Property developer China Vanke Co. Ltd (000002.SZ / 02202.HK) is still facing liquidity pressure, and its operations have taken a sharp turn for the worse.
According to its annual report released on March 31, China Vanke recorded a net loss attributable to shareholders of about 49.48 billion yuan in 2024, compared to a net profit of 12.16 billion yuan in 2023, marking a 506.79% decline.
Since its public listing in 1991, China Vanke’s net profit attributable to shareholders has steadily increased, breaking through the 20 billion yuan mark for the first time in 2016. By 2020, this figure reached 41.516 billion yuan, marking its highest level in history. However, since the second half of 2021 when the real estate sector entered a downturn, Vanke’s profitability has sharply declined and in 2024, it experienced its first annual loss since its listing.
“For the company, 2024 was an exceptionally difficult year, facing multiple risks and challenges,” Vanke said in its annual report, saying that the company’s loss was caused by both external and internal factors.
When the supply and demand dynamic in the real estate market underwent a major change, the company failed to break free from its reliance of high debt, rapid turnover, and high-leverage expansion, leading to issues such as aggressive investments, excessive diversification, and delays in transforming its financing model. Moreover, the management and risk control mechanisms were not able to keep up with the needs of business and organizational development, resulting in passive operations.
In early 2025, Shenzhen State-owned Assets Management took full control of China Vanke. On March 31, the company held an analyst meeting attended by its newly appointed Chairman Xin Jie, Executive Vice President Yu Liang, Chief Financial Officer Han Huihua, and Board Secretary Tian Jun.
At the meeting, senior executives said that the relevant departments of Shenzhen city, Guangdong province, and the central government are closely monitoring and actively supporting Vanke’s stable operation to bolster market confidence, and various measures have been introduced by governments at all levels to promote the stabilization of the real estate market.
Vanke’s major shareholder, Shenzhen Metro Group, along with other sectors, have provided various forms of support, creating favorable conditions for Vanke’s reform and risk mitigation, they noted.
Vanke will fully utilize existing policies, coordinate various resources, improve management, increase revenue and reduce costs, strengthen the collection of receivables, enhance performance, minimize losses, resolve risks, and get back on track to healthy development, they said.
Over RMB 30 Billion in Asset and Credit Impairments
Property developers usually pre-sell properties, and only after the property is delivered does the advance payment is recognized as revenue and profit generated. Over the past three years, due to the sustained downturn in the property market, the settlement of earlier high-cost land projects significantly reduced gross margins.
According to its financial report, in 2024, Vanke’s development business settled 20.765 million square meters of floor area, with settlement revenue of 279.09 billion yuan, representing a year-on-year decrease of 29.9% and 30.5%, respectively. The gross margin for the development business was 9.5%, a year-on-year decline of 6.2 percentage points. As a result, Vanke’s overall gross profit slumped by 50.80% year-on-year to 34.911 billion yuan.
However, the primary reason for Vanke’s net profit turning from a gain to a huge loss in 2024 was the large impairment provisions for assets and credit losses. Vanke’s senior executives mentioned at the analyst meeting that considering the real estate market’s downward trend is difficult to reverse in the short term, the company made impairment provisions for inventory price declines on certain unsettled projects, and in addition, some receivables face collection risks, which further increased the loss pressure.
In 2024, China Vanke made asset impairment provisions of about 7.168 billion yuan, a year-on-year increase of 105%; credit impairment provisions amounted to 26.398 billion yuan, an increase of 6,884%, with the total impairment losses from these two items accounting for 71.13% of the pre-tax total loss of about 47.187 billion yuan for the year.
The sharp increase in impairment losses was mainly due to Vanke’s provision of 25.768 billion yuan for “other receivables” in 2024, compared to only 58.878 million yuan in the previous year. Vanke’s financial report auditor, KPMG Huazhen, also listed credit impairment losses on other receivables as a key audit matter.
Vanke’s “other receivables” mainly include land and other guarantees, transactions with partners, amounts receivable from joint ventures or associates and other enterprises, receivables of interest and dividends, etc. Vanke did not detail the specific bad debt provisions for each item in the financial report.
As of the end of 2024, the balance of Vanke’s partner business receivables was about 87.566 billion yuan, a year-on-year decrease of 5.105 billion yuan; the balance of receivables from joint ventures or associates and other enterprises was about 136.23 billion yuan, a decrease of 9.087 billion yuan. This suggests potential bad debts from partners are weighing heavily on earnings, and Vanke cited expected credit losses due to project conditions, counterparty repayment capacity, and economic outlook.
Notably, in 2024, Vanke recorded a net loss of about 48.704 billion yuan, a decline of 338.09% from a year earlier, meaning that the loss of Vanke’s net profit attributable to shareholders was far greater than its overall net loss. During the same period, Vanke’s minority interests were about 774 million yuan, a decrease of 90.67% year-on-year.
