Author | Cao Anxun

Recently, Vanke's turmoil has continued. On the one hand, Vanke Jinan's general manager Xiao Jin was taken away for investigation, and on the other hand, stock and debt fluctuated, and there were many rumors in the market.

On April 14, Vanke held an investor relations conference to respond to market concerns about business conditions and negative public opinion.

Regarding the management side, Vanke admits that currently Vanke has indeed encountered phased operational difficulties, and liquidity is under pressure in the short term. However, it has formulated a package of plans to stabilize operations and reduce debt.

To this end, Vanke will first “save itself”, resolve risks on its own based on its own capabilities and resources, re-open and review all of its businesses, sort them out, and formulate a series of targeted plans.

Second, Vanke will make full use of all existing financing instruments. Currently, it has actively mobilized various frontline forces to make good use of and make full use of a series of policy financing instruments.

After a two-pronged approach, Vanke is confident that the debt size will drop by 100 billion yuan this year and next two years, and that debt risks will be substantially mitigated. At the same time, we promise to deliver all projects on time and with high quality.

In response to recent negative public opinion questioning management's moral risk, Vanke stated that no management is seeking personal gain. At the same time, there may be some past models and practices that have not adapted to the new stage of industry development. Vanke will comprehensively review and sort out them. If irregularities or irregularities are discovered, Vanke will actively rectify them and will never tolerate them.

Vanke made a detailed report on this with the Shenzhen State-owned Assets Administration Commission and major shareholders. The Shenzhen State-owned Assets Administration Commission and Shenzhen Metro continue to support Vanke.

In addition, Vanke also responded to the Yantai Vanke Company being reported under its real name.

The company that reported Yantai Vanke in real name this time is a subsidiary of the Yantai Rizakura Group (hereinafter referred to as the Yantai partner). The two sides have cooperated to develop real estate projects for nearly 10 years and have cooperated on 7 projects.

Beginning in 2021, due to the overall market environment, sales of many projects in Yantai fell short of expectations, and profits were unable to reach initial researchable targets. In order to guarantee the funds required for project construction, delivery and normal operation, the project company's funds cannot continue to be distributed according to the wishes of the Yantai partners. At the same time, the Yantai partner, as a shareholder, ignored the construction delivery and normal operation requirements of the project company and put forward a huge claim of 1.6 billion yuan without reasonable basis.

Although Yantai Vanke and Yantai partners have communicated many times, they have never been able to reach an agreement. The Yantai partners have since made numerous reports to the government, public security, the tax bureau, the Securities Regulatory Commission, the Shenzhen Stock Exchange, etc., and have been exposed in the media several times.

Regarding Vanke's misappropriation of funds, the Yantai public security authorities have already decided not to file a case. The tax authorities also did not determine that Yantai Vanke subjectively deliberately evaded taxes. There are no so-called personal interests of the Vanke management team in the cooperative project.

Currently, in response to the economic dispute with the partner, Yantai Vanke Company has filed a civil lawsuit in the Yantai court in February 2024. The case has entered the formal trial stage, and the court has ruled to protect the partner's assets in accordance with the law.

Vanke's side pointed out that the Yantai partner slandered the company and Chairman of the Board of Directors Yu Liang on the Internet in April 2024. Vanke Group is filing a civil lawsuit with the court and filing a criminal report with the public security authorities.

Regarding the Tangshan Emerald Blue Mountain project reported by the Yantai partner, Tangshan Vanke has reached an execution settlement with the partner in 2022 based on the winning judgment. The compensation assets have been delivered in an orderly manner, and the Blue Mountain project has been operated and constructed normally and delivered with high quality.

As for Xiao Jin, general manager of Jinan Vanke, being taken away by the public security authorities, Vanke responded that it was an individual case and had nothing to do with Yantai Vanke being reported. The Jinan Municipal Law Commission also stated that the Xiao Jin incident was a personal issue. It should be distinguished from the normal business practices of Vanke Group and Jinan Vanke, and will continue to support Vanke's business development in Jinan.

