Summary of China Vanke's Earnings Call Company Overview - **Company**: China Vanke (000002.SZ, 2202.HK) - **Industry**: Real Estate Development Key Financial Highlights 1. **1H25 Financial Performance**: - Reported net losses of Rmb11.9 billion, aligning with the lower end of the estimated loss range of Rmb10 billion to Rmb12 billion [1] - Revenue decreased by 26% year-over-year to Rmb104 billion, with property development revenue down 32% year-over-year to Rmb84 billion [12][1] - Gross margin improved to 10% in 2Q25, up 9 percentage points quarter-over-quarter, marking the highest level since 4Q23 [7][1] 2. **Impairment Charges**: - Total impairment charges amounted to Rmb5.4 billion, impacting the net loss significantly [1][8] - The company anticipates continued impairment recognition, with expected charges of Rmb3 billion in 2H25E and Rmb1 billion in 2026E-27E [2] 3. **Liquidity Situation**: - Secured over Rmb49 billion in financing year-to-date, including Rmb25 billion from external sources and Rmb24 billion in shareholder loans [6][4] - Debt structure improved slightly, with short-term maturities reduced to 43% of total debt [6][1] 4. **Future Projections**: - Forecasting net losses of Rmb18.4 billion, Rmb9.9 billion, and Rmb9.7 billion for 2025E-27E [2] - Contract sales estimate for 2025E is Rmb139 billion, reflecting a 44% year-over-year decline [10] Market Position and Valuation 1. **Valuation Metrics**: - Vanke A and H shares are trading at discounts of 2% and 29% to end-2025E NAV, respectively [3] - Target prices remain unchanged at Rmb6.0 for Vanke A and HK$4.7 for Vanke H, indicating an 8% downside [3][19] 2. **Market Performance**: - Property sales in 7M25 declined by 44% year-over-year, underperforming the average market decline of 18% [10] Strategic Outlook 1. **Land Banking**: - Acquired 6 projects in 1H25, totaling Rmb2.5 billion, which accounted for 4% of total contract sales [9] - Reliance on third-party interests increased, with attributable interests in new projects down to 53% [9] 2. **Risks and Challenges**: - Continued pressure on margins and inventory write-downs expected until ASP stabilization occurs [21] - Strenuous liquidity conditions and the need for additional support from major shareholders remain critical [1][21] 3. **Upside Risks**: - Potential government funding support and a stronger-than-expected recovery in higher-tier cities could improve sell-through rates and ASP [15][23] Conclusion - China Vanke is facing significant challenges with liquidity, profitability, and market performance, leading to a "Sell" rating. The company’s future hinges on effective management of impairments, liquidity support, and market recovery dynamics.

Company Situation - Chinese property giant Evergrande 将被退市 [1] - Evergrande 在经历惊人的衰落后将面临退市 [1]

Summary of Key Points from the Conference Call Industry Overview - The focus is on the **China Real Estate Equities** sector, particularly the implications of **mandatory convertible bonds (MCB)** on distressed developers [1][2]. Core Insights - **Debt Restructuring Risks**: Despite some progress in debt restructuring for distressed developers, there are significant risks associated with MCBs, particularly regarding share dilution and its impact on share prices. This is crucial for investors seeking beta opportunities [2][3]. - **Sunac Case Study**: The share price of **Sunac** was initially supported by debt restructuring progress but faced substantial pressure post-MCB conversion, with an estimated share increase of **75-114%** upon conversion leading to considerable downside risks [3][10]. - **Investor Sentiment**: There is a rising risk appetite among investors, as evidenced by the resilience of stocks like **Greentown** and **C&D** following profit alerts and share placements. Mid-cap developers are viewed as having better risk-reward profiles due to stronger fundamentals [4]. Stock Preferences - **Preferred Stocks**: **CR Land** and **C&D International** are rated as "Buy" due to their strong execution capabilities and potential for alpha generation. Both companies have seen **36-44%** year-to-date share price gains, with expectations for further catalysts such as margin recovery and new land acquisitions [5][8]. - **Market Conditions**: Disappointing national data is expected to have a lesser impact on the share prices of these preferred stocks compared to risks such as lower-than-expected sales and prices of high-end projects, cooling land markets, and macroeconomic concerns [5]. Additional Considerations - **Valuation and Risks**: The report outlines the valuation methodologies for CR Land and C&D, emphasizing the importance of maintaining sales momentum and managing margin expectations. Risks include potential slowdowns in land acquisition and sales deterioration [23]. - **Market Dynamics**: The report highlights the broader market dynamics affecting the real estate sector, including the impact of MCBs on share capital and the overall sentiment towards distressed developers [8][12]. Conclusion - The analysis underscores the complexities within the China real estate sector, particularly the implications of MCBs on share dilution and investor sentiment. The focus on specific stocks like CR Land and C&D reflects a strategic approach to navigating potential investment opportunities amidst ongoing market challenges [2][5][8].

