China Vanke says it has plans in place amid short-term liquidity pressure

China Vanke, a state-backed real estate developer, acknowledged that it is experiencing operational challenges and short-term financial strain, but it also stated that it has “a basket of plans” to stabilise its operations and reduce debt.

After disclosing its situation to Shenzhen Metro, the state-owned firm’s largest shareholder, Vanke has the backing of both entities, the company said in a filing that detailed remarks made by the company at a Sunday discussion with analysts.

Due to worries about liquidity, investors have been selling off Vanke’s bonds and shares in recent weeks, which has led to an unusual order from the central government to assist the Shenzhen-based business.

To make matters worse, S&P was the latest major credit rating agency to revoke its investment grade rating last week. Additionally, the developer verified claims in Chinese media that an executive from Jinan, a city in northeast China, had been detained by authorities for an unidentified probe.

The developer said the Jinan municipal commission for political and legal affairs had informed it the executive’s probe was about a personal situation and unconnected to Vanke during the Sunday meeting, which was held by firm Chairman Yu Liang and CEO Zhu Jiusheng.

Vanke also said that it had sued a business partner for defamation after the partner claimed that management had engaged in financial misbehaviour, including taking personal profits from the company.

Shares of Vanke in Hong Kong edged up 1% on Monday morning, while its shares in Shenzhen rose more than 2%.

The firm promised in the Sunday meeting to complete projects and deliver apartments on time.

Vanke said last month it aimed to boost its cashflow by slashing debt by 100 billion yuan ($13.82 billion) over the next two years, and the Shenzhen state asset regulator was coordinating with several state-owned companies to help its cashflow.