In response to rumors that Vanke executives are being controlled by the border or are unable to return abroad, Vanke said that Cai Ping, the former central China regional chief partner, and Wang Runchuan, the former head partner of the headquarters collaboration center, have left their jobs due to personal reasons.

Vanke Group management's overseas official travel is proceeding normally. President Zhu Jiusheng just returned from the Hong Kong inspection project on April 14. Co-president Zhu Baoquan flew to Japan for a business inspection at noon on April 14.

At a time when the market is recovering weakly, confidence from creditors and investors is invaluable. This requires housing enterprises to promptly clarify rumors and disclose the facts in order to dispel unease. Furthermore, housing enterprises need to support them with continuous improvement in sales and performance. This is also Vanke's most important event this year.

The following is a record list of the investor relations activities of Vanke Enterprise Co., Ltd.:

Vanke Enterprise Co., Ltd. Investor Relations Activity Record Form No.: 2024-002

When: Sunday, April 14, 2024, 16:30 — 18:00

Location: Conference room on the 6th floor of Vanke Enterprise Co., Ltd.

Listed company reception staff name:

Chairman of the Board: Yu Liang; President: Zhu Jiusheng; Secretary of the Board: Zhu Xu.

Introduction to the main contents of investor relations activities:

I. Introduction to the overall situation

First of all, thank you very much for participating in this company exchange event. Recently, there has been a lot of news about the company in public opinion, and investors are also very concerned about the company's situation. We would also like to take this opportunity to discuss some hot issues with everyone.

First, judging from the overall business situation, Vanke is currently experiencing phased operational difficulties, and liquidity is under pressure in the short term. However, we have formulated a package of plans to stabilize operations and reduce debt, which can properly resolve these phased pressures. We will first resolve risks on the basis of “self-help”, self-mitigate risks based on our own capabilities and resources, re-open and review all of our businesses, sort out the categories, and formulate targeted plans. Therefore, the package I am referring to is not a package; it is a series of packages. Second, we have made full use of existing financing instruments. We have actively mobilized various frontline forces to make good use of a series of policy financing instruments introduced by the central government to help the industry mitigate risks. We received understanding, support, guidance and help from financial institutions during this period, and we are grateful. The ultimate goal of these major plans is what I said at the results conference. We are confident that our debt size will be reduced by 100 billion yuan this year and next two years, and that debt risks will be substantially mitigated. Here, I also solemnly promise that all Vanke Group projects will be delivered on time and with high quality.

What is causing the current challenge? After careful discussion and deep reflection by the Group's management team, we believe that although there are external market changes, it is more because the company itself maintained its inertia of expansion and failed to adjust in a timely manner when the macro situation and industry situation underwent major changes. In summary, there are three main issues:

First, although we first realized the need for transformation and development in the industry, proposed the business philosophy of “putting equal emphasis on development and management services”, and actually laid out a number of business service businesses and business formats based on our main business and in line with national policy orientation, there are problems of going too far and too hasty in the actual operation process. The transformation business exceeded our ability to match resources, took up too much development business capital, and was too large to keep up with management capabilities and failed to achieve business goals as planned.

Second, although the company realized early in the industry that rapid growth would eventually come to an end, our actions have failed to resolutely escape industry inertia. In many cities, including some key cities and first-tier cities, there have been aggressive investments and mistakes. After the central government clearly proposed the goals and requirements for high-quality development of the industry, it was unable to make more thorough adjustments to the “three highs” model that generally exists in the industry, leading to a passive situation today.

Third, after the central government clearly made a strategic judgment that the relationship between supply and demand in the industry had fundamentally changed, and introduced a series of important policies and measures for the transformation of the industry's new development model, our understanding of trending changes in the financing model was initially not thorough enough. The group has already initiated adjustments to the real estate financing model, but it still takes a process to shift from focusing on overall credit financing to a new financing model.

