China Merchants Shekou's net profit last year was approximately 1.023 billion yuan, "the market is still in a bottom-building and recovery period"

On March 17, Zhu Wenkai, Chairman of China Merchants Shekou Industrial Zone Holdings Co., Ltd. (001979.SZ), stated at the 2025 Annual Performance Briefing that the company aims to truly transform from a traditional developer into a “developer + operator + service provider.”

According to the 2025 annual report, the company’s revenue was approximately 154.727 billion yuan, a decrease of 13.53% year-on-year; net profit attributable to shareholders was about 1.023 billion yuan, down 74.65% year-on-year; net profit excluding non-recurring gains and losses was about 169 million yuan, a decrease of 93.1%; and net cash flow from operating activities was approximately 9.693 billion yuan, down 69.67% year-on-year.

Regarding performance changes, CFO Yu Zhi-liang said that the results fully reflect industry cycles and market environment changes, mainly due to cautious asset impairment provisions; cyclical reduction in settlement scale; and decreased investment income from joint ventures and associated companies, as well as gains from equity sales compared to the previous period.

China Merchants Shekou stated that the company actively adapts to industry changes, precisely optimizes its cash flow management system, strictly safeguards capital safety, and firmly implements the operating strategy of “sales-driven investment and sales-driven production,” continuously improving capital efficiency. For the year, net cash flow from operating activities reached 9.693 billion yuan, with cash and cash equivalents at the end of the period totaling 86.127 billion yuan.

At the end of the reporting period, the company’s asset-liability ratio excluding prepayments was 64.17%, net debt ratio was 72.46%, and the cash-to-short-term debt ratio was 1.19. The company actively implements new real estate financing models, adheres to simple, efficient, and safe financing principles, and completed the full repayment of 12 billion yuan of perpetual bonds within the year. It also secured 14.1 billion yuan in operational property loans. In 2025, the company added 17.94 billion yuan in public market financing, with coupon rates among the lowest in the industry for the same period; the overall cost of funds at year-end was 2.74%, a decrease of 25 basis points from the beginning of the year.

In development operations, the company achieved a total contracted sales area of 7.1612 million square meters and contracted sales of approximately 196.009 billion yuan in 2025. The company ranked in the top three in total sales in 10 cities including Shanghai, Shenzhen, Chengdu, Xi’an, Changsha, Nanjing, Zhengzhou, Suzhou, Foshan, and Nantong, and entered the top five in local markets in 15 of the 30 key cities nationwide. Regarding land acquisition, in 2025, the company acquired 43 parcels of land, totaling approximately 4.4 million square meters of gross floor area, with a total land price of about 93.8 billion yuan, and a land payment of approximately 54.3 billion yuan. During the period, nearly 90% of investments were concentrated in the “core 10 cities,” with investments in first-tier cities accounting for 63% of total investments—an increase from the previous year. The company acquired 5 parcels in Shanghai, 3 each in Shenzhen, Beijing, Chengdu, and Hangzhou, and 2 in Xi’an.

Regarding future investments, Vice President Wu Bin said it is difficult to set a specific ratio. Overall in 2026, the company will continue to follow the principles of targeted investment in key regions and cities, based on sales, with careful selection to ensure effective resource allocation. New land acquisitions will focus more on turnover speed and profit realization, balancing the “three red lines” with scale and profit.

Managing Director Nie Liming stated that, based on current project arrangements, the total available sales value is expected to reach 340 billion yuan in 2026. In terms of business types, 83% will be residential; in terms of city tiers, “6+10” core cities will account for 81%, and the “30 Strong Cities” will account for 94%. Regarding supply rhythm, most supply will be concentrated in the first half of the year, with additional supply from newly acquired land in the second half.

In the construction management segment, China Merchants Construction added 80 new projects (including consulting), with a total contracted area of 11.39 million square meters and contract revenue exceeding 800 million yuan. Over the years, more than 620 construction projects have been undertaken, covering over 35 million square meters.

During the period, the company’s property management revenue within its scope was 7.63 billion yuan, an increase of 2.2% year-on-year. It added 29 new projects with a total construction area of 1.77 million square meters, focusing on core cities and key formats, including 12 apartments, 8 commercial properties, and 3 industrial parks. The light asset management area increased by approximately 828,000 square meters, with projects located in Shanghai, Hangzhou, Chengdu, Shenzhen, and other key cities.

In the commercial sector, at the end of the period, the company managed 54 retail projects, with an operating area of about 3.4 million square meters, and 185,000 square meters under construction. The annual revenue from retail operations was 1.96 billion yuan, and the occupancy rate of projects open for over three years was 93% at the end of the period.

Regarding recent policies in core cities to optimize purchase and loan restrictions, Nie Liming said that since 2021, the industry has undergone more than four years of deep adjustment. Recently, the national and local governments have introduced many policies to optimize restrictions and stabilize the market and housing prices. These policies have indeed brought more confidence to the market and served as a boost.

He added that the new policies released in Shanghai on February 25, 2023, have led to a phased recovery in visitor and signing volumes in core areas after the Spring Festival. During the Spring Festival and March, visitor and transaction activity was quite good, and as of yesterday, March 15, there are signs of a market rebound.

However, he emphasized that the market is still in a bottoming and recovery phase, and China Merchants Shekou maintains a cautious optimism. In the short term, the focus is on boosting confidence; in the medium to long term, the market is gradually bottoming out and recovering. The policy bottom is clear, but confirming the market bottom still requires time.

He pointed out two clear signals from the series of policies: First, the government’s firm determination to implement city-specific measures and precise regulation to stabilize housing prices and the market. These policies are not a blanket relaxation but are tailored to different cities and regions, emphasizing policy coordination and step-by-step implementation. They aim to support reasonable housing demand while safeguarding risk bottom lines, leveraging market mechanisms, and preventing large fluctuations.

The second signal is the government’s push for a new model of high-quality development in the real estate industry, from top-level design to institutional implementation. Stabilizing the real estate market is seen as essential for stabilizing the overall economy, and preventing systemic risks in real estate is crucial. This not only supports residents’ reasonable housing needs but also provides a systemic framework for the industry’s long-term healthy development.