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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] China Vanke is facing intensifying financial pressure after posting a massive net loss amid ongoing default risks and a prolonged downturn in China’s property market.
According to reports on April 1 citing the company’s 2025 financial results, Vanke recorded a net loss of 88.56 billion yuan (approximately KRW 19.3 trillion), marking a 78.4% increase in losses from the previous year and its second consecutive annual deficit.
The loss exceeded earlier guidance of around 82 billion yuan. Earnings per share came in at a loss of 7.45 yuan.
The company attributed the worsening performance to weak housing sales and rising costs from previously acquired high-priced projects entering the settlement phase. Additional pressures came from inventory write-downs and provisions for credit losses.
Revenue fell sharply by 32.0% year-on-year to 233.43 billion yuan. Property sales area dropped 43.4% to 10.25 million square meters, while sales value declined 45.5% to 134.06 billion yuan.
Market data also highlights a prolonged downturn. According to CRIC (China Real Estate Information Corporation), Vanke’s annual contracted sales fell to 87 billion yuan last year, down 45% and nearly 80% below its 2020 peak—extending a five-year decline.
Profitability metrics deteriorated significantly. Gross profit plunged 95.5% to 1.26 billion yuan, while the company set aside 20.83 billion yuan in additional inventory impairment provisions, bringing cumulative reserves to 26.64 billion yuan. Inventory levels declined 28% to 373.74 billion yuan.
Debt metrics also worsened. As of year-end, interest-bearing debt stood at 358.48 billion yuan, accounting for 35.1% of total assets. The net debt ratio surged to 123.5%, up 42.9 percentage points from the beginning of the year, while the debt-to-asset ratio rose to 76.9%.
Vanke has negotiated with creditors to extend the principal repayment of certain bonds maturing after December 2025 by one year. Although it repaid 33.2 billion yuan in maturing debt last year, liquidity pressures remain high, with 14.68 billion yuan in bonds due in 2026—of which 11.27 billion yuan will mature between April and July.
The company acknowledged that its challenges stem not only from market conditions but also from its past growth strategy, which relied heavily on high leverage, rapid expansion, and diversified investments.
Looking ahead, Vanke plans to pursue both risk reduction and recovery. It aims to exit high-risk regions and non-core businesses, focus on key cities, restructure its investment model, and enhance competitiveness through integrated real estate development and operational services targeting corporate clients.
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
