occurrences

On August 30, 2024, Vanke A disclosed that in its 2024 semi-annual report, 1H24 achieved operating income of 142.78 billion yuan, -28.9%; realized a net profit loss of 9.85 billion yuan, or -199.8%; and a basic loss of 0.83 yuan per share, compared to -198.6%.

reviews

Large-scale profit declined, accrued impairment and asset disposal, and losses exceeded the lower limit of the performance forecast: 1H24 company's operating income fell year-on-year & net profit loss due mainly to: ① significant decline in real estate development project settlement scale and gross margin, 1H24 development business revenue was 111.68 billion yuan, or -34.6% year-on-year, with a settlement gross margin of 6.8%, a year-on-year decrease of 13.5 pct; ② calculated impairment, 1H24 calculated inventory price reduction preparation of 2.1 billion yuan (including non-consolidated projects) Credit impairment losses of 2.1 billion yuan were calculated; ③ Some non-main financial investments were lost, and the invested Prologis investment real estate was adjusted from the fair value method to the cost method, resulting in a book loss of about 1 billion yuan; ④ the prices of some bulk asset transactions, asset withdrawals, and equity transactions were lower than the book value, resulting in asset disposal losses.

The development scale maintains the first tier of the industry and continues to revitalize the stock: 1H24 completed the delivery of 0.074 million housing units; achieved sales volume of 127.33 billion yuan, -37% over the same period, maintained the first camp in the industry, and achieved a repayment of 118.6 billion yuan. Since 2023, a total of 45.5 billion yuan of resources has been revitalized and optimized, repayment of repayments and investment receivables of 8.1 billion yuan has been achieved, and sales contracts of about 14 billion yuan have been revitalized and optimized to achieve sales contracts of about 14 billion yuan.

Accelerate the promotion of bulk asset and equity transactions and return cash: From January to July 2024, the company achieved a contract amount of 20.4 billion yuan for major transactions (including asset transactions and REIT issuance by Printing Power). Innovative asset trading tools have made positive progress. Yinli Group completed the issuance of 3.26 billion yuan commercial infrastructure REITs; Jianwan Leasing Pre-REIT Fund expanded the Guangzhou project, etc.

Actively use financial support policies to promote the transformation of the financing model: 1H24 added a total of 61.2 billion yuan in financing and refinancing, and 3.66% of the comprehensive cost of additional financing; a total of 21.9 billion yuan of operating property goods were implemented, adding 15 billion yuan to the table; 175 “white list” project declarations, etc.

Payment of 7.3 billion yuan of domestic public bonds and foreign open bonds equivalent to approximately RMB 10.4 billion was completed.

Investment advice

Considering the pressure of the company to remove inventory, depreciation, and dispose of assets, we lowered the company's profit forecast. Net profit due to mother is estimated to be -7.92 billion yuan, 0.44 billion yuan, and 2.4 billion yuan respectively (originally -4.98 billion yuan, 2.57 billion yuan, and 2.63 billion yuan). Since the company's future work focuses on implementing a “package” plan, there is some pressure on short-term performance to maintain the company's “neutral” rating.

Risks indicate sluggish sales in the real estate market; poor development of the operating service business; debt default