Ownership battle takes toll on Vanke

Firm shifts its focus from sales to maintaining internal stability for first time in its history

The battle for control of China Vanke Co Ltd is taking such a toll on the troubled real estate giant that the property developer has had to shift its top priority from acquiring land and increasing sales to keeping its management team stable for the first time in its 32-year history, the firm's top executives said on Monday.

The frank admission came at the announcement of the firm's 2016 interim results at a briefing in Shenzhen, where Vanke Chairman Wang Shi and President Yu Liang were notable by their absence, as they were busy "dealing with ownership issues".

Sun Jia, Vanke's executive vice-president, told the briefing that the firm, whose biggest shareholder Baoneng Group's massive buying of its shares triggered a heated war over control for Vanke, had lost "many" employees in the first half of this year.

Board Secretary Zhu Xu said that it also faced difficulties such as acquiring new land, falling project sales and weakening cooperation with partners.

She said that from the end of June to August, 31 projects have been forced to modify clauses, postpone or even terminate due to partners' concern over Vanke's branding, management and funding situation in the future.

Though its rating has yet to be changed, Wang Wenjin, executive vice-president of Vanke, warned that it may face challenges such as a negative outlook and downgrades from domestic and international rating institutes.

In fact, China Merchants Securities Co later on Monday downgraded Vanke's rating to -A, saying its long-term outlook is still positive, but the ownership dispute has had a negative influence on its management.

Although seeing a 10 percent increase in its net profit to 5.35 billion yuan ($802 milion) and 49 percent revenue growth in the first half of 2016, according to its interim report published on Sunday, Vanke in July lost above 30 percent in both sales area and value.

The battle for control escalated last month when Vanke announced an asset restructuring plan worth 45.6 billion yuan with Shenzhen Metro Group that would make the subway operator its biggest shareholder.

Zhu Xu noted no agreement has yet reached over the asset restructuring plan with Shenzhen Metro so far and Vanke hopes to communicate with involved parties in a bid to solve the dispute soon.

grace@chinadailyhk.com

(China Daily 08/23/2016 page13)