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● Yangtze Business Daily reporter Jiang Chuya

There are new developments in Vanke’s financing.

On the evening of July 18, Vanke (Vanke A, 000002.SZ) announced that in order to meet operational needs, Vanke raised 14.728 billion yuan in financing from banks.

The Yangtze Business Daily reporter noticed that recently, Vanke has frequently disclosed the latest trends in bank financing. Previously, on July 9, Vanke disclosed in the investor relations activity record that the company has received great support from financial institutions and its financing channels remain unobstructed. Since the beginning of this year, the company has raised more than 60 billion yuan in new financing and refinancing, corresponding to the repayment of more than 50 billion yuan in debt. During the process, major financial institutions have given the company great support.

In terms of public market debt, Vanke completed the repayment of all matured public market debts in the first half of the year. There are no overseas public debts this year. There are still two domestic public bonds left in the second half of the year, totaling 4.3 billion yuan, which will be repaid through operating cash flow, syndicated loans and other channels.

In terms of performance, in the first half of this year, Vanke suffered its first loss in more than 30 years since its listing. The performance forecast shows that Vanke expects a net profit loss of 7 billion to 9 billion yuan in the first half of the year, a year-on-year decrease of 171% to 191%.

In addition, the company's stock price has continued to decline since late May, with a range of decline of more than 30%.

In order to boost market confidence, Vanke's management planned to increase its holdings. On July 16, Vanke announced that 1,862 key management personnel of the company had completed a plan to raise 200 million yuan to increase their holdings, locking in two years of profit and loss. This was only one week after the announcement of the increase plan on July 10.

Financing and debt repayment accelerated

On July 18, Vanke announced that it had received another 14.728 billion yuan in bank financing, with its subsidiaries in Shenzhen and Chongqing mortgaging land as collateral.

After this guarantee occurs, Vanke's total external guarantees will be 76.648 billion yuan, accounting for 30.56% of the company's audited net assets attributable to shareholders of listed companies at the end of 2023.

A reporter from the Yangtze Business Daily noticed that since 2024, Vanke's financing channels have remained unobstructed and it has made progress in many aspects.

In May this year, Vanke obtained a 20 billion yuan syndicated loan led by China Merchants Bank by mortgaging its equity in Vanwei Logistics. This is one of the largest single loans received by a real estate company in recent years.

On May 13, Vanke applied for a total of 7.339 billion yuan in loans from Bank of China, Agricultural Bank of China and Bank of Beijing; on May 20, Vanke obtained a 1.2 billion yuan loan from Bank of China to meet the development and construction of the Changzhou project; in June, it received financing from Bank of Communications' fixed-income asset package.

In terms of REITs, Vanke's Intime REIT completed its listing and issuance with an issuance scale of 3.26 billion yuan; affordable rental housing REITs and logistics warehousing REITs are also in the application process.

The industry believes that these financing progress will help Vanke improve liquidity, support the company's operations and development, and to a certain extent reflect the financial institutions' recognition of Vanke. At the same time, Vanke is also actively exploring new financing models to cope with the market environment and debt situation.

According to the investor relations activity records disclosed by Vanke on July 9, Vanke's financing channels have remained unobstructed since the beginning of this year, with total new financing and refinancing exceeding 60 billion yuan and corresponding repayments exceeding 50 billion yuan.

In terms of public market debt, the company completed the repayment of three overseas debts in the first half of the year, equivalent to about RMB 10.5 billion, and there is no overseas public market debt due this year; it completed the repayment of three domestic corporate bonds and medium-term notes, totaling RMB 5 billion. In the second half of the year, the company has two remaining domestic public bonds, totaling RMB 4.3 billion, which will be repaid through operating cash flow, syndicated loans and other channels.

Regarding deleveraging, Vanke Chairman Yu Liang set a goal of reducing interest-bearing debt by more than 100 billion yuan in the next two years.

