Core views:

Internal and external factors affected the first loss in half a year, and short-term results are still under pressure. According to the company's semi-annual performance forecast, Vanke 24H1 expects net loss to mother of 7-9 billion yuan (23H1 profit of 9.9 billion yuan), net loss of 5-6.5 billion yuan (23H1 profit of 8.7 billion yuan), decline in land acquisition efforts, high price settlement compounded by overall market decline, contraction in the company's settlement scale, decline in gross margin, asset impairment, investment and asset disposal losses, for the first time since listing.

Priorities have turned to debt management, and the company's current cash flow is secure. According to the performance forecast, 24H1 achieved repayment of 9.34 billion yuan in bulk transactions and 3.26 billion yuan in REITs issued by Printing Power. Active asset disposal put loss pressure on profit tables, but the company's cash flow safety was guaranteed to a large extent. According to Wind and the company's financing announcement, the 24H2 public bonds are expected to mature about 9.6 billion yuan. The repayment funds have been basically raised, and the cash flow is highly secure. Revitalizing assets and improving the debt structure is the company's most important task at present. In the future, it will focus on the three main businesses of development, property management, and long-term rental apartments. Other tracks will gradually withdraw, and in the process, they may still face certain fluctuations in profit and loss, but the business focus will help improve the quality of long-term operations.

Management increases wealth and focuses on long-term business development. Vanke announced a plan to increase the holdings of key management personnel. The plan is to use 0.2 billion yuan of self-financing to increase the company's A-share holdings through a trust plan within the next 6 months, regardless of the price range. The additional shares will be locked in for 2 years. The company's short-term operations are under pressure, and the increase in management holdings further reflects the management's confidence in the company's long-term business development.

Profit forecasting and investment advice. Net profit due to mother is expected to be -99/+0.5 billion yuan in 24/25, giving the company a reasonable valuation of 0.4 times the net assets due to mother at the end of 23, corresponding to a reasonable value of 8.41 yuan/share for A shares. After considering the exchange rate (0.91) and the AH share discount premium, Hong Kong stocks are all rated as “increase in holdings”.

Risk warning. The improvements fell short of expectations, including policy improvements, the sustainability of residents' demand falling short of expectations, etc.; supply-side clean-up disrupted market sentiment; settlement scale and profit margins fell short of expectations.