Vanke wishes for a ninth victory: Vanke will definitely pass this level

Author | Zhou Zhiyu

At the performance meeting on March 29th, Vanke's President Zhu Jiusheng admitted that currently Vanke's financing is still in a normal state, objectively speaking, there is pressure, but this challenge can definitely be overcome.

Zhu Jiusheng stated that a considerable proportion of Vanke's funds are in pre-sale regulatory fund accounts, and overseas public debts are also gradually maturing. However, Vanke has different financing channels and methods, which keeps Vanke's financing in a normal state.

Of course, challenges exist. Zhu Jiusheng pointed out that currently Vanke's financing faces three challenges: the imbalance between revenue and expenditure in the development business, the challenges brought by changes in financing models, and the layout of the entire operational business, namely the insufficient EBITDA to cover the overall interest rate climbing state.

Specifically, the sales of the development business continue to decline, while facing high engineering payment expenditures, resulting in an imbalance in Vanke's development business revenue and expenditure, or a "scissors difference"; in terms of financing, as financing shifts from general-to-general and credit-based to project-based, loan funds are strictly regulated, leading to a reduction in funds flowing back to the group headquarters, posing a challenge to Vanke; in terms of operational business, Vanke's layout has reached nearly 400 billion, but the EBITDA of operational business is not enough to cover the climbing interest rates.

Zhu Jiusheng stated that this has led Vanke to encounter three "scissors differences".

However, there are still solutions. Zhu Jiusheng pointed out that for the decline in sales volume, excellent peers have already provided answers, which can be balanced with the income of operational business. This creates a seesaw effect between the problems encountered in Vanke's development business and operational business, requiring Vanke to spend more time and effort in creating more EBITDA, Net Property Income (NPI), and Net Operating Income (NOI) against the backdrop of declining sales.

Regarding the transformation of financing models, Zhu Jiusheng sighed, "One door closes, but two windows open." Currently, banks have given Vanke 1-3 years to gradually transition, while the real estate financing coordination mechanism, commonly known as the "project whitelist", allows projects to obtain more financing at the project level.

In addition, Vanke also pays attention to operational property loans, which can balance and prevent the contradictions between the development business and operational business that Vanke is facing. By 2024, Vanke, including its subsidiary Inlity Group, has added a total of 10.9 billion yuan in new operational property loans. After taking stock of assets internally, Vanke found that its assets are still very rich.

Zhu Jiusheng said that this will be a "gradual improvement", providing Vanke Group with new sources of funding. Of course, in terms of financing talents, higher requirements will be placed, but it is believed that Vanke has sufficient talent reserves and thickness.

Furthermore, Vanke's major shareholder Shenzhen Metro will provide substantial support in the billions to Vanke, which can further fill the funding gap for Vanke.

Zhu Jiusheng summarized with "The apes on both sides of the strait continue to cry, the light boat will pass through the Triple Mountains", stating that Vanke's left bank has the support of customers and financial institutions, while the right bank has the support of major shareholders, representing the support of state-owned assets and enterprises, government support. Next, relying on its own efforts, Vanke will definitely overcome the current three difficulties