Date
20 September 2017

No more Vanke shares please, Dad

“Do I have to buy Vanke (000002.CN) shares with my red-pocket money?” This is the question the young daughter of Vanke CEO Yu Liang reportedly confronted her father with around the Lunar New Year.

In a vote of confidence, Yu spent almost all of US$1 million-plus paycheck last year buying about 1 million Vanke shares, according to the China Securities Journal. And he is investing money for his daughter in the same basket.

But, despite record profits, the share performance of the top mainland developer has been rather disappointing.

Vanke’s earnings surpassed 15 billion yuan (US$2.43 billion) in 2013, more than double the level three years ago. Its shares, however, last changed hands at 7.6 yuan apiece, not even matching the closing price in 2010.

With a market value of 84 billion yuan, Vanke is worth just five times its earnings. And while income multiplies, valuation shrinks at a faster pace.

Although investors are more interested in tech plays right now, Yu is clearly not letting the investment fashion distract him. To him, Vanke’s earnings, cashflow and valuation speak for themselves. 

Armed with enough cash to cover the company’s future expansion, Vanke is raising its dividends.

The company is also exploring different channels to generate more business from millions of families living in the properties it built.

Now, if only Yu could convince his daughter of that potential.

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SK

 

EJ Insight writer

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