We have also noticed that in the recent negative public opinion, there are also some questions about management's moral risk. There is no management seeking personal gain. Today, it seems that there may be some past models and practices that have not adapted to the new stage of development of the industry. We will comprehensively review and sort out and formulate corresponding strategies. If illegal issues are discovered, we will actively rectify them; if illegal issues are discovered, the Group will never condone them.

We have also made detailed reports with the Shenzhen State-owned Assets Administration Commission and major shareholders on the above situation. The Shenzhen State-owned Assets Administration Commission and Shenzhen Metro supported Vanke as always. During the market adjustment period, the company was fortunate to receive the full support and trust of Shenzhen's state-owned assets and major shareholders. We are deeply grateful for this, and we will also cherish the trust and redouble our efforts.

II. Explain recent market concerns and public opinion

There are also a few recent public opinions that have received quite a bit of attention. Here, I will explain them one by one.

The first is a real-name report about Yantai.

The company that reported this time was mainly a subsidiary of the Yantai Rizakura Group whose actual controller was Li Jun. Yantai Vanke and partner Li Jun (hereinafter referred to as “Yantai Partner”) have cooperated to develop real estate projects for nearly 10 years, cooperating on 7 projects.

Beginning in 2021, due to the overall market environment, sales of many projects in Yantai fell short of expectations, and profits were unable to reach initial researchable targets. In order to guarantee the funds required for project construction, delivery and normal operation, the project company's funds cannot continue to be distributed according to the wishes of the Yantai partners. At the same time, the Yantai partner, as a shareholder, ignored the construction delivery and normal operation requirements of the project company and put forward a huge claim of 1.6 billion yuan without reasonable basis. Although Yantai Vanke and Yantai partners have communicated many times, they have never been able to reach an agreement. The Yantai partners have since made numerous reports to the government, public security, the tax bureau, the Securities Regulatory Commission, the Shenzhen Stock Exchange, etc., and have been exposed in the media several times.

Regarding the content reported by the Yantai partner, here are a few things to report to you:

(1) The Yantai whistleblower reported the case to the Yantai public security authorities in 2023 regarding Vanke's misappropriation of funds and was accepted. After 3 months of investigation and evidence collection, the Yantai public security authorities decided not to file the case in November 2023

The cooperation project involved by the whistleblower clearly stipulated in the cooperation agreement: “Other funds of the project company are immediately transferred to the fund management account of Vanke Enterprise Co., Ltd.” The transfer of funds from the Yantai project company involved in the report was the overall management of project funds by Vanke in accordance with the cooperation agreement. After 3 months of investigation and verification, the public security department issued a notice of “not filing a case” in November 2023.

(2) The tax authorities carried out an inspection of Yantai Vanke. Vanke did not refuse to pay the accounts. Currently, the tax authorities have not determined that Yantai Vanke had subjective intention to evade taxes

The Yantai whistleblower reported Yantai Vanke's tax evasion to the tax authorities in 2023. Beginning in September 2023, the Yantai Municipal Taxation Bureau carried out a full tax inspection of 11 Yantai Vanke projects. Tax enterprises have connected and communicated smoothly. Yantai Vanke has not refused to pay accounts, and Vanke Group has drawn 7 staff from the Beijing region to cooperate with the inspection. All accounts have been submitted to the Inspection Bureau, and relevant supporting materials have been provided one after another in accordance with the inspection requirements. The tax authorities exchanged preliminary inspection opinions with Yantai Vanke. Currently, the tax authorities have not determined that Yantai Vanke had the subjective intention of evading taxes. Yantai Vanke will adhere to the principle of seeking truth from facts and actively cooperate. We believe that governments and tax authorities at all levels will make inspection conclusions in accordance with the law and regulations, objectively and impartially.