China is preparing to mobilize centrally owned state enterprises to purchase unsold homes from distressed property developers https://t.co/QUXoMdzC35 ...

Company Restructuring - China Evergrande 清算人已聘请银行出售物业管理部门 [1] - 此举是在之前尝试失败后进行的 [1] Industry Context - China Evergrande 在 2021 年的违约引发了持续多年的房地产债务危机 [1]

Minmin, what happens next. What happens to Evergrande now. Yes.So the company's shares are going to be removed on August 25th. And Evergrande has said it's not going to appeal against that decision by the Hong Kong Stock Exchange. And because what happens here is that the company, as you can see on the chart, that it's already suspended trading since January of 2024 after it received this liquidation petition from the Hong Kong courts.And since then, it hasn't been able to resume trading because it hadn't m ...

The Philippines’ most valuable company said its financial statement is currently undergoing “rigorous audit” by external auditors after Manila’s securities regulator said it would look into the property developer’s valuation and deals https://t.co/aj8DMkfaav ...

Report Industry Investment Rating - Maintain a buy rating on FUTLAN/FTLNHDs [2] Core Viewpoints - China's export growth is expected to decelerate from 5.9% in 2024 to 2% in 2025, while import growth may mildly slow down from 1.1% to 0.5%. The USD/RMB rate may appreciate from the current 7.15 to 7.1 by year-end [2][14] - Seazen shows improving access to the CBICL-guaranteed bond market, with lengthened tenors and lower funding costs, and has relieved near-term refinancing pressure [7][8] Summary by Directory Trading Desk Comments - Yesterday, NWDEVL 27 - 31s and NWDEVL Perps rose 1.8 - 4.5pts and 1 - 1.5pts respectively on rumors and reports. CNH SWIPROs were largely unchanged. Swire Pacific 1H25 revenue rose 15.7% yoy to HKD45.77bn, while operating profit was down 62.4% yoy to HKD1.86bn. In Chinese properties, LNGFOR 27 - 32s/ROADKG 28 - 30s were 0.2pt lower to 0.1pt higher. Longfor begins phased early repayment of offshore syndicated loan. ROADKG failed to obtain bondholder consent. China IG was 0 - 2bps tighter. In Macau gaming, related bonds were 0.1pt lower to 0.1pt higher. Wynn Macau 2Q25 operating revenue was flat yoy, while MGM China 1H25 adjusted EBITDA slipped 1.4% yoy. TW lifers were 1 - 3bps wider. Japanese AT1s and insurance hybrids edged up c0.25pt, SOFTBKs were up 0.1 - 0.7pt. SoftBank Group 1Q26 net sales rose 7% yoy to JPY1.82tn. Korea space was largely unchanged, except HYNMTR 30s tightened 1bp [1] - This morning, the new CNH paper XYDXIV moved 0.5pt higher, while other CNH new issues remained largely unchanged. MTRC Perps were up c0.1pt. China IGs and Thailand BBLTB tightened 1 - 2bps, while LGENSOs widened 1 - 2bps [2] - Yankee AT1s continued to move up slowly. In SEA, VEDLN 28 - 33s were unchanged to 0.2pt higher. KBANK 31s were 2bps tighter and BBLTB unchanged. PETMKs were unchanged to 2bps wider [3] FUTLAN/FTLNHDs - The 8th tranche of CBICL - guaranteed bond. Maintain buy on FUTLAN/FTLNHDs. FTLNHD 4 5/8 10/15/25 was 0.2pt higher this morning [2] - Provide details of FUTLAN/FTLNHDs including Amt o/s, Maturity, Coupon, Offer price, and YTM [6] Seazen - On 4 Aug'25, Seazen issued the 8th tranche of CBILC - guaranteed bond with an issue size of RMB1bn, 5 - year tenor, and a coupon rate of 2.68%. The tenor has lengthened from 3 - year to 5 - year and the funding cost has trended lower. Proceeds will be used for project developments and repaying offshore debts. It has a RMB1bn bond maturing on 13 Sep'25 [7] - In Jun'25, Seazen completed partial tender offers and a concurrent new issue of 3 - year USD300mn bond, relieving near - term refinancing pressure. Its high - quality IPs, secured financing headroom, and growing recurring income offer financial flexibility for refinancing in the coming 2 - 3 years [8] China Economy - China's exports rebounded despite a contraction in exports to the US, with ASEAN and Africa making up for 129% of the US loss since Apr. Exports of motor vehicles and chips were strong, while ships, personal computers, and cell phones softened. Imports rebounded due to robust AI - related demand, and soybean imports from the US rebounded. However, there are headwinds