Vanke won the cash flow defense battle

Author | Zhou Zhiyu

Editor | Zhang Xiaoling

Signals of industry recovery are beginning to emerge, and Vanke has also proven through a report that it is moving out of the pain and achieving a phased victory.

On the evening of March 31, Vanke released its 2024 financial report. The report shows that it achieved annual revenue of 343.18 billion yuan and sales of 246.02 billion yuan, maintaining a leading position in the industry.

It is worth noting that last year, Vanke's net cash flow from operating activities was approximately 3.8 billion yuan, marking 16 consecutive years of positive cash flow, demonstrating that Vanke's "streamlining" strategy is showing resilience. Additionally, as of the end of 2024, Vanke held cash and cash equivalents totaling 84.01 billion yuan.

This report marks that this leading real estate company has won the cash flow defense battle during the industry's deep adjustment period.

With strong support from various parties, Vanke has ushered in a significant turning point in its reform and development. In the first quarter of this year, all of Vanke's maturing public debts have been repaid.

The pain of the deep adjustment period in the real estate industry has tested every player involved. Vanke is attempting to carve out a survival path in the gap between the stock market and new tracks through a "bone-scraping" transformation. It is injecting a strong dose of confidence into the industry's narrative of "stabilizing after a decline" with tangible changes.

The annual report shows that the losses in Vanke's 2024 financial report are mainly due to provisions for inventory impairment on some high-priced land projects, the need to recognize impairment on some other receivables, and losses from non-core financial investments and transactions of bulk assets and equity at prices below book value.

Vanke's management stated that last year the company implemented a comprehensive plan for streamlining, accelerating asset disposal to replenish cash flow, which increased losses. Additionally, some receivables faced recovery risks, adding to the pressure of losses.

However, with actions taken over the past three years, the profit situation at the project level is recovering. The gross profit margin of the 70 new projects acquired after 2022 has rebounded to 16%, creating benchmark projects such as Shanghai Ideal Land, with multiple projects achieving an average disposal rate of 80%, proving that product competitiveness remains strong.

The net operating cash flow for the year still had a positive value of approximately 3.8 billion yuan, indicating that Vanke has made positive progress in its business streamlining efforts.

In terms of sales, Vanke's total sales amount last year remained in the industry's top tier, while continuously maintaining a repayment rate of over 100%.

At the same time, it actively implemented the requirements for streamlining, promoting the exit from non-core businesses and investments. Last year, Vanke achieved a bulk transaction signing of 25.9 billion yuan in 2024, completing resource revitalization and cash recovery of 10.4 billion yuan.

Last year, Vanke revitalized the stock commercial office land in the Nanzhan Business District of Panyu District, Guangzhou. Although Vanke acquired this land in 2016, it was affected by planning adjustments and underground rail construction, making it unsuitable for development in the short term. Through consultations with the local government, the land was ultimately revitalized through the method of "land storage and optimized planning for re-transfer," improving the utilization efficiency of stock resources.

Management stated that under the backdrop of increased supportive policies for stock revitalization, the company will continue to seize opportunities this year On one hand, there is a thorough study of policies such as special bonds and the acquisition of existing commercial housing, actively promoting the revitalization of eligible project resources. Currently, Vanke has over 30 projects advancing in this direction.

Another focus is on enhancing internal capabilities for newly added capacity that has been revitalized or optimized, striving to secure customers with good products, increasing cash inflows, and enhancing self-sustainability.

Vanke's management revealed that since 2023, Vanke has revitalized and optimized 56 projects through various means such as government supportive policies, commercial-to-residential conversions, and resource exchanges, involving a saleable value of approximately 68.9 billion yuan. Additionally, 24 projects have recovered initial investments through land withdrawal, storage, equity withdrawal, and asset transactions.

Among the 68.9 billion yuan of revitalized and optimized value, cumulative sales have reached 16 billion yuan, positively impacting performance over the past two years.

Vanke's management cited an example in Guizhou, where there are many resources awaiting revitalization. Vanke has revitalized 4.2 billion yuan of capacity through the "commercial-to-residential" approach. Currently, several projects represented by YunCuiYinXiu, DuHuiYinXiang, and WeiLaiXingGuang have maintained a sales absorption rate of over 80% based on research into target customer needs, with a gross profit margin of about 18%, achieving "revitalization after revitalization."

Last year, Vanke delivered over 180,000 housing units, while the delivery figure for 2025 is expected to further decrease to 112,000 units, significantly reducing engineering payment pressure. This lays a foundation for the continued recovery of operational cash flow this year.

On the financing side, with strong support from financial institutions and relevant departments, Vanke achieved new financing and refinancing of 94.8 billion yuan for the year, corresponding to an average financing cost of 3.54%.

Major shareholder Shenzhen Metro Group and other state-owned enterprises have also provided strong support to Vanke. Among them, in 2024, Shenzhen Metro Group significantly participated in the subscription of CICC Yingli REIT, acquiring the headquarters land of Vanke located in Shenzhen Super Base. In the first quarter of 2025, the major shareholder again acquired a 49% income right of the Hongshu Bay project held by Vanke, helping Vanke revitalize existing resources and providing 7 billion yuan in shareholder loans to support liquidity.

As cash flow continues to improve, this will further support Vanke in overcoming short-term difficulties.

Vanke's management stated that Vanke has the confidence and capability to meet challenges, maintain operational stability, ensure timely project delivery, and properly resolve maturing debts.

While traditional development business contracts, Vanke's operational service business is also breaking through.

Long-term rental apartments are Vanke's "vanguard" in the existing market. In terms of management scale, Vanke's long-term rental apartments have a cumulative management scale of approximately 260,000 units, with over 120,000 units included in the guaranteed rental housing, ranking first among market-oriented institutions in terms of guaranteed volume. In terms of efficiency, it has achieved a rental rate of 95%, a GOP profit margin of 90%, and serves over 5,000 corporate clients (such as Tencent and BYD).

In addition, Vanke's long-term rental business has also explored a "revitalization of existing stock" development model, with nearly 7,000 units under Vanke revitalized from 15,000 units last year.

Last year, WanWuYun's revenue exceeded 36 billion yuan, significantly increasing its proportion of Vanke's total revenue and contributing positive profits; the commercial business achieved revenue of nearly 9 billion yuan, with an operating building area exceeding 10 million square meters, among which the rental rate of YingLi reached 95% The logistics and warehousing business achieved revenue of approximately 4 billion, with a leading industry scale.

In terms of REITs, Vanke is also continuously transitioning its business model from heavy to light, accelerating the listing process of long-term rental apartments and logistics REITs, as well as promoting the expansion of CICC Yinyi Consumption REIT.

While properly resolving debt risks, Vanke is actively switching to new models, building a new pattern of optimized capital structure.

Vanke's management stated that under policy guidance and support, they believe the industry has already passed the most difficult period, and the real estate market will return to a stable and healthy development track.

Looking back at the threshold of 2025, Vanke's transformation journey has not been easy, but only those enterprises that dare to dismantle the old engine and forge new momentum can navigate through the fog of cycles. When the policy spring breeze blows through the industry and the policies to revitalize existing stock take effect, this leading real estate company is expected to transform new capabilities into sustained growth momentum, revitalizing itself in the new cycle of real estate