On January 27, Vanke Corporation Limited (Vanke) announced that the Chairman of the Board, CEO, and Board Secretary all resigned from their positions. Simultaneously, Xinjie from Shenzhen Metro Group will assume the position of Chairman of Vanke’s Board of Directors. Industry experts indicate that Vanke has likely been taken over by a state-owned enterprise and could become the next Evergrande.
According to Vanke’s announcement on January 27 titled “Announcement on Changes in Some Directors and Senior Management Personnel,” due to work adjustments, Yu Liang applied to resign from the company’s Board Chairman position but will continue as a board member. Due to health reasons, Zhu Jiusheng applied to resign from all positions, including Director, Investment and Decision-Making Committee member of the Board, CEO, Chief Executive Officer, and Authorized Representative. And due to work adjustments, Zhu Xu applied to resign as the Board Secretary and Company Secretary but will continue working at the company.
Among the three resigning individuals, there were previous rumors of Zhu Jiusheng being taken away by public security agencies for investigation. Zhu Jiusheng has now resigned from all positions and no longer holds any role at Vanke.
In another announcement released by Vanke on the same day titled “Announcement on the Resolutions of the 12th Meeting of the 20th Board of Directors,” it was stated that Xinjie was elected as the Chairman of the 20th Board of Directors, and Yu Liang, Li Feng, Hua Cui, and Li Gang were appointed as Executive Vice Presidents of the company.
Public records show that Xinjie is the Chairman of Shenzhen Metro Group Limited (Shenzhen Metro), while the other four newly appointed Executive Vice Presidents, except for Yu Liang, are from external sources.
According to the International Financial News on January 27, Li Feng previously served as the General Manager and Party Branch Secretary of Shenzhen Tianjian Real Estate Group Co., Ltd. He transferred to the major shareholder of Tianjian Real Estate, Shenzhen Special Economic Zone Construction Collective Co., Ltd., as a Party Committee member and Vice General Manager in March 2020.
Hua Cui and Li Gang are both from Shenzhen Metro. The former previously served as the Deputy Secretary of the Party Committee of Shenzhen Metro Operation Group Co., Ltd., General Manager of the Audit Legal Center of Shenzhen Metro Group Limited, and Director, General Manager, Party Branch Secretary, and Chairman of Shenzhen Building Materials Trading Group Co., Ltd. The latter served as the Director of the Shenzhen Metro Group office before moving to serve as the Party Committee Secretary and Chairman of Shenzhen Metro Business Management Co., Ltd.
Tian Jun, from the Ping An Group, replaced Zhu Xu as the Secretary of the Vanke Board. Tian Jun’s previous professional experience primarily focuses on Ping An, where he served as an external director of Shenzhen Metro Group in July 2017.
With these changes, the 20th Board of Directors of Vanke now consists of 10 members, with four independent directors. Among the internal directors, only Yu Liang and worker representative Wang Yun are from the Vanke team. The remaining four positions are represented by major shareholders Shenzhen Metro and Shenzhen State-owned Enterprise representatives.
Regarding this, current affairs commentator Wang Jian expressed on his self-media program on January 27 that the resignations of the top management at Vanke do not imply their departure from the company but rather a means to address issues transparently. Moreover, the entry of the state-owned enterprise Shenzhen Metro into Vanke indicates a typical scenario of Vanke being taken over by a state-owned enterprise.
In another announcement released by Vanke on the 27th, titled “2024 Performance Forecast,” it was disclosed that the expected net profit attributable to shareholders of the listed company for 2024 will suffer a loss of approximately 45 billion RMB, a significant decrease of 470.0% compared to the previous year, where a profit of 12.163 billion RMB was realized. The expected adjusted loss after excluding non-recurring items is 41 billion RMB, a decrease of 518.6% compared to the previous year. The basic earnings per share are expected to be a loss of around 3.79 RMB per share, compared to a profit of 1.03 RMB per share in the previous period.
Among the listed property developers that have already released their performance forecasts for 2024, Vanke emerges as the “king of losses.”
When explaining the reasons behind the profit decline at Vanke, the announcement stated that it primarily stems from a significant decrease in the settlement scale and gross profit margin of real estate development projects, additional credit impairment and inventory depreciation provisions, losses from certain non-core financial investments, as well as transactions of bulk assets and equities prices lower than book value, among other factors.
Despite being one of the leading real estate enterprises in China, Vanke still faces challenges due to the overall environment of the Chinese real estate market, including declining sales, financial pressure, and high levels of debt.
According to data from Wind Information, a Chinese financial information service provider, Vanke has approximately 32.645 billion RMB in domestic debt maturing within a year. In terms of the open market, Vanke has a total of 9 bonds maturing domestically and internationally in 2025, with a total size of 21.59 billion RMB. The first quarter of 2025 poses a peak period for debt repayment for Vanke, requiring payment of 9.89 billion RMB in domestic public bonds. The peak for overseas bond repayments is in May 2025, with 455 million USD needing repayment.
Since 2021, Vanke’s net profit has been dwindling, with the fourth quarter of 2023 marking the start of quarterly losses. Concurrently, Vanke’s sales have been decreasing for four consecutive years since 2021. As of 2024, Vanke achieved a cumulative sales area of 181.07 million square meters, a year-on-year decrease of 26.57%; the sales amount was 246.02 billion RMB, a year-on-year decrease of 34.59%, bringing the sales scale back to a level seen a decade ago.
Faced with financial pressures, Vanke began a series of self-rescue measures starting in 2023. In 2024, Vanke successively sold prime assets such as Shanghai Songjiang Impression City, Shanghai Jiading’s Nanxiang Impression City MEGA, Shanghai Minhang’s Qibao Vanke Plaza, and the Shenzhen Bay Super General Base. At the interim performance meeting held at the end of August last year, the Vanke management disclosed that by promoting bulk transactions and reviving resources, Vanke had received over 10 billion in payments during the first half of the year and was negotiating the sale of 19 projects.
Regarding Vanke’s future, newly appointed Chairman of the Board, Xinjie, expressed confidence that the new management team “is confident in achieving stability in Vanke’s team, finances, and operations. The company has made arrangements for debt repayment in the first quarter of this year.”
However, commentator Wang Jian stated in his analysis on January 27 that Shenzhen Metro itself is facing losses and questioned where the funding would come from to rescue Vanke in a debt crisis. He suggested that Vanke is likely to become the second Evergrande, turning into a zombie enterprise.
Economist David Huang, currently in the United States, stated on January 17 to Epoch Times that if Vanke, as one of the last remaining outstanding enterprises in the Chinese real estate industry, were to face a financial crisis, it would lead to the perception that the Chinese real estate sector is in dire straits. This could trigger market volatility and have a severe negative impact on the economy.