Vanke’s No. 1 investor installs chairman in ailing developer to guide its way out of debt

New chairman’s state-linked background sends positive signals, but company’s fate still depends on a sales recovery, an analyst says

Reading Time:2 minutes

A photo taken on March 31, 2024, shows a worker driving past residential buildings under construction by Chinese real estate developer Vanke in Hangzhou, in eastern China’s Zhejiang province. Photo: AFP

Yulu Aoin Hong KongandYuke Xiein Beijing

Published: 8:19pm, 27 Jan 2025Updated: 11:22pm, 27 Jan 2025

Embattled builder China Vanke, once the second-largest Chinese developer by sales, reshuffled its management while forecasting a record US$6.2 billion net loss for 2024 as it struggles to get out from under US$4.9 billion in debt maturing this year.

The company named a chairman with a state-linked background, sending positive signals about its ability to pay its debts after a bond sell-off triggered ratings downgrades from Fitch Ratings and S&P Global a week ago. The news boosted prices of Vanke’s bonds.

Yu Liang resigned as chairman due to “work adjustment reasons”, but would remain with the company as a director, Vanke said in a filing with the Hong Kong stock exchange on Monday. The new chairman Xin Jie is also chairman of state-owned Shenzhen Metro Group, the developer’s largest shareholder.

With assets of more than 5 trillion yuan (US$689 billion), the Shenzhen State-owned Assets Supervision and Administration Commission (SSASAC) has “the ability, strength and enough ‘bullets’ to support Shenzhen Metro Group to promote a stable development of Vanke through all possible means”, an SSASAC representative said on Monday, according to state-owned newspaper Nanfang Daily.

The asking price of Vanke’s bond maturing in 2025 advanced 11 per cent, while the asking price of its bond maturing in 2029 rose 9 per cent, according to Dealing Matrix, a bond information provider.

Vanke said in a separate filing that it expects a net loss of 45 billion yuan for 2024, down from a 12 billion yuan net profit in 2023, citing falling sales and profit margins, provisions for credit and inventory impairments, and losses in bulk asset and equity transactions.