By Clare Jim
HONG KONG (Reuters) -Property developer China Vanke said on Monday its chairman Yu Liang and CEO Zhu Jiusheng stepped down as it forecast a record $6.2 billion net loss for 2024, as concerns over the company’s liquidity deepen.
Xin Jie, the chairman of its major state-owned shareholder Shenzhen Metro, will become Vanke’s chairman, signalling increased state oversight on expectations that the government would step in to contain non-repayment risks as the developer faces several debt maturity deadlines this year.
Yu will remain at the company as executive vice president, while three others from Shenzhen state-owned firms will join in the same role.
A state media outlet reported earlier this month that Vanke’s CEO had been detained and that the firm could be subject to a takeover or reorganisation. The report was deleted within hours of its publication.
Vanke has not commented on the report.
“To effectively mitigate risks and earnestly safeguard the interests of house buyers, creditors and investors, the Board has resolved to strengthen the Group’s management capabilities, leverage the resource advantages of Shenzhen Metro … as the substantial shareholder and other parties,” Vanke said in a filing.
It added that it was experiencing “temporary liquidity difficulties” and pledged to concentrate on its core businesses, along with other measures, to improve its operations.
Vanke said in a separate filing that it expects a net loss of 45 billion yuan ($6.20 billion) for 2024, down from a 12 billion yuan net profit in 2023, hurt by a fall in sales and profit margins, additional provisions for credit and inventory impairments, as well as losses in some bulk asset and equity transactions.
One of the best-known household names in China with many projects across bigger cities, Vanke is currently around a third owned by Shenzhen Metro.
It had previously been viewed as immune to the property market turmoil which saw China Evergrande 3333.HK ordered into liquidation last year following its offshore debt default in late 2021.
Analysts have expressed concern that Vanke’s problems could be the last straw for homebuyer confidence, which has shown signs of stabilising in the past few months, and that banks could further shut financing to the sector, squeezing developers that have not defaulted.
The Shenzhen government has enough resources to help stabilise Vanke’s development via Shenzhen Metro, the Nanfang Daily cited the local state-asset regulator as saying.
The newspaper also cited Shenzhen housing authorities and banks as saying that they will help Vanke’s liquidity via asset disposals and financing.