Vanke explained that both the company and its business partners had seen a sharp decline in profits at the project level. Under its “equal share, equal rights” model, project-level returns are shared equally, but minority interest reflects only the partner’s share of profits. Vanke’s net profit includes corporate-level expenses, investment and asset transaction gains/losses, and is also affected by ownership stakes—most impairments in 2024 came from high-ownership projects.
Vanke’s short-term liquidity pressure remains high. Last year, the company has implemented a “slim down” plan, actively disposing of assets to rescue itself, however, some assets were heavily discounted, further increasing Vanke’s loss pressure. In 2024, Vanke incurred an asset disposal loss of 2.534 billion yuan, mainly due to the disposal of the Shenzhen Bay headquarters base site and the Beijing Jade Book Garden project.
In May 2024, Vanke transferred the Shenzhen Bay Super Headquarters Base site to a consortium led by Shenzhen Metro, resulting in a loss of 1.785 billion yuan.
In 2021, Vanke voluntarily returned a land parcel in Haidian District, Beijing, but has yet to recover the land payment from the government. This plot of land was acquired by a consortium led by Vanke in November 2016 for 5.9 billion yuan. In August 2024, Vanke pledged the receivables from the land for a 2 billion yuan bridging loan from Orient Asset Management. According to sources, Vanke ultimately received only about 4 billion yuan for the land, a loss of more than 1 billion yuan compared to the original cost.
Only RMB 900 Million in Cash at Holding Company Level
Vanke’s more severe challenge comes from its debt. As of the end of 2024, Vanke’s outstanding interest-bearing debt totaled 361.28 billion yuan, an increase of 41.23 billion yuan from the previous year. Among this, bonds payable was about 60.27 billion yuan, a decrease of 18.96 billion yuan; but bank loans was about 257.92 billion yuan, an increase of 60.58 billion yuan, indicating that Vanke replaced more of its public debt with bank loans in the past year.
According to data provided by Vanke, the company secured new financing and refinancing of 94.8 billion yuan in 2024. Among them, Vanke pledged its 81.62% stake in Vanke Logistics Development Co., Ltd. for a 20 billion yuan syndicated loan, and also secured 6.7 billion yuan in collateralized loans from Bank of Communications with a fixed asset package. In the same year, Vanke repaid 29.2 billion yuan in domestic and overseas public debt on time.
Entering 2025, Vanke’s short-term debt pressure increased sharply. As of December 31, 2024, the company had 158.28 billion yuan of interest-bearing debt due within one year, an increase of 95.86 billion yuan from the end of 2023, and the proportion of short-term debt in total interest-bearing debt rose from 19.5% at the end of 2023 to 43.8%.
According to data from DealingMatrix, Vanke has 16 onshore public bonds due or callable in 2025, with a total principal of 32.64 billion yuan, and it also has two offshore bonds maturing, with a total principal of about 3.6 billion yuan.
However, Vanke’s cash reserves are nearly exhausted. Vanke had cash and cash equivalents of about 88.16 billion yuan as of the end of 2024, a decrease of 11.65 billion yuan from a year earlier and the parent company had cash and cash equivalents of only about 900 million yuan, a net outflow of about 1.749 billion yuan.
Vanke can no longer rely on itself to extricate itself from the crisis and must turn to government and state-owned major shareholders for help. Around the Chinese New Year holiday in 2025, Shenzhen State-owned Assets swiftly took over Vanke’s daily operations and management. Vanke’s senior executives said at the analyst meeting that the newly added state-owned members, together with Vanke’s original management team, are working hand in hand to carry out reforms, prevent risks, and mobilize all parties’ resources to stabilize operations and ensure sustainable development.
In recent times, the market has also been concerned about the moral hazard of Vanke’s original management and whether the previous management mechanisms had a negative impact on its operations. On March 31, Vanke responded that that in 2025, it will adhere to a transparent operational system, build an efficient organization, and reduce costs, enhance efficiency, slim down, revitalize inventory, reduce debt, and standardize governance to solidify the bottom line of risk prevention.
After gaining full control over Vanke’s situation, Shenzhen Metro quickly provided substantial financial support. In February 2025, Shenzhen Metro extended shareholder loans to Vanke in two tranches, totaling RMB 7 billion. In the first quarter of 2025, Vanke repaid RMB 9.89 billion in maturing public debt on schedule.
On March 31, Vanke’s management said that in 2025, the company will continue to dynamically manage its development business, reasonably balance income and expenditure timing, accelerate sales and cash collections, and leverage the internal “blood-generating” capacity of its service-oriented operations.
In addition, Vanke will continue to balance short-term liquidity needs with the long-term value of held assets, flexibly replenishing liquidity through tools such as asset securitization, market-based transfers, and bringing in strategic investors, it said.
“In terms of debt repayment arrangements, Vanke will continue to seek cooperation and support from financial institutions, stabilize existing bank financing, and take full advantage of policy ‘toolboxes’ to pursue new liquidity opportunities,” it said.