(3) There are no personal interests of the so-called Vanke management team in the cooperative project

Vanke does not send benefits to executives through a follow-up investment system. Vanke began implementing a project follow-up investment plan in 2014. According to the existing system, Vanke's directors, supervisors and senior management are not allowed to participate in project follow-up and investment, let alone obtain any personal benefits from cooperative projects.

Employees participate in the follow-up investment, and the follow-up plan clearly requires them to share their own capital with the company. Investment funds share risks and benefits with company investments and partner investments. Employees and investment rights are all small shareholders. They have the same rights as other shareholders and bear the same shareholder obligations; there is no specificity. Whether it is Vanke's wholly-owned project or a cooperative project, the investment model, terms, and requirements are the same.

The follow-up investment system embodies the principles of profit sharing and risk sharing. In the first few years of Vanke's implementation of the follow-up investment plan, the market conditions were good. The company and partners all received good returns, and employees received the same benefits as investment funds. However, the market situation has changed in recent years, and the income level of the company and partners has declined, and employees have also suffered the same operating results, and some of the follow-up investors have lost money. This reflects the original intention of the team to share benefits and risks with investors.

(4) The company has taken legal measures

In response to the economic dispute with the partner, Yantai Vanke Company filed a civil lawsuit in the Yantai court in February 2024 to claim legal rights according to law. The case has entered the formal trial stage, and the court has decided to litigate and preserve the partner's assets in accordance with the law.

The Yantai partner slandered the company and the chairman of the board of directors on the Internet in April 2024. Vanke Group is filing a civil lawsuit with the court and filing a criminal report with the public security authorities.

Regarding the Tangshan Emerald Blue Mountain project reported by the Yantai partner, Tangshan Vanke has reached an execution settlement with the partner in 2022 based on the winning judgment. The compensation assets have been delivered in an orderly manner, and the Blue Mountain project has been operated and constructed normally and delivered with high quality.

Vanke Group and Yantai Vanke will adhere to the principle of seeking truth from facts, and believe that the judicial authorities will draw conclusions objectively and impartially. If illegal operations are discovered during the operation process, Vanke Group will resolutely and thoroughly rectify them under the guidance and requirements of government departments. If any individual or subsidiary company acts in violation of the law, Vanke Group will never condone it and accept the ruling and processing of the judicial authorities.

The second is about Xiao Jin, general manager of Jinan Vanke, being taken away by the public security authorities. What exactly is the situation?

Xiao Jin's case is an individual case and has nothing to do with the Yantai report. The group has arranged for the Beijing region and the Jinan company to communicate the situation with the Jinan Political and Legal Commission and the police investigating the case. The police said that the Xiao Jin case was an individual case and had nothing to do with the Yantai report. The Jinan Municipal Law Commission stated that the Xiao Jin incident is a personal issue. It is necessary to distinguish it from the normal business practices of Vanke Group and Jinan Vanke; continue to support Vanke's business development in Jinan and help implement the “Strong Provincial Capital” strategy; and arrange for special personnel to coordinate and connect with those requiring political and legal system services in the guarantee of delivery.

Third, public opinion mentions the situation of leaders Cai Ping and Wang Runchuan who have not returned abroad? Rumor has it that after Cai Ping, the head of central China, did not return to the US, all Vanke Group vice presidents and above are currently controlled by the border.

The actual situation is that Cai Ping, the former chief partner of the Central China region, was born in the US. Now that he has reached the stage of receiving education, he needs family company. He proposed his resignation in 2023 and received approval from the company.

Wang Runchuan, the former head partner of the Headquarters Collaboration Center, proposed leaving his job because he went to Hong Kong to further his studies. Currently, he lives in Shenzhen.

The Group's management's overseas business trips (including Hong Kong, Macao and Taiwan) are proceeding normally. Group CEO Zhu Jiusheng just returned from the Hong Kong inspection project today. Group Co-CEO Zhu Baoquan flew to Japan at noon today (April 14) for a business inspection.

April 14, 2024