In the Chinese city of Shenzhen, the financial information service enterprise “Peng Ding Chuang Ying” has been facing difficulties in meeting some of its obligations, affecting a number of investors, including employees of Vanke, the company’s largest shareholder and a major player in the Chinese real estate industry. Vanke has been receiving a series of negative news this year.
On July 1st, Shenzhen Peng Ding Chuang Ying Financial Information Service Co., Ltd. (referred to as Peng Ding Chuang Ying) issued a statement explaining that due to market factors, some of their equity investment products were unable to meet their planned repayments on time, resulting in delayed payments for some products.
Peng Ding Chuang Ying stated that they are actively working with relevant parties to formulate special plans, raise funds, and ensure the interests of their clients, emphasizing that the current situation is under control.
It was reported that Peng Ding Chuang Ying’s wholly-owned subsidiary, Shenzhen Peng Jin Suo Internet Financial Service Co., Ltd. (referred to as Peng Jin Suo), started to experience payment crisis from March to May this year, with many investors not receiving returns on products they had purchased, including a significant number of Vanke employees.
On July 2nd, news revealed that the targeted financing products of Peng Jin Suo were mainly purchased by Vanke employees. The investment amounts varied from tens of thousands (about $4,100 to $5,500) to millions (about $550,000 to $690,000), with delays starting from March. Only a small portion of products before May were repaid, while no products after May received repayments.
In late June, Vanke employees took to social media to report delays in the repayment of related financial products they had purchased, including one with a 360-day maturity and a 5.2% annualized return rate that was due on April 7th.
Furthermore, a long-time employee at Vanke disclosed to the media that more than ten products from Peng Jin Suo had defaulted since March, involving approximately 700-800 million yuan (about $96.3 million to $110 million), without any prior notification.
According to investors, Peng Jin Suo’s financial products are classified as equity investment products, previously recommended within Vanke but not mandatorily enforced by the headquarters or regional offices. The delayed repayments of Peng Jin Suo’s products are considered non-standard debts and do not directly implicate Vanke.
For investors, these equity investment products do not involve trusts or private equity funds, lack third-party custody, and do not have underlying collateral. Employees internally invested based on trust in the platform’s fundamentals, unaware of the specific investment destinations, leading to significant risks when defaults occur.
Established in June 2014 during the peak of internet finance, Peng Ding Chuang Ying attracted investments from 22 listed companies.
Peng Ding Chuang Ying has a close relationship with Vanke. In August 2016, Vanke made a strategic investment of 300 million yuan (about $41.3 million) in Peng Ding Chuang Ying, marking their largest financing deal. Corporate inquiry platform Qichacha’s information shows that the largest shareholder of Peng Ding Chuang Ying is Shenzhen Vanke Financial Advisory Co., Ltd., a subsidiary of Vanke Group, holding a 20% stake. Vanke Financial, in turn, is 95% owned by Vanke Corporation.
Peng Jin Suo, a wholly-owned subsidiary of Peng Ding Chuang Ying, is an internet finance platform committed to guiding private funds to bolster the development of the real economy, expanding financing channels for small and micro-enterprises, aiding in solving financing difficulties, and providing secure investment returns for investors. On its third anniversary in June 2017, Peng Jin Suo announced that its transaction volume had exceeded 20 billion yuan (about $2.75 billion) by March that year.
Tianyan information reveals that the beneficiary of Peng Jin Suo, Guo Changyu, had been a director at Shenyang Vanke Yongda Real Estate, which is now deregistered, but Guo Changyu remains part of the Vanke Group.
Among the overdue products of Peng Jin Suo is a “New Startup Equity Investment Product,” where the issuer, “Huicheng Haotao,” has two natural person shareholders, Zhang Liling and Luo Ming, both holding director positions in enterprises under Vanke.
This has led to market speculation that Vanke may be utilizing Peng Jin Suo for disguised financing, a concern that has persisted for several years.
Vanke Group did not respond promptly to requests for comment from Epoch Times.
Vanke, a Fortune Global 500 company, is one of the largest real estate developers in China and globally. Originally a private company, Vanke now has significant state-owned enterprise involvement, with Shenzhen Metro being a key shareholder, imbuing Vanke with state-owned background. Due to various factors such as the continuous downturn in the Chinese real estate market and tightened financing environment, Vanke has faced a string of negative news and public controversy this year.
On March 11th this year, ratings agency Moody’s downgraded Vanke’s corporate rating to junk status, further warning of potential downgrades. In a statement, Moody’s revoked Vanke’s Baa3 issuer rating, giving a Ba1 corporate rating, placing all of Vanke’s ratings under review for downgrade. Baa3 is the lowest investment grade rating, with Ba1 and below being non-investment grade, commonly referred to as junk status.
Vanke’s profits were nearly halved last year. Its 2023 financial report disclosed on March 28th indicated a 9.8% year-on-year decrease in sales to 376.12 billion yuan (about $51.7 billion), a 7.6% decline in operating income to 465.74 billion yuan (about $64 billion), and a 46.4% drop in net profit attributable to shareholders of listed companies to 12.16 billion yuan (about $1.67 billion).
In the first quarter of this year, Vanke’s profits further declined, shifting from profit to loss. The Q1 report revealed a 10.05% year-on-year decrease in operating income to 61.594 billion yuan (about $8.5 billion), a net loss attributable to shareholders of listed companies of 362 million yuan (about $49.8 million), and a net loss attributable to shareholders of listed companies excluding extraordinary gains and losses of 1.675 billion yuan (about $230 million), all transitioning from profit to loss.
On April 14th, Vanke’s management acknowledged the company’s phase of operational difficulties, experiencing short-term liquidity pressures, claiming to have devised a comprehensive plan to stabilize operations and reduce debts, aiming to alleviate these pressures effectively. Over the next two years, they plan to reduce interest-bearing debt by over 100 billion yuan (about $13.8 billion) to ensure the company’s security.
Vanke also addressed rumors about “Vanke management being under control” and “Vanke Jinan general manager being taken away by the police.” Regarding the previously reported issues of “embezzlement of funds, high-interest loans, tax evasion, and money laundering,” Vanke stated that the relevant cases are currently under adjudication.
With a stream of negative news affecting Vanke, the company’s stock prices have been volatile this year. Vanke’s A-shares hit a ten-year low in April, closing at 6.94 yuan (about $0.95) on July 4th, about an 80% drop from its peak in 2021.
Vanke has long been seen as a barometer of large developers closely tied to the Chinese government, signaling that turmoil at Vanke could further shake confidence in the Chinese real estate industry. Although the Chinese government did not rescue private enterprises like Evergrande and Country Garden, they provided support to Vanke. On May 23rd, Vanke signed agreements with leading financial institutions such as China Merchants Bank, obtaining a 20 billion yuan (about $2.75 billion) syndicated loan to temporarily ease its cash flow crisis.