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State-backed property developer China Vanke acknowledged facing short-term liquidity pressure and operational difficulties. Despite this, the company has devised “a basket of plans” to stabilize its business and reduce debt.
After briefing them on its situation, Vanke received support from Shenzhen’s state asset regulator and its largest shareholder, state-owned Shenzhen Metro. This support was highlighted in a filing summarizing comments made by the company during a meeting with analysts on Sunday.
Market Response and Central Government Intervention:
Investors reacted to Vanke’s challenges by selling off its shares and bonds in recent weeks, prompting a rare directive from the central government to assist the Shenzhen-based company.
Credit Rating Downgrade and Executive Investigation
S&P downgraded Vanke’s credit rating, marking the last major credit rating firm to strip its investment-grade status. Additionally, Chinese media reported that police removed an executive based in Jinan for an unspecified investigation. However, Vanke clarified that the investigation was unrelated to the company and was a personal matter.
Vanke announced filing a defamation lawsuit against a business partner who accused management of financial misconduct. Despite these challenges, Vanke’s shares in Hong Kong rose by 1% on Monday morning, while its shares in Shenzhen increased by more than 2%.
Commitment to Project Completion:
During the Sunday meeting chaired by company Chairman Yu Liang and CEO Zhu Jiusheng, Vanke assured stakeholders its commitment to completing projects and delivering apartments on time.
Vanke aims to bolster its cash flow by reducing debt by 100 billion yuan ($13.82 billion) over the next two years. The Shenzhen state asset regulator coordinates with several state-owned companies to support Vanke’s cash flow.
