Under Massive Losses, Vanke Restructures: Shenzhen Metro's Xin Jie Appointed Chairman, Yu Liang Named Executive Vice President (AI Translation)
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文｜财新 陈博
By Chen Bo, Caixin
【财新网】现年60岁的郁亮因工作调整，辞去董事会主席职务。1月27日，万科集团（000002.SZ/02202.HK，下称“万科”）发布公告，披露上述消息。
[Caixin Global] Yu Liang, aged 60, has stepped down as Chairman of the Board due to work adjustments. On January 27, Vanke Group (000002.SZ/02202.HK, hereinafter referred to as "Vanke") announced the news.
郁亮将继续担任公司董事，并留任执行副总裁。万科大股东深圳地铁集团（下称“深铁”）董事长辛杰当选万科董事会主席。辛杰于2023年10月当选万科董事会副主席。
Yu Liang will continue to serve as a director of the company and will remain as executive vice president. Xin Jie, chairman of Shenzhen Metro Group (hereinafter referred to as "Shentie"), the largest shareholder of Vanke, has been elected as the chairman of Vanke's board of directors. Xin Jie was elected as the vice chairman of Vanke's board of directors in October 2023.
当天万科召开董事会会议，审议通过多项议案，该公司管理团队大幅调整。
On that day, Vanke held a board meeting where several proposals were reviewed and approved, resulting in a significant reshuffle of the company's management team.
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- Yu Liang stepped down as Vanke's Chairman but remains a director and executive VP; Xin Jie, of Shenzhen Metro, takes over as Chairman amid management reshuffles.
- Vanke forecasted a 45 billion yuan net profit loss for 2024 and faces its first annual loss since going public, with significant debt challenges.
- State-owned Shenzhen Metro, as Vanke's largest shareholder, aims to enhance control and provide financial support to stabilize Vanke's operations amidst a downturn in the property market.
Yu Liang, 60, has stepped down as Chairman of Vanke Group but will continue as a director and executive vice president. Xin Jie, Chairman of Shenzhen Metro Group, Vanke’s largest shareholder, is now the Chairman of the Board at Vanke. This reflects the increased influence of Shenzhen Metro over Vanke and anticipates enhanced state-owned enterprise support for Vanke. The same day, Vanke announced a 470% year-on-year decline in its net profit forecast for 2024, marking its first annual loss. Challenges such as high debut repayments due in 2025, have resulted in a significant management reshuffle to address Vanke’s debt crisis. Vanke currently holds 79.75 billion yuan in cash against a short-term liability of 120.2 billion yuan, indicating a liquidity issue.[para. 1][para. 2][para. 3]
The Shenzhen State-owned Assets Supervision and Administration Commission has vowed thorough support for Vanke through coordinated asset and funding management. Chairman Xin Jie reassured stakeholders of a solid plan to stabilize Vanke amid active debt repayment arrangements for early 2025. The leadership change, involving Yu Liang and Zhu Jiusheng amid rumors of an investigation surrounding Zhu, links to Vanke’s operational challenges as the company forecasts substantial losses for the fiscal year 2024, prompting a strategic managerial overhaul.[para. 3][para. 4][para. 5]
Vanke’s financial strains put its public domestic debt in sharp focus. Upcoming 2025 obligations include redeeming several billion yuan worth of debts, for which funds are already earmarked. With bank loans totaling about 224.501 billion yuan by June 2024, Vanke is engaged in talks with potential buyers like the Singaporean Government Investment Corporation to dispose of equities in logistics ventures to streamline operations and recoup funds. This strategy, partly driven by previous aggressive land investments from 2018 to 2021, reflects the need for decisive asset divestiture to manage growing losses. A focused reduction in non-core business ventures is underway to reinforce core business stability.[para. 5][para. 6][para. 7]
Vanke's aggressive land acquisition strategy from 2018 to 2021 significantly contributed to its current financial predicament. Initially hailed for its market-leading land scale, Vanke’s aggressive investments have backfired amid a real estate downturn starting July 2021, leading to sustained losses. Despite signals for a market downturn, Vanke persisted with substantial land exposures driven by competitive pressures. This has now prompted a period of adjustments to refocus operational priorities and mitigate ongoing financial burdens.[para. 8]
Vanke has a history of being a lucrative target in the capital markets. The firm's involvement in the notorious "Baowan dispute" was resolved through shrewd strategic maneuvers, with Shenzhen Metro becoming the largest shareholder. However, amid the prevailing real estate downturn, Shenzhen Metro has realized significant paper losses on its Vanke shares. This comes even as Shenzhen Metro took major loans for its Vanke stake acquisition, leading to substantial interest burdens and a nearly complete expenditure of dividend returns from its Vanke equity holdings to service interest obligations. These losses, compounded by Vanke’s downturn, have significantly impacted Shenzhen Metro’s profitability over the years, forcing deeper strategic alignment and involvement in Vanke’s daily operations. As of late 2024, a dedicated task force involving state-owned stakeholders and government representatives is overseeing Vanke’s business moves, potentially reshaping its operational directions in the coming years.[para. 9][para. 10]
- Vanke Group
- Vanke Group is facing significant management changes and financial challenges. Chairman Yu Liang stepped down, and Xin Jie from Shenzhen Metro Group became the new chairman. The company forecasts a net profit loss of 45 billion yuan for 2024, marking its first annual loss. Vanke is under financial strain, requiring about 100 billion yuan in liquidity support and is negotiating the sale of assets to address debt issues. Shenzhen Metro Group, the largest shareholder, plans to strengthen its control and support Vanke's stability.
