China Fund News reporter Feng Yao
"Vanke has long proposed to 'survive', but the solid standards of the past may not be able to fully guarantee the company's safety. At the 2023 annual results meeting held this morning, Yu Liang, chairman of the board of directors of Vanke, said frankly when reviewing the experience since the fourth quarter of last year.
On March 28, Vanke, which is in the "whirlpool", announced its 2023 financial report, in addition to the operating data that has attracted much attention, Vanke for the first time has rarely put forward a leverage reduction target: to reduce interest-paying debt by more than 100 billion yuan in the next two years.
At the results meeting, Vanke's management also publicly responded to many hot issues such as the company's current debt situation and financing challenges.
At the same time, according to Vanke's statement, if all the state-owned assets support in Shenzhen are implemented, it can release 10 billion yuan of capital liquidity for Vanke.
1. The market has overfallen and "resolutely reduced leverage"
As the first real estate company to shout "survive", Vanke has encountered great market pressure since the fourth quarter of last year. According to the annual report, Vanke's revenue in 2023 will be 465.74 billion yuan, down 7.6% year-on-year, and the net profit attributable to the parent company will be 12.16 billion yuan, down 10.53 billion yuan from 22.69 billion yuan in 2022.
At the performance meeting, Yu Liang reviewed the experience since the fourth quarter of last year for the first time. Yu Liang said frankly that although Vanke proposed to "survive" very early, it was not comprehensive enough. "Under the changes in the market, the robust standards of the past may not be able to fully guarantee the safety of the company, so it is necessary to strengthen the bottom-line thinking and make better preparations. ”
He mentioned that in order to "survive", good business ability is only one aspect, and the company also needs to do a good job of stress testing under extreme conditions. According to Yu Liang, Vanke will resolutely reduce leverage this year and next.
Yu Liang said bluntly, "Vanke's management team will resolutely not lie flat and will definitely cross this stage threshold." He said that Vanke will intensify efforts to revitalize the stock and change the real estate, and reduce interest-paying debts by more than 100 billion yuan in the next two years to ensure the safety of the company.
In its annual report released yesterday, Vanke for the first time put forward a rare target of transaction collection and leverage reduction: on the one hand, it will cash in the "reservoir" through bulk asset and equity transactions, and achieve transaction collection of no less than 30 billion yuan in 2024, and on the other hand, it will reduce interest-paying debt by more than 100 billion yuan in the next two years, accounting for one-third of the current interest-bearing debt.
According to the annual report, Vanke's interest-bearing liabilities totaled about 320.05 billion yuan at the end of last year, accounting for 21.3% of total assets. The interest-bearing liabilities due within one year were approximately RMB62.42 billion, a decrease from the same period in 2022, accounting for 19.5%, and the interest-bearing liabilities of more than one year were approximately RMB257.63 billion, accounting for 80.5%.
Regarding the future trend of the real estate market, Yu Liang still maintains his past views. In his view, the real estate market is obviously in a state of over-falling in the short term.
He said that in 2023, the area of new residential construction will be less than 700 million square meters, down 59% from the high point in 2019. "The pivotal value of future residential construction is 1 billion square meters, and the current support policies have been introduced in large numbers and stronger than in the past. With the effect of the policy, it is believed that the market will gradually recover. ”
2. Talk about financing, insurance capital, and rating
Since the beginning of this year, there have been "small essays" about Vanke's financing in the market. At the results meeting, Vanke's management also publicly responded to the challenges faced by the financing side for the first time.
Zhu Jiusheng, President of Vanke, said bluntly that Vanke is currently facing three challenges on the financing side, the first is the challenge of the imbalance between revenue and expenditure of the development business, "The development revenue has declined, but the project expenditure has remained high, mainly due to the peak of project delivery in 2023." ”
The second challenge is the change in financing models. Zhu Jiusheng said that in the past, Vanke mainly carried out aggregate-to-total credit financing with banks, but with the change of regulatory policies, it must now turn to the financing model of project mortgage. "It is still difficult to convert overnight, and the cooperative bank gave Vanke a conversion period of 1~3 years. ”
At the same time, he mentioned that in the process of conversion, banks are mainly concerned about three aspects: where the funds go, the project situation and whether the cash flow is sufficient. According to the annual report, as of the end of last year, from the perspective of financing objects, Vanke Bank borrowed about 197.3 billion yuan, accounting for 61.7%.
