China Vanke Faces Turmoil as Leadership Steps Down Amid Record Loss Forecast

China Vanke, one of the nation’s prominent property developers, announced that its Chairman, Yu Liang, and CEO, Zhu Jiusheng, have stepped down as the company projected a record $6.2 billion net loss for 2024. The announcement has heightened concerns about the company’s liquidity, which has been under increasing scrutiny.

Yu Liang will remain at the company as Executive Vice President, while Xin Jie, Chairman of Vanke’s largest state-owned shareholder, Shenzhen Metro, will take over as Chairman. This leadership change signals enhanced state involvement, as the government is expected to intervene to address non-repayment risks amid several upcoming debt maturity deadlines. Three additional executives from Shenzhen state-owned firms will also join Vanke as executive vice presidents.

Earlier this month, state media reported that Zhu Jiusheng had been detained and that the company could face a takeover or restructuring. However, the report was removed shortly after publication, and Vanke has declined to comment on the matter.

In an official filing, Vanke acknowledged “temporary liquidity difficulties” and pledged to focus on core operations, improve management capabilities, and leverage the resources of Shenzhen Metro and other key stakeholders to safeguard the interests of homebuyers, creditors, and investors. It also outlined plans to address its financial challenges by concentrating on asset disposals and financing solutions.

The company attributed its anticipated 2024 losses to declining sales, shrinking profit margins, credit impairments, inventory write-downs, and losses from bulk asset and equity transactions. Despite the challenges, Vanke took steps to reassure stakeholders by announcing plans to redeem $137.68 million worth of its 2027 notes early in March, a move that was interpreted by investors as evidence of its ability to meet immediate financial obligations.

Vanke, which is approximately one-third owned by Shenzhen Metro, had previously been considered resilient to the broader property market crisis that led to the liquidation of China Evergrande following its 2021 offshore debt default. However, analysts have expressed concerns that Vanke’s difficulties could undermine recovering homebuyer confidence and further tighten bank financing for developers, compounding stress within the sector.

Local authorities in Shenzhen have expressed their commitment to stabilizing Vanke. The Shenzhen state-asset regulator told the Nanfang Daily that Shenzhen Metro’s involvement essentially represents a nationalization of Vanke, a development seen as positive for creditors. Meanwhile, housing authorities and banks in Shenzhen have pledged to assist Vanke by facilitating asset disposals and liquidity support.

In a new filing on Monday, Vanke revealed plans to transfer its income and equity rights in a Shenzhen skyscraper project to Shenzhen Metro, a move expected to generate a profit of $82.75 million. The project had previously been a joint venture, with Vanke holding a 49% stake and Shenzhen Metro owning the remaining 51%.

Yu Liang, who served as Vanke’s president from 2001 to 2018 and as chairman since 2017, and Zhu Jiusheng, who joined Vanke in 2012 and became CEO in 2018, have played key roles in the company’s growth. However, their departure marks a significant shift during one of the most challenging periods in Vanke’s history.

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