On April 14, 2024, the company released the “Record Form of Investor Relations Activities on April 14, 2024”.
Actively respond to stage challenges and deliver the double promise of debt conversion. The company has formulated a package of plans to stabilize operations and reduce debt, which can properly resolve phased pressure. First, it is based on “self-help,” and secondly, making full use of existing financing instruments. The company promises that the debt size will be reduced by 100 billion yuan this year and next two years, and that debt risks will be substantially mitigated; all Vanke Group projects will ensure timely and high-quality delivery.
If you can't do anything, ask yourself instead. The company summed up the three major reasons for the current challenges: 1) the transformation business exceeds its ability to match resources, takes up too much capital for development, and is too large to keep up with management capacity and failure to achieve business goals as planned; 2) it has failed to resolutely break away from industry inertia, leading to aggressive investment and mistakes in many cities, including some key cities and first-tier cities; 3) the understanding of trending changes in the financing model was not comprehensive enough at the beginning. The Group has already begun to adjust the real estate financing model, but it still takes a process to shift from focusing on total credit financing to a new financing model.
Respond positively to public opinion and mitigate negative effects.
1) Yantai's real-name report was not filed; Yantai Vanke has filed a civil lawsuit. First, the Yantai whistleblower reported the case to the Yantai public security authorities in 2023 on Vanke's misappropriation of funds and was accepted; after 3 months of investigation and evidence collection, the Yantai public security authorities decided not to file the case in November 2023. Second, the tax authorities carried out an inspection of Yantai Vanke. Vanke did not refuse to pay the accounts. Currently, the tax authorities have not determined that Yantai Vanke had the subjective intention of evading taxes. Third, there are no personal interests of the so-called Vanke management team in the cooperative project. Yantai Vanke Co., Ltd. filed a civil lawsuit in the Yantai court in February 2024 to claim legal rights according to law. The case has entered the formal trial stage, and the court has decided to litigate and preserve the partner's assets in accordance with the law.
2) Xiao Jin, general manager of Jinan Vanke, was taken away by the public security authorities as an individual case and had nothing to do with the Yantai report.
3) There are no leaders who go abroad and do not return, and management's overseas official duties are carried out normally. Cai Ping, the former chief partner of the Central China region, whose child was born in the US. He is now receiving education and needs to be accompanied by a family. He proposed his resignation in 2023 and obtained approval from the company. Wang Runchuan, the former head partner of the Headquarters Collaboration Center, proposed leaving his job because he went to Hong Kong to further his studies. Currently, he lives in Shenzhen. The Group's management's overseas official travel was carried out normally.
Investment advice: Maintain an “better than the market” rating. We believe that many of the company's businesses still have potential for development, actively address debt issues, and receive support from various parties. The company expects EPS of 1.08 and 1.13 yuan in 2024 and 2025. Considering the company's leading position, we gave the company a moderate valuation premium. According to the 2024 10-12XPE level, it corresponds to a reasonable value range of 10.78-12.92 yuan, maintaining the “superior to the market” rating.
Risk warning: The industry faces a total downside risk, and the actual implementation of the company's debt conversion plan requires follow-up.