The third challenge mentioned by Zhu Jiusheng is that the current rate of return on operating business is difficult to cover the interest rate. However, he said that since 2023, with the continuous deepening of the pilot of public REITs, it will bring new development opportunities to Vanke.
In addition, in order to alleviate the financial pressure, Vanke has also tried to raise funds through multiple channels, and the whitelist of real estate projects is an important window.
According to Vanke's management, as of the end of March this year, Vanke has reported 42 whitelist projects of the housing and construction financing coordination mechanism in 22 cities, involving 16.95 billion yuan of new financing, and will organize various cities to actively apply in accordance with the requirements.
It is worth mentioning that when talking about insurance capital, Zhu Jiusheng bluntly said that Vanke has cooperated with many insurance companies, and the way insurance capital supports Vanke is more to correspond to operating business with debt plans.
"In terms of term setting, it is carried out in the form of '5+1+1+......', and for whether or not to '+', the choice is sometimes in the insurance capital, sometimes in us, and we will sit down and talk when it is approaching. At the same time, he said that the long-term patient support of major insurance companies has made Vanke's operating business more calm and resilient.
As for the downgrade, Zhu Jiusheng said that the ratings of major rating companies for Vanke have indeed been downgraded, but the company's fundamentals have not fundamentally changed. "The downgrade certainly has an impact, but at the moment, it seems to be relatively limited. ”
3. How to support state-owned assets?
Since the fourth quarter of last year, how Shenzhen state-owned assets, including the major shareholder Shenzhen Railway, have provided financial support to Vanke has also attracted great attention from the market.
At the results meeting, Vanke's management said that at the communication meeting with financial institutions on November 6 last year, Shenzhen State-owned Assets made a very positive statement. "After that meeting, Shenzhen State-owned Assets took four major measures to help and support Vanke in a market-oriented and legalized way. ”
First, it has helped Vanke dispose of relatively illiquid real estate and long-term equity investments, second, it has subscribed to Vanke's profitable consumer infrastructure in a market-oriented manner, third, it has promoted cooperation in a number of projects through industrial synergy between Shenzhen state-owned enterprises and Vanke, and fourth, Shenzhen state-owned assets are also actively coordinating financial resources to support Vanke.
According to Vanke, some of these projects have been completed, some have paid sincerity money, and some are in the process of gradual implementation. "If all these projects are completed, it is expected to help Vanke release liquidity of more than 10 billion yuan. ”
4. "Revitalizing the stock and changing the real estate into the property"
Under the current circumstances, promoting "revitalizing stock and converting real estate into real estate" has also become Vanke's top priority to release liquidity.
In 2023, the pilot of public REITs will continue to deepen, bringing new development opportunities to Vanke, which will effectively solve the problems of excessive operating business assets and long payback period. In 2024, Vanke, including its subsidiary, SCPG, has added a total of RMB10.9 billion in new operating property loans, achieving continuous optimization of its capital and debt structure.
As Yu Liang said, the importance of REITs for operating real estate is similar to mortgage loans for residential development, which can achieve a closed loop of business models and promote the transformation of real estate enterprises from developers to real estate developers.
According to Vanke's management, Vanke is expected to become the only company in the industry to achieve a breakthrough in three types of operating REITs.
Previously, the CICC SCPG REIT released by Vanke's SCPG Group has officially entered the inquiry stage, Wanwei Logistics REIT has been officially released on the exchange, and the long-term rental apartment REIT is currently actively declared.
It is understood that in 2023, Vanke's commercial business will achieve revenue of 9.11 billion yuan, a year-on-year increase of 4.6%, and a total of 203 commercial projects will be opened, with a construction area of 11.58 million square meters. Among them, more than 90% of the commercial projects managed and operated by Vanke are in first- and second-tier cities.
In addition, since the opening of the national warehousing network in 2015, Vanke's logistics business has maintained the largest scale of cold chain warehousing in the country, with revenue of 4.18 billion yuan in 2023, a year-on-year increase of 17.2%, of which cold chain revenue increased by 33.9% year-on-year.
Editor: Xiao Mo
Review: Xu Wen