Chinese real estate giant Vanke is using its high-quality asset, Wanwu Cloud’s equity, as collateral to secure continued financial support from its major shareholder, Shenzhen Metro Group (referred to as “Shenzhen Metro Group”).
In a recent announcement, Vanke revealed that it will exchange Wanwu Cloud stocks worth up to 6 billion yuan to replace the credit enhancement measures provided by Shenzhen Metro Group in February this year, amounting to 4.2 billion yuan. This means that Vanke has now pledged around 10 billion yuan of Wanwu Cloud’s equity to Shenzhen Metro Group, accounting for approximately 44.5% of Wanwu Cloud’s total share capital, raising concerns in the market about Vanke’s asset liquidity and debt repayment capabilities.
Shenzhen Metro Group had previously provided Vanke with a 2.8 billion yuan loan on February 10, with Wanwu Cloud stocks worth 4 billion yuan pledged as collateral. With the recent 4.2 billion yuan loan exchange, the total amount of Wanwu Cloud’s pledged equity will reach the billion-yuan level. Some investors are worried that if Vanke fails to repay its debt in a timely manner, there is a risk of change in ownership of its equity in Wanwu Cloud.
Since the beginning of the year, Shenzhen Metro Group has provided Vanke with four loans totaling 11.852 billion yuan. However, apart from the two loans mentioned earlier that specifically mentioned Wanwu Cloud’s equity as collateral, the collateral for the 3.3 billion yuan loan provided at the end of April and the 1.552 billion yuan loan in mid-May were not disclosed in the announcement.
As Vanke’s largest shareholder, Shenzhen Metro Group has paid a heavy price to rescue Vanke. Its 2024 annual report showed a net loss of 33.46 billion yuan, mainly due to significant investment losses and impairment losses on its long-term equity investment in Vanke.
By the end of 2024, Shenzhen Metro Group’s total liabilities totaled a staggering 444.788 billion yuan. The state-owned enterprise, once known as the most profitable metro company, is now facing unprecedented difficulties due to Vanke’s debt crisis.
Vanke’s own financial situation is also concerning. In 2024, the company recorded a net loss of 49.478 billion yuan, making it one of the largest loss-making listed companies in the A-share market. In the first quarter of 2025, it reported a massive loss of 6.246 billion yuan, a 1625.63% decrease year-on-year.
As of March 31, 2025, Vanke’s total liabilities amounted to 914.065 billion yuan, with interest-bearing debt of 361.28 billion yuan. The short-term debt coverage ratio is insufficient, and the liquidity risk remains severe. Against the backdrop of the overall downturn in the Chinese real estate market, whether Vanke can generate cash through sales and repay its debts on time will be a key factor in determining the ownership of Wanwu Cloud’s equity.