Beijing (AFP) – Indebted Chinese property giant Vanke warned Monday of a major loss last year amid a continuing market slump, while also saying its CEO was resigning due to “health reasons.” Beijing has in recent years grappled with a prolonged crisis in the country’s vast real estate sector, once a key pillar of the economy but now beset with sprawling debt.
Hong Kong-listed Vanke is part-owned by the government of Shenzhen and was China’s fourth-largest real estate firm by sales last year, according to research firm CRIC. Chinese outlet the Economic Reporter this month cited sources as saying that CEO Zhu Jiusheng had been “taken away by public security authorities,” but did not specify whether he had been formally detained. Vanke has not confirmed Zhu’s detention but said in a statement on Monday that he “has applied to resign…owing to health reasons.” Zhu “will no longer hold any position within the company,” the firm said. The Economic Observer article did not specify what offences Zhu may be alleged to have committed. It reported at the time that calls and messages to Zhu and people close to him had gone unanswered. Vanke did not respond to an AFP request for comment following the publication of the article.
Two other top executives — chairman of the board Yu Liang and company secretary Zhu Xu — had left their positions “due to work adjustments” but would continue in other roles, according to the company.
– Persistent woes – Alongside other Chinese real estate titans, Vanke has staggered through a years-long debt crisis, and on Monday in a filing at the Hong Kong Stock Exchange warned of a net loss of approximately 45 billion yuan ($6.2 billion) last year. Among the reasons for the expected losses were “the continuous market downturn,” while “sales and gross profit margins turned out to be lower than investment expectations,” Vanke said in the filing. “The Company deeply apologises for the performance loss and will make every effort to promote business improvement,” it wrote. “Looking forward, the Company considers that the industry has already got through the most difficult time and is confident that the real estate market will stop falling and stabilise.”
Vanke is among several major Chinese property firms to become embroiled in recent years in a debt crisis that has left developers in severe financial distress. Earlier this month, rating agency Moody’s downgraded Vanke’s credit rating to indicate a “negative” outlook. The company’s woes are emblematic of the recent downturn, which has spooked investors and weighed on consumer confidence, applying downward pressure on Beijing’s annual growth targets. Authorities posted one of China’s lowest rates of economic growth in decades earlier this month, suggesting that a string of recent policies aimed at stimulating activity have yet to fully kick in.
Beijing in November announced support measures for the ailing property sector that included lowering deed tax rates for certain first and second homes in four major cities, including Beijing and Shanghai. Cities across the country have also announced various relaxations to purchasing restrictions in recent months, once implemented to limit harmful speculation.
© 2024 AFP
