Zeng, with a monthly salary of 1 million RMB, voluntarily reduced his salary at Vanke: 10,000 RMB before tax per month!

On March 28, Vanke A (SZ000002, stock price of 9.24 yuan, market value of 110.24 billion yuan) released its 2023 annual performance report.

The announcement shows that in 2023, Vanke Group's operating income was 465.74 billion yuan, a year-on-year decrease of 7.6%; the net profit attributable to the shareholders of the listed company was 12.16 billion yuan, a decrease of 105.3 billion yuan from 2022's 22.69 billion yuan, a decrease of 46.4%.

Against this backdrop, 8 executives of Vanke Group voluntarily waived their 2023 annual bonuses. In addition, starting from the date of the report disclosure, Chairman Yu Liang, President Zhu Jiusheng, and Chairman of the Supervisory Board Xie Dong voluntarily received a monthly pre-tax salary of 10,000 yuan.

Yu Liang voluntarily reduces his monthly pre-tax salary to 10,000 yuan

According to the annual report, 8 directors, supervisors, and senior executives who worked full-time at Vanke Group in 2023 voluntarily waived their 2023 annual bonuses, with a total pre-tax compensation of 7.661 million yuan received from Vanke Group during their tenure in 2023; the 4 independent directors received a total pre-tax compensation of 1.5 million yuan from Vanke Group during their tenure in 2023.

As a result, the total pre-tax compensation of Vanke Group's management in 2023 decreased to 9.16 million yuan, a 73.6% decrease from 34.66 million yuan in 2022.

In addition, starting from the date of the report disclosure (March 28, 2024), Chairman Yu Liang, President Zhu Jiusheng, and Chairman of the Supervisory Board Xie Dong voluntarily received a monthly pre-tax salary of 10,000 yuan.

It is worth noting that this is not the first time that the management of Vanke Group has reduced their salaries. In 2021, the net profit attributable to the parent company of Vanke Group decreased from 41.5 billion yuan to 22.5 billion yuan, a 46% decrease. Facing the third profit decline in thirty years since its listing, Yu Liang voluntarily waived all his bonuses in 2021 and received a pre-tax salary of 1.547 million yuan that year. Two years later, in 2023, Yu Liang's salary at Vanke Group once again decreased to 1.27 million yuan, with a monthly salary of about 100,000 yuan.

As a leading company in the industry, the salaries of Vanke Group's management have been relatively high in the past. According to data from the Wind platform, during Yu Liang's tenure as President of Vanke Group from 2014 to 2016, his annual pre-tax compensation was around 9.8 million yuan each year; since becoming Chairman of Vanke Group in 2017, from 2017 to 2020, Yu Liang's annual pre-tax compensation at Vanke Group was consistently above 11 million yuan each year, with the highest compensation received in 2018 at 12.53 million yuan, with a monthly salary of about 1 million yuan.

Pre-tax compensation does not include company dividends. Since 2014, Yu Liang has held approximately 7.3 million shares of Vanke Group, and Vanke Group has maintained dividends every year from 2014 to 2022, ranging from 0.41 yuan to 1.25 yuan per share In 2023, Vanke Group decided not to distribute dividends, bonus shares, or increase capital reserves for the first time since 1992.

Vanke: Firmly Resisting "Lying Flat"

Additionally, on the morning of March 29th, Vanke held its 2023 annual performance recommendation meeting to address concerns from the public.

Vanke's Yu Liang: Short-term Market Clearly Oversold

Yu Liang stated that the short-term market is clearly oversold, with the central value of residential construction in the future reaching 1 billion square meters. Currently, there have been numerous supportive policies introduced with greater intensity than before. With the effects of these policies becoming evident, it is believed that the market will gradually recover.

Yu Liang believes that housing demand needs to be dynamically observed, and there is still ample room for growth in the future. On one hand, the standards for a better life are constantly improving, whether it's the per capita living space, housing facilities, residential environments, etc., there is room for improvement. On the other hand, the urbanization process is not yet complete, and there is still a demand for new housing. In 2023, China's new urban population is 11.96 million. The residential construction area started in 2023 is less than 700 million square meters, a 59% decrease from the peak in 2019. Therefore, in the short term, the market is clearly oversold.

In Yu Liang's view, the current policies supporting the real estate market have been introduced in large numbers, with greater intensity than in previous years. With the manifestation of policy effects, it is believed that the market will gradually recover. He also pointed out that the "Three Major Projects" for real estate development proposed by the central government last year will promote economic recovery and provide more development space for real estate enterprises. Vanke has projects in urban village renovation and affordable housing areas, and will continue to leverage its capabilities and advantages in small unit construction and commissioned construction, actively participating.

