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Fitch: expect China Vanke's FCF to remain negative in 2025 and 2026, even after including asset sales proceeds
ByAinvest
Thursday, Aug 28, 2025 10:01 am ET1min read
Fitch: expect China Vanke's FCF to remain negative in 2025 and 2026, even after including asset sales proceeds
China Vanke, one of China's largest property developers, has reported a significant loss for the first half of 2025, reflecting ongoing challenges in the property sector. The company reported a net loss of 12 billion yuan ($1.7 billion) for the period ended June 30, 2025, marking a deepening of its financial woes [1].The loss was driven by a combination of factors, including declines in home settlements and suppressed gross margins. Despite receiving financial support from its hometown government in Shenzhen, the broader weakness in the housing market continues to exert pressure on Vanke's bottom line [2].
The company's revenue declined by 26% to 105.3 billion yuan, while its total cash slipped to 69.4 billion yuan. Vanke's unfinished residential inventory stood at about 257 billion yuan at the end of June. The company's interest-bearing borrowings as of June were 364 billion yuan, with 43% of these due within 12 months [2].
Fitch Ratings has downgraded Vanke's long-term issuer default score to CCC+, indicating a higher risk of default. The rating agency expects Vanke's free cash flow (FCF) to remain negative in 2025 and 2026, even after including asset sales proceeds [2].
Despite the state-owned shareholder's efforts, including multiple loans totaling about 23.9 billion yuan, Vanke's liquidity stress and prospects remain uncertain. The company has sought to extend some of its domestic bank loans by up to 10 years, which could provide some breathing room on its repayment obligations [2].
In conclusion, while the Chinese government has taken steps to stabilize Vanke's operations and finances, the developer continues to face significant financial challenges. The outlook for Vanke remains uncertain, with a high risk of default and negative FCF in the near future.
References:
[1] https://asia.nikkei.com/business/markets/china-debt-crunch/china-vanke-reports-record-1.7bn-half-year-loss-as-woes-deepen
[2] https://www.businesstimes.com.sg/property/china-vankes-loss-widens-12-billion-yuan-despite-support
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