China Vanke's quarterly loss widens to 6.25 billion yuan after overhaul
[NEW YORK] China Vanke's first-quarter loss widened, underscoring the property developer's challenges even after the government in its hometown of Shenzhen stepped in to take control of operations.
The company reported a net loss of 6.25 billion yuan (S$1.1 billion) in the three months ended in March, steepening from a 362 million yuan loss a year earlier, according to a Hong Kong exchange filing on Tuesday (Apr 29).
The loss stemmed mainly from declines in home settlements and gross margins, Vanke said in the filing. Margins dropped to 6.1 per cent from about 10 per cent last year, according to Bloomberg calculations on reported figures.
As part of a government-led overhaul in January, Vanke's two top executives stepped down and an official from Shenzhen Metro Group, its largest state shareholder, took over as chair.
The loss followed significant write-offs in the final quarter last year. Bloomberg Intelligence (BI) said Vanke's contracted sales risk dropping 30 per cent this year due to weakening buyer confidence and a shrinking supply pipeline, according to a note earlier this month.
'This could result in a 74 billion yuan shortfall in its sales proceeds this year versus last year,' Kristy Hung, a property analyst at BI, wrote in the note. 'A deepening cash crunch raises the stakes in any rescue.'
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Other key figures:
Revenue declined 38 per cent to 38 billion yuan
Total cash slipped to 75.5 billion yuan from 88.2 billion yuan at end-2024
Vanke's sold but unbuilt inventory was worth about 219 billion yuan at the end of March
Liquidity support
Shenzhen Metro plans to lend Vanke 3.3 billion yuan to help it repay bonds in the open market. The loan, with a three-year term, charges a floating rate that stands at 2.34 per cent as at Tuesday.
The developer also plans to sell some treasury shares to replenish liquidity.
Vanke has 26.3 billion yuan of onshore and offshore bonds maturing this year, Bloomberg-compiled data showed.
'This year should remain tough for Vanke's earnings due to subdued profitability of presold projects in prior years and increased asset impairments,' said Jeff Zhang, an analyst at Morningstar. 'However, we expect a bottom-line turnaround in 2026 as the gross margins of projects acquired since 2022 have improved materially.' BLOOMBERG
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