Yu Liang: Firmly Resisting "Lying Flat," Confident in Overcoming Difficulties

Regarding the highly concerned question of whether Vanke has the confidence to "survive," Yu Liang stated that the Vanke management team is firmly resisting "lying flat" and will definitely overcome this phase. The company will increase efforts in revitalizing existing assets, transforming real estate, etc., and will reduce interest-bearing debt by 100 billion yuan in the next two years to ensure the company's safety. He believes that the capabilities established by Vanke in development and operation services over the past years will help Vanke become an excellent company in the industry's new development stage.

Yu Liang admitted that having good business capabilities is only one aspect of "surviving." The company also needs to strengthen bottom-line thinking, conduct stress tests under extreme conditions, and make more comprehensive preparations. Although Vanke proposed "survival" very early on, the considerations were not comprehensive enough. In the changing market, past conservative standards may not fully guarantee the company's safety, so there is a need to strengthen bottom-line thinking and make more comprehensive preparations.

Major Shareholders' Four Measures to Support Vanke

Vanke's management stated that at a communication meeting with financial institutions on November 6th last year, Shenzhen State-owned Assets made a very positive statement. After that meeting, Shenzhen State-owned Assets took 4 major categories of measures in a market-oriented and legal manner to help and support Vanke.

The first is to help Vanke dispose of real estate and long-term equity investments with relatively low liquidity The second is to subscribe to Vanke's profitable consumer infrastructure through a market-oriented approach;

The third is to promote multiple project collaborations through industrial synergy between Shenzhen's state-owned enterprises and Vanke;

Fourth, Shenzhen's state-owned assets are actively coordinating financial resources to support Vanke.

Currently, some of these projects have been completed, some have paid earnest money, and some are gradually being implemented. Once all these projects are completed, it is expected that they can help release liquidity for Vanke on a scale of over one hundred billion.

The downgrade rating has no fundamental impact on Vanke

According to the Beijing News, regarding the impact of the rating downgrade on Vanke's financing and rumors of financing with financial institutions, Zhu Jiusheng stated that the rating downgrade does have an impact on Vanke, but it is not fundamentally significant. The impact is relatively limited. "The company is indeed facing challenges and pressure in the short term, constantly reviewing, and the company's capabilities and fundamentals have not fundamentally changed, so there shouldn't be major issues."

Regarding bank loans, Zhu Jiusheng stated that the company's cooperation with banks has always been based on good strategies and long-term relationships. There are 26 long-term cooperating banks that strongly support Vanke. "In the industry downturn, with sales and receipts declining, banks are our allies in risk prevention. When banks frown, give warnings, provide leniency, cooperating banks give us a conversion period of 1 to 3 years."

"Overall, we will adopt a multi-channel financing strategy, work together with financing institutions, achieve mutual success, and be grateful for the support of financial institutions when the industry faces challenges," said Yu Liang, Chairman of Vanke's Board of Directors.

Vanke Management Responds to "No Dividends"

According to Lanjing Finance, the secretary of Vanke's board of directors responded to this at the performance briefing on March 29th: "Vanke has always attached great importance to cash dividends to reward shareholders, distributing a total of 103 billion yuan in dividends over 31 consecutive years, with a historical average dividend rate of 33.3%, which is also 2.8 times the equity financing of Vanke over the years, which we have always been proud of. Against this background, when the board of directors considered canceling the 2023 dividends, it was really very difficult."

"The industry is still undergoing deep adjustments, with sales performance of the top 100 real estate companies in January and February declining by over 50%, Vanke's sales declining by over 40%, market confidence is still recovering, operational uncertainties still exist. Based on this, Vanke has also communicated with bond investors and equity investors in advance," said Zhu Xu.

She introduced that there are some differences among Vanke's investors regarding dividends. For example, bond investors hope that the company will not distribute dividends or reduce dividends, retaining more cash reserves to cope with future debt repayments; equity investors are divided into two categories, one category understands and hopes that the company will not distribute dividends, retaining more cash reserves to ensure operational safety, while the other category hopes that the company will continue its previous dividend policy.

"Taking into account the opinions of bond investors and equity investors, after very in-depth discussions, the board of directors decided to cancel dividends in 2023 to help the company better cope with the uncertainties of a special period and ensure operational safety. We sincerely ask investors to understand," Zhu Xu said