Vanke deleverages to meet 'three red lines'

China Vanke (2202) aims to further deleverage to meet Beijing's "three red lines" policy in the first quarter.

The developer's liability to asset ratio came in at 70.4 percent, failing to meet the three red lines, while other two indicators, net gearing ratio at 18.1 percent, and cash to short-term debt ratio at 1.8 times, were compliant.

Chairman Yu Liang said the firm is not seeking an excessively low net gearing ratio but to maintain sufficient liquidity.

It held the cash and the cash equivalents, including pledged and restricted deposits amounting to 195.2 billion yuan (HK$231.5 billion), at the end of last year.

Zhu Jiusheng, chief executive and president of China Vanke, said the company's investment plan to acquire 19.9 stakes in embattled Tahoe Group is quite difficult at the current time, which depends on Tahoe's debt restructuring progress.

Yu also said Vanke will spin off some businesses that can stand the test of the market. But it will not take business public only because of short-term financing needs, Yu added.

Shares of China Vanke dropped 5.29 to HK$30.4. It had reported a 6.8 percent increase in 2020 net profit to 41.52 billion yuan (HK$49.19 billion) on Tuesday.

Also yesterday, developer Ronshine China (3301) said its net profit for 2020 dropped 23 percent to 2.43 billion yuan from a year ago.

The company declared a final dividend of HK$0.50 per share. Basic earnings per share were 1.43 yuan.