- Shenzhen Metro Group
- Shenzhen Metro Group, as Vanke's largest shareholder, will strengthen its involvement in Vanke's management. It faces over 330 billion yuan in losses from its investment in Vanke. The group used a mix of self-financing and bank loans to acquire Vanke shares. In recent developments, Shenzhen Metro took a more active role, forming a workgroup to oversee Vanke's operations amid financial challenges.
- China Construction Bank
- The article briefly mentions that Zhu Jiu Sheng, who played a vital role at Vanke, previously worked at China Construction Bank for 19 years and had extensive connections in Shenzhen's financial circles before joining Vanke in 2012.
- VWLogistics
- VWLogistics, directly held by Vanke with an 81.62% stake, is in the process of being sold to Singapore's GIC. The transaction, expected to be finalized in the first quarter of 2025, is crucial for Vanke to address its debt issues. In May 2024, Vanke pledged this stake to secure a 200 billion yuan syndicated loan. Successful sale could provide Vanke with over 45 billion yuan in additional funds after repaying the loan.
- GLP Group
- According to the article, Vanke plans to increase efforts to sell and transfer early non-core assets, including its stake in GLP Group. The company has been in discussions with Singapore's GIC to sell its logistics arm, GLP, and the deal is nearing completion, likely to be finalized in the first quarter. If successful, the sale will help Vanke address its financial challenges.
- CICC
- According to the article, CICC (China International Capital Corporation) has been appointed by the Shenzhen government as a financial advisor for Vanke. CICC is involved in conducting due diligence on Vanke's assets and liabilities to draft financial arrangement plans and support the company's financial stability amid its challenges.
- Baoneng
- The article mentions that from July 2015, Vanke faced intense competition from several entities, including Baoneng, during a protracted shareholder battle. This struggle, involving Baoneng, China Resources Land, and China Evergrande, lasted nearly two years and represented significant challenges for Vanke in defending against external acquisition threats.
- China Resources Land
- The article mentions China Resources Land in the context of a stock ownership battle involving Vanke, which included China Resources Land, Baoneng, and China Evergrande. Ultimately, Shenzhen Metro Group intervened to acquire shares from some rivals, including China Resources Land, to become Vanke's largest shareholder.
- China Evergrande Group
- The article mentions China Evergrande Group in the context of a past stock acquisition battle involving Vanke. China Evergrande was one of the companies involved in the contested stake in Vanke, selling its shares to Shenzhen Metro Group in 2017, which helped Shenzhen Metro become Vanke's largest shareholder. There is no further detail on Evergrande's current situation in the article.
- October 2023：
- Xin Jie was elected as the vice chairman of Vanke's board of directors.
- April 2024：
- Vanke proposed a comprehensive plan to 'focus on core business and streamline operations'.
- By Mid-2024：
- Shenzhen Metro's holding ratio in Vanke shares fell to 27.18%.
- June 2024：
- Vanke's bank loan balance stood at approximately 224.501 billion yuan.
- End of September 2024：
- Vanke held approximately 79.75 billion yuan in cash.
- 4th Quarter 2024：
- Vanke began discussions with GIC regarding the sale of its equity in Wanwei Logistics.
- End of 2024：
- Assets of Shenzhen's state-owned enterprises expected to exceed 5 trillion yuan.
- First Quarter 2025：
- Vanke scheduled domestic public debt obligations redemption.
- January 16, 2025：
- Rumors circulated about Zhu Jiu Sheng's cooperation with a public security investigation.
- January 17, 2025：
- Zhu Jiu Sheng updated his personal social media circle responding to rumors.
- January 21, 2025：
- Vanke had transferred repayment funds to a regulatory account for debt due on January 27, 2025.
- January 23, 2025：
- Meeting convened by decision-makers mandating assurance of Vanke's debt payments in the first quarter.
- January 24, 2025：
- Vanke issued an advisory announcement for '2020 Vanke 02'.
- January 27, 2025：
- Vanke announced Yu Liang stepping down and Xinjie's election as new chairman, and significant management reshuffles.
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