.17%, and its shareholding ratio increased by 0.44% from the previous month.
Shenwan Internet media team analysis said that in the medium and long term, the cinema line industry integration inflection point is expected to come ahead of schedule, the lack of income in the first quarter may accelerate the clearance of medium-and long-tail cinemas. While the head leading company has strong financial strength, the risk is relatively controllable, and at the same time, it is conducive to its integration of high-quality assets. Shanghai Film, Hengdian and other head companies have recently announced the intention of M & An integration, and it is expected that a new round of industry consolidation will be seen as soon as the second half of the year. (Sina Finance Huang Xiaoyun Xu Yuanlei Liluo)