The major shareholder of China Vanke has expressed support for the real estate developer, including a commitment to invest over $1 billion in its project.
On Monday evening, Vanke stated that the state-owned Shenzhen Metro Group had recently expressed optimism about Vanke's development prospects during a communication meeting with financial institutions and had never formulated any plans to reduce its stake in the company, nor had it expressed any intention to do so.
According to FactSet data, Shenzhen Railway Group holds over 30% of Vanke's shares.
Vanke stated that in order to express its confidence in Vanke, Shenzhen Railway Group will undertake some of its urban renewal projects in Shenzhen, injecting new liquidity into the company. The transaction amount is expected to exceed 10 billion yuan (1.38 billion US dollars).
Like many other real estate companies, Vanke has also been hit by a decline in real estate sales and low consumer confidence. Some Chinese real estate companies are facing a serious liquidity crisis, with some defaulting, including debt ridden China Evergrande Group and Sunac China.
The continuously declining real estate market has also become an important obstacle to China's economic recovery, and the Chinese government has launched a series of stimulus measures to boost demand for home purchases.
Vanke also stated that Shenzhen Railway Group is actively preparing to purchase the bonds issued by the company in the open market.
S&P Global Ratings stated in a report last week that "we believe Vanke has sufficient liquidity to repay its domestic and foreign debts due for the remainder of 2023 and 2024." The agency cited Vanke's continuous improvement in real estate sales.
The rating agency predicts that if monthly sales remain at the current level, Vanke will achieve positive operating cash flow in the next 12 to 18 months.
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