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China Vanke, a major state-backed real estate developer, reported a projected net loss of up to USD 1.67 billion for the first half of the current year, marking one of its worst performances to date. The downturn stems from a sharp drop in project settlements, contracting profit margins, additional provisions, and asset impairments. Vanke's troubles follow a historic annual loss of nearly USD 6.8 billion in 2024. In response, Shenzhen's municipal government intervened through funding support and leadership overhaul via Metro Group. Despite these efforts, market confidence remains shaky, with share prices falling and analysts warning of ongoing liquidity and repayment risks.
China Vanke, once regarded as a bellwether for the resilience of China's property sector, has reported a staggering projected net loss of up to RMB 12 billion (approximately USD 1.67 billion) for the first half of the year. The financial setback continues a downward trend following its record-breaking full-year net loss of RMB 49.5 billion (around USD 6.8 billion) in 2024. Advertisement
The company attributed the slump to multiple converging pressures most notably, a slowdown in project settlements, narrowed margins, increased provisions for declining asset values, and wider financial impairments. These issues reflect the broader liquidity distress that has crippled China's property industry since the debt crisis emerged in 2021.
Vanke's stock fell as much as 4.2% following the disclosure. Analysts from Citi and Nomura downgraded their ratings earlier, citing concerns about the company's access to refinancing, future project sales, and ability to cover upcoming debt obligations.
In an attempt to shore up liquidity, Vanke recently offloaded 22 million A-shares initially repurchased at higher prices at a nearly 60% discount, raising approximately RMB 146 million. The transaction triggered criticism from investors and signaled the urgent need for cash, with the proceeds earmarked for operational requirements.
To address its growing financial stress, Vanke has increasingly relied on government support. Earlier this year, Shenzhen's state-owned Metro Group injected about RMB 24.9 billion into the company. These funds enabled Vanke to repay nearly RMB 16.5 billion of public debt, providing temporary relief. Additionally, Metro Group's influence deepened as government-backed officials were appointed to key leadership positions. This included a major reshuffle in January, when both the chairman and CEO were replaced with state-linked executives a rare move for a publicly listed company of Vanke's stature.
Despite these interventions, structural challenges remain unresolved. The real estate market continues to struggle with weak homebuyer sentiment, oversupply, and reduced access to credit. While Beijing has implemented several easing measures including lowering down payment requirements and relaxing mortgage rates the recovery has been uneven. Developers such as Evergrande and Country Garden have already defaulted, while Vanke, though comparatively stable until recently, now finds itself under similar pressure.
Meanwhile, Vanke's property services subsidiary Onewo has stepped in with a strategic acquisition, agreeing to buy the remaining 55% stake in Shanghai Xiangda Property Services for RMB 870.3 million (around USD 120 million). This deal, announced a few months ago, is seen as an effort to consolidate its services arm and generate stable cash flow from management contracts in a volatile development market.
Industry watchers have warned that Vanke's deteriorating financial health may signal deeper vulnerabilities within state-supported developers. According to Fitch Ratings and Moody's, Vanke still faces "substantial refinancing risk," particularly as offshore bond markets remain largely inaccessible and many maturities are set to peak over the next 18 months.
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