The first loss in the interim report led to a drop in stock prices and increased holdings to protect the market

In the first half of 2024, Vanke expects to record a net loss of 7 billion to 9 billion yuan attributable to the parent company, and a net loss of 5 billion to 6.5 billion yuan after deducting non-operating items. This is the first semi-annual report of Vanke to record a loss since its listing. According to Choice data, since its listing in 1993, Vanke's net profit in the semi-annual report has always been positive and has been rising steadily.

When explaining the reasons for the loss, Vanke said that it was mainly due to the decline in settlement scale and gross profit margin; in addition, impairment of some projects was recorded, some non-core financial investments incurred losses, and the prices of some bulk transactions and equity transactions were lower than the book value.

In order to recover funds and reduce losses, Vanke previously publicly mentioned at its annual report performance meeting that it will strengthen bulk transactions and equity transactions this year and recover more than 30 billion yuan.

In the first half of the year, Vanke realized asset transaction proceeds of 9.34 billion yuan. Among them, in February, it completed the transfer of 50% equity of Qibao Vanke Plaza for 2.38 billion yuan; in May, it completed the transfer of super-total projects and received proceeds of 2.235 billion yuan; in June, Intime completed the equity transaction of 48% of Nanxiang Impression City MEGA.

Regarding the losses, Vanke’s management said bluntly, “Historically, we have had problems such as hasty transformation, taking too big steps, and overly optimistic investments in development projects. As the market changes and housing prices fall, these problems have put pressure on the company’s cash flow and performance.”

Since late May, Vanke's stock price has continued to decline. On May 24, the stock closed at 8.99 yuan per share, but as of July 19, it was only 7.03 yuan per share, a drop of more than 30%.

In order to boost confidence in the face of falling stock prices and large losses in the interim report, Vanke announced on July 10 that a total of 1,862 key management personnel of the company plan to raise 200 million yuan in self-funded funds within six months and entrust a third party to voluntarily increase holdings of the company's A shares through a trust plan.

In the announcement, Vanke said that based on its long-term confidence in the industry and the company's future development, key management personnel intend to implement a share purchase plan to safeguard shareholder interests and enhance investor confidence.

On July 16, Vanke announced that 1,862 key management personnel of the company had completed a plan to raise 200 million yuan to increase their stock holdings, locking in two years of self-financing and bearing their own profits and losses. This was only one week after the announcement of the plan.

In fact, Vanke's management and directors have increased their holdings many times before. For example, in 2014, Yu Liang used his full-year after-tax income in 2013 to buy Vanke shares; in 2022, directors, supervisors, and senior managers who worked full-time at Vanke voluntarily used all their after-tax income in 2021 to buy Vanke shares.

In terms of sales, in the first half of the year, Vanke's sales amounted to 127.33 billion yuan, maintaining its position in the first tier of the industry, and delivered 74,000 houses, of which 56,000 were delivered in the second quarter, accounting for 75%. The company's development business achieved sales proceeds of 118.6 billion yuan in the first half of the year.

At the business level, Vanke continues to improve its three main businesses and build competitive advantages for the new development stage of the industry.

In terms of development business, the company has increased its efforts to dispose of and revitalize its existing resources. In the first half of the year, the company signed contracts for existing homes totaling over 24 billion yuan. New investment projects after 2022 performed well, with a cumulative sales disposal rate of about 60%. The gross profit margin of the sold part of the project was above 18%. In terms of rental housing, Vanke Parkview's GOP profit margin reached 90.1% in the first half of the year, an increase of 1.3 pts year-on-year, and the number of new projects expanded to 15,000, an increase of 85.3% over the same period last year. In terms of property services, Vanke Cloud is in a mature development stage. Among them, the efficiency improvement of Butterfly City operations has achieved remarkable results, and 287 Butterfly City changes have been completed, with an efficiency improvement of nearly 200 million yuan in the first half of the year.