Shares of Wanda Hotel Development, the Hong Kong-listed arm of Dalian Wanda Group, soared by more than 20 percent on Thursday in response to a company announcement on Wednesday night that it will acquire tourism and hotel assets from companies controlled by Wanda Chairman Wang Jianlin in a restructuring.
The shares closed at a two-year high of HK$1.39 (17 cents) on Thursday. Trading was suspended on Wednesday pending an announcement.
Wanda Hotel Development said that it will buy Wanda Culture Travel Innovation Group, which engages in theme park design, construction and operation management, for 6.3 billion yuan ($945.6 million), according to a filing the company sent to the Hong Kong Stock Exchange on Wednesday night.
It will also purchase Wanda Hotel Management Co from Dalian Wanda Commercial for 750 million yuan, the filing noted.
The Hong Kong-listed company's interests in Wanda Properties Investment, Wanda International Real Estate Investment Co, Wanda Americas Real Estate Investment Co and Wanda Australia Real Estate Co will be sold to Dalian Wanda Commercial, according to a statement the company sent to the Global Times on Thursday.
The value of this latter transaction has yet to be determined.
"The foreign capital market's evaluation of companies is different from the A-share market, which prioritizes money flows instead of asset appreciation, a common development model of domestic property firms," Song Ding, a Shenzhen-based expert from the China Development Institute, told the Global Times on Thursday.
These deals, which will help Wanda Hotel Development to better "focus on theme park and hotel operation and management," or the asset-light strategy that generates profits through providing services, has gained wide recognition among foreign investors, therefore driving up Wanda's shares, Song explained.
Song said that as China's property market appears to have topped out, it is reasonable that Wanda would retreat from its traditional business and tap into a "blue sea."
"There are numerous well-recognized international luxury hotel managers using asset-light strategies such as Marriott and Kempinski through which Wanda could gain experience," Song said.
But still, Wanda is the first domestic player to adopt the strategy, meaning that there are both challenges and opportunities, he noted.
The asset-light strategy also prompted Wanda's sale of 13 cultural and tourism projects to Sunac and 77 hotel assets to Guangzhou-based property developer R&F in mid-July, said a statement on Wanda's official WeChat account on Thursday.
"Wanda has sold its hotel assets but the company chose to retain its hotel management company, which has been the largest luxury hotel manager in China. Also, Wanda will still own and operate its tourism projects after the spinoff," the statement said.
In the statement, Wanda detailed its current asset-light businesses, ranging from commercial management, hotel management, movies and tourism to children's entertainment, sports and healthcare.