in 2H25 for exports [9] - In July, exports edged up to 7.2% yoy, with exports to the US further slumping to - 21.7%. Shipments to Africa accelerated to 42.4%, and exports to ASEAN remained at 16.6%. Exports to the EU, Australia, Korea, and Canada rebounded. Trade surplus narrowed to US$98bn. Exports of transport equipment and tech products polarized. Imports increased to 4.1% yoy, with strong AI - related demand. Import volume of some energy products, machine tools, etc. dropped, while crops rebounded. Soybean imports from the US rebounded [11][12][13] New Issues - No offshore new issues were priced today [16] - There are no offshore new issues in the pipeline today [17] News and Market Color - Regarding onshore primary issuances, 152 credit bonds were issued yesterday with an amount of RMB148bn. Month - to - date, 501 credit bonds were issued with a total amount of RMB507bn, a 17.6% yoy increase [19] - AVIC plans to take direct control of AVIC International Leasing via an equity restructure. SK Hynix and Samsung Electronics will be exempt from 100% US tariffs on semiconductors. Longfor begins phased early repayment of HKD9.3bn offshore syndicated loan. MGM China 1H25 adjusted EBITDA slipped 1.4% yoy to HKD4.9bn. Mongolian Mining expects a consolidated net loss of USD15 - 25mn for 1H25. New World Development dismisses take - private reports. ORIX 1QFY26 revenue rose 8.5% yoy to JPY768.6bn. Rakuten Group will early redeem JPY16.8bn RAKUTN 1.81 11/04/55 on 4 Nov'25. Road King fails to obtain bondholder consent. SoftBank Group 1QFY26 net sales rose 7% yoy to JPY1.8tn. Wynn Macau 2Q25 operating revenue was down 0.2% yoy to USD883.5m [19]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints - Yesterday, the IG space opened 5 - 10bps wider with a cautious tone, and various bonds had different price movements. For example, TH bank BBLTB sub - curve and TW lifers gradually recovered and closed 1 - 3bps wider. In Chinese properties, GRNLGR 28 - 31s dropped 1.0 - 2.9pts [1]. - This morning, MTRC Perps were up 0.2pt, ADSEZ 31 - 41s and ADGREG 42s rose 0.6 - 2pts, while CKINF 4/4.2 Perps decreased 1pt [2]. - AVIC launched a tender offer and consent solicitation for its USD300mn AVICCP 2.375 02/09/26 at par, and is soliciting consent from bondholders for two modifications [6][7]. Summary by Related Catalogs Trading Desk Comments - The IG space opened 5 - 10bps wider. TH bank BBLTB sub - curve and TW lifers closed 1 - 3bps wider. Lower - beta papers with 4.5% yield or below and front - end papers were heavily traded. FRESHK 26 - 28s had a spread change of 7bps tighter to 3bps wider. In Macau gaming, different bonds had price changes ranging from unchanged to +1pt. Among greater China higher - beta credits, Perps moved higher. There were block selling on FRNs of China leasing/securities houses and two - way flows on EU/Japan banks FRNs. Yankee AT1s recovered. In Chinese properties, GRNLGR, LNGFOR, and VNKRLE bonds dropped, while LIFUNGs rose. In the SEA, MEDCIJ 28 - 29s were unchanged to 0.1pt lower, and VEDLN 28 - 33s were unchanged to 0.2pts higher [1]. Analyst Comments - AVIC launched a tender offer and consent solicitation for AVICCP 2.375 02/09/26 at par. It failed to furnish audited FY24 financial statements and expects to be unable to provide unaudited 1H25 financial statements on time. It is soliciting consent for two modifications: removing the financial statement requirement and adding an early redemption option. The offer expires on 15 Aug'25, and two bondholder meetings will be held on 26 Aug'25. The tender offer settlement is on 29 Aug'25. The resolutions are binding if passed and the eligibility condition is met. The tender offer can be an opportunity for investors to switch to other Chinese IG names [6][7][9]. Macro News Recap - On Monday, S&P (+1.47%), Dow (+1.34%), and Nasdaq (+1.95%) were higher, and UST yield was lower with 2/5/10/30 yield at 3.69%/3.75%/4.22%/4.80% [5]. Last Trading Day's Top Movers - Top Performers included GWFOOD 3.258 10/29/30 (price 86.3, change 2.4), WESCHI 4.95 07/08/26 (price 92.8, change 1.3), etc. Top Underperformers included GRNLGR 6.9 02/12/29 (price 20.1, change - 2.9), GRNLGR 8 1/4 01/22/31 (price 20.1, change - 