Vanke ‘ready to resolve liquidity issues’
Developer denies ‘tunnelling’ of assets and travel curbs on managerial staff
China Vanke said it is well prepared to resolve its liquidity woes and operational difficulties, rejecting allegations the embattled developer’s majority shareholders are diverting its assets, while also denying travel restrictions have been imposed on its key managerial staff.
While dismissing default concerns, the company told investors on Sunday it had plans to stabilise its operations, reduce its debt load and “properly resolve these short-term pressures”.
Vanke will also “make full use of existing channels and tools” to raise funds and it is fully supported by financial institutions in these efforts, according to a filing on the Shenzhen Stock Exchange.
Shares in Vanke rose by as much as 2.3 per cent in Hong Kong early yesterday, outperforming the broader market, which slipped on geopolitical concerns.
Vanke chairman Yu Liang and president Zhu Jiusheng said during the investor meeting the company was confident about its plan to reduce debt by 100 billion yuan (HK$108 billion) by next year, and pledged timely delivery of homes to buyers, according to the filing.
The meeting was attended by officials from financial institutions and brokerages including Citigroup, UBS Group, Morgan Stanley and China International Capital Corporation, the filing showed.
The meeting follows a downgrade on the developer by S&P Global Ratings last week, which came on the heels of similar cuts by Moody’s and Fitch Ratings earlier in the month.
Earlier, Vanke’s shares and bonds were also pressured by allegations made by its local partner in Yantai, Shandong province, and amid rumours that executives at the firm’s Jinan unit were detained by police for investigation.
The company said police were not acting on the allegation about the Yantai project, while authorities had not determined whether Vanke’s Yantai unit intended to evade taxes.
It also denied there was any tunnelling of the company’s assets. Tunnelling is a term used to define an unethical business practice in which majority shareholders transfer a company’s assets to the detriment of minority shareholders.
The developer added the executive detained by police had no connection to the Yantai project.
Vanke, the second-largest mainland developer by sales, also denied speculation the government had prohibited senior company officials from travelling abroad after a chief partner for its central China operations abruptly left the firm to go to the United States.
The company said the partner in question had gone overseas for personal reasons after resigning in 2023. Outbound travel by the management group stayed normal, it said, adding president Zhu Jiusheng had just returned from a project inspection trip to Hong Kong while co-president Zhu Baoquan was on a visit to Japan.
Vanke shocked investors late last month with a 46.4 per cent slump in net profit for 2023 and failed to propose a dividend for the first time in its history.
The company has two offshore bonds totalling the equivalent of 5.6 billion yuan maturing in 2024, while 7.3 billion yuan of onshore bonds are due or puttable this year, according to S&P.
It also faces a maturity wall next year when 36.2 billion yuan of onshore and offshore bonds are due to mature.
As of the end of 2023, Vanke had estimated accessible cash of 36.3 billion yuan, S&P said.
There were “no signs yet of game-changing measures” in China’s property sector despite several rounds of supportive policies this year, a Goldman Sachs report said.
“Despite these easing efforts, many property activity indicators have continued to worsen, and developers’ funding conditions remain stretched,” Goldman Sachs analysts led by Wang Lisheng said in a report on Sunday.