China Vanke, one of the leading property developers in the country, has received a vote of confidence from its majority shareholder, Shenzhen Metro Group. In a recent meeting with financial institutions, Shenzhen Metro expressed its optimism about Vanke’s future and stated that it has no plans to reduce its stake in the company.
Shenzhen Metro currently owns over 30% of Vanke, according to FactSet. To demonstrate its support, the state-owned company has committed to investing more than $1.0 billion in Vanke’s projects. As part of this commitment, Shenzhen Metro will be purchasing some of Vanke’s urban renewal projects in Shenzhen, China, for over 10 billion yuan ($1.38 billion). This infusion of funds will help boost liquidity for the developer.
Like many other property companies in China, Vanke has been facing challenges due to declining property sales and weakened consumer confidence. The industry as a whole is experiencing a severe liquidity crisis, with several developers, including debt-laden giants like China Evergrande Group and Sunac China, facing defaults.
In addition to its financial support, Shenzhen Metro is actively preparing to purchase Vanke’s bonds in the open market. This further demonstrates the shareholder’s confidence in the company’s future prospects.
According to S&P Global Ratings, Vanke has enough liquidity to meet its debt obligations through 2023 and 2024, both domestically and internationally. The ratings agency expects positive operating cash flows for Vanke in the next 12-18 months if the company can maintain its current level of monthly sales.
Overall, these developments indicate a positive outlook for China Vanke and highlight the support it has from its majority shareholder, Shenzhen Metro Group.