2.9), etc. [4]. Offshore Asia New Issues - **Priced**: No Offshore Asia New Issues Priced Today [12]. - **Pipeline**: Licheng International Development plans a 3 - year issue with a 5.5% pricing and is unrated. Macquarie Bank plans an 11NC10 issue with a pricing of T + 170 and has an issue rating of A3/BBB+/BBB+ [13]. News and Market Color - Regarding onshore primary issuances, 85 credit bonds were issued yesterday with an amount of RMB66bn. Month - to - date, 130 credit bonds were issued with a total amount of RMB149bn, a 4.4% yoy increase. S&P revised the outlook of Adani Electricity Mumbai to stable from negative, affirmed BBB - rating [14]. - S&P revised the outlook of Adani Green Energy RG2 to stable from negative, affirmed BB+ rating; revised the outlook of Adani Ports to positive from negative, affirmed BBB - rating. Agile plans to deliver a preliminary restructuring proposal to offshore creditors in 3Q25. Ant Group will exit India's Paytm by selling its 5.84% stake for up to INR38bn (cUSD434mn). Road King bondholder group can block revised consent solicitation. SK Telecom will help develop a South Korean ChatGPT challenger. SK On will focus on cutting - edge technology [21].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Chinese economy** and its macroeconomic conditions, particularly in the context of trade and policy impacts due to U.S. tariffs and domestic structural shifts [4][5]. Core Economic Insights - **Real GDP Growth**: China's real GDP growth in the first half of 2025 was **5.3% year-over-year**, surpassing expectations. The government aims for a full-year target of "around 5%" [4][5]. - **Export Performance**: Exports increased by **6.2% year-over-year** in Q2 2025 in USD terms, showing resilience despite rising tariffs. However, a decline in exports is expected in the second half of the year as tariff impacts materialize [4][10][11]. - **Growth Projections**: Sequential growth is anticipated to slow in the second half of 2025, with full-year GDP growth projected at **4.7%** and Q4 growth dropping to **4.0%** year-over-year [5][19]. Policy and Government Actions - **Policy Easing**: Policymakers are not in a rush to announce major easing measures due to solid growth in H1 2025. Recent declines in infrastructure investment indicate a lack of urgency [4][19][20]. - **15th Five-Year Plan**: Preparations for the 15th Five-Year Plan are underway, focusing on balancing productivity enhancement through technological innovation and enlarging domestic demand [4][41][42]. Property Market Dynamics - **Property Market Differences**: The current property market differs fundamentally from that of a decade ago, with a focus on managing risks rather than stimulating new construction. The demand for new urban housing is expected to remain below **5 million units per year** [26][27]. - **Quality Over Quantity**: The government's new model emphasizes improving the quality of existing housing rather than increasing the quantity, focusing on infrastructure improvements [27]. Overcapacity and Deflation Issues - **Overcapacity Problem**: China's industrial sectors face significant overcapacity, with low capacity utilization rates in industries such as cement and auto manufacturing. This has contributed to a negative GDP deflator and ongoing deflationary pressures [32][33][39]. - **Long-term Solutions**: Addressing overcapacity requires fundamental changes in the fiscal and political systems, including reforms to local government incentives [37][38]. Domestic Demand Challenges - **High Household Savings**: A high household savings rate persists due to insufficient social safety nets and low wage growth, posing challenges for boosting domestic demand [44][45]. - **Income and Confidence**: The government faces the challenge of translating higher productivity into increased income and consumer confidence, necessitating comprehensive reforms across various systems [45]. Conclusion - The Chinese economy is navigating a complex landscape of external pressures and internal structural changes. Policymakers are focused on long-term planning and stability rather than immediate stimulus, with significant implications for growth, trade, and domestic demand in the coming years [4][5][41].