China Vanke, one of the largest property developers in China, announced on Monday that its top executives would be stepping down and projected a loss of $6.2 billion for 2024. This development highlights the ongoing struggles in China's prolonged property downturn.
In a filing in Hong Kong, Vanke stated that its chairman, Yu Liang, would resign for "work adjustment reasons," while chief executive Zhu Jiusheng would leave due to health issues. These changes are part of an effort by the local government to exert more control over the company's management.
Xin Jie, the head of Vanke's largest shareholder, a government-owned entity in Shenzhen, will take over as the new chairman. Additionally, three new executives from state-owned firms will join the company. Yu Liang will remain with Vanke as an executive vice president.
In a separate filing, Vanke indicated that it lost $6.2 billion last year, attributing part of the loss to declining sales. Financial analysts have expressed growing concern over Vanke's financial situation, especially following a reported $2.5 billion quarterly loss in October and warnings regarding its ability to repay creditors. Recently, S&P Global and Fitch downgraded their outlooks for the company, citing fears over its cash generation capabilities amid significant sales declines.
Vanke faces $5 billion in bond repayments due this year. The broader Chinese real estate market has seen numerous companies default on substantial debts, leaving millions of home buyers without the apartments they had purchased. Although experts previously believed Vanke could withstand the downturn due to its state-owned largest shareholder and its designation as a "high quality" developer by the government, its current struggles raise concerns about the overall property market in China.
The announcements made on Monday were the first public comments from the company since reports emerged that Zhu had been taken away by police and that local officials had been appointed to oversee Vanke. These reports were quickly retracted.
Multibillion-dollar losses, executive changes, and state interventions have become increasingly common in China's property sector, where major builders have collapsed under significant debt burdens. Last week, Country Garden, another major developer that defaulted on $187 billion in debt in 2023, was granted additional time to negotiate a restructuring deal in a Hong Kong court. This follows the court's order for Evergrande, which defaulted on over $300 billion in debt in 2021, to be liquidated a year ago.