Overcoming the twin mountains of delivery and debt restructuring, Sunac needs to tackle the "hard bones" of project revitalization.

Ask AI · Can project revitalization become the key to Fantasia Group’s cash flow recovery?

How did property developers that were the first to complete debt restructuring in both domestic and overseas markets perform in 2025?

On the evening of March 27, Fantasia Group (01918.HK, “Fantasia” for short) released an announcement showing that last year it achieved revenue of about RMB 45.12 billion, down about 39.0% year over year; gross loss was about RMB 0.64 billion, while gross profit in the prior year was about RMB 2.89 billion; and loss attributable to owners was about RMB 12.33 billion, narrowing by about 52.0% from the previous year.

As the data shows, although Fantasia is committed to advancing debt restructuring, it still faces certain challenges in operations. However, due to the progress of deleveraging work, Fantasia’s interest-bearing liabilities decreased by RMB 71.41 billion to RMB 188.26 billion; overall liabilities fell by RMB 133.45 billion compared with the end of 2021; and the accounting gains brought by the restructuring also helped narrow the scale of its losses.

Restructuring gains and “loss reduction” in performance

A decline in property sales revenue is the main reason Fantasia’s revenue decreased. In 2025, Fantasia’s property sales revenue was about RMB 33.05 billion, down about 46.0% year over year, mainly due to declines in delivered property delivery area and average selling price. During the period, Fantasia’s property delivery area decreased by about 23.1% year over year, and the average sales price of annual recognized projects decreased by about 29.8% year over year.

In response to the current sales situation, Fantasia said directly that in recent years the real estate industry has continued to trend downward, and the sales market as a whole has shrunk significantly. In addition, property developers have gradually experienced debt problems, leading to insufficient confidence among homebuyers in pre-sale homes, further exacerbating the difficulties in selling new homes. Combined with tighter external financing channels, it has constrained property delivery progress and the launching and selling of new projects.

Beyond the real estate business, Fantasia’s property management and culture and tourism segments are also facing certain industry-wide challenges. In property management, in 2025, under pressure from a decline in Fantasia Services’ average collection rate of property management fees, it achieved revenue of about RMB 6.82 billion and turned a loss into a profit. In the culture and tourism segment, revenue was about RMB 4.73 billion; at the current stage, the culture and tourism industry is undergoing deep adjustment, and the market’s competitive landscape is accelerating in its divergence.

Facing challenges both within and outside the company, Fantasia’s two major tasks last year were ensuring project deliveries and resolving debts.

Data shows that from 2022 to 2025, Fantasia delivered 186,000 units, 312,000 units, 170,000 units, and 54,000 units, respectively, with cumulative deliveries exceeding 722,000 units. As the delivery peak passed and the delivery-assurance work basically wrapped up, Fantasia has shifted from a “delivery-assurance” intensive campaign back to a normal operating model of “sales—delivery.”

Debt resolution also made key progress. Last year, Fantasia completed debt restructuring for both domestic and overseas debts in full, directly affecting the company’s core financial indicators. For interest-bearing liabilities, by the end of 2025, Fantasia’s balance of interest-bearing liabilities was about RMB 188.26 billion, decreasing by RMB 71.41 billion versus the end of last year, and decreasing by RMB 133.45 billion versus the overall liabilities at the end of 2021.

Completion of the debt restructuring also brought accounting gains on the books. In 2025, Fantasia’s other income and gains were about RMB 35.57 billion. This mainly included combined gains of about RMB 32.97 billion from overseas debt restructuring and domestic debt restructuring; gains of about RMB 0.65 billion from the disposal of subsidiaries, joint ventures, and associates; and interest income of about RMB 0.29 billion from collecting interest from joint ventures and associates, among others.

The sharp increase in other income and gains weakened the impact of Fantasia’s other expenses and losses. Last year, Fantasia’s other expenses and losses were about RMB 27.12 billion, mainly including losses of about RMB 8.92 billion from the disposal of subsidiaries, joint ventures, and associates; allowance for impairment provisions of about RMB 7.51 billion for long-term assets; provision for litigation and other contingent liabilities of about RMB 3.98 billion; and so on.

With the combined effect of various factors, Fantasia achieved “loss reduction” last year. Loss attributable to owners was about RMB 12.33 billion, narrowing by about 52.0% year over year. At the end of the period, Fantasia’s net assets attributable to the parent company were about RMB 34.17 billion. Total cash (including cash and cash equivalents and restricted cash) was about RMB 12.01 billion, of which cash not subject to restrictions was about RMB 5.68 billion.

Liu Shui, general manager of corporate research at CEC Insight Research Institute, said that debt restructuring gains for property developers are mostly accounting-level adjustments rather than a fundamental improvement in operating conditions. In debt restructuring, debtors generate differences because the book value of the restructured debt exceeds the fair value of settlement cash, non-cash assets, or the book value of restructured debt after the restructuring. This difference must be recognized once in the current period’s profit, forming “debt restructuring gains.” Profit driven by accounting standards is one-time and is not sustainable.

Liu Shui believes that going forward, property developers’ profitability will still depend on changes in revenue and profit generated by normal business operations. Key indicators to focus on include core operating profit, gross margin, and operating net cash flow after excluding restructuring gains; as well as sales de-stocking speed, the status of project deliveries, the quality of land reserves, and whether financing channels truly recover—these better reflect the company’s ability to achieve sustainable development.

Tackling the “hard bone” of project revitalization

For Fantasia, after completing debt restructuring, whether it can “get back on track,” and how it can “get back on track,” is a key question the market is concerned about.

In this regard, Fantasia said that with the delivery-assurance tasks basically completed and the conclusion of work to resolve public-market debt risks, introducing funding to revitalize projects and resolving project debt problems will be the “top priority” this year; it will increase efforts to promote cooperation with institutions such as asset management companies that can provide incremental capital, accelerating the resolution of project debt risks and revitalization of high-quality projects.

Over the past year, Fantasia has revitalized 12 real estate projects and expects to obtain about RMB 11.2 billion in funding from them to address existing project debt problems and kick off project development and construction. As of now, it has cumulatively received about RMB 8.58 billion in funding. Among them, projects such as Beijing Fantasia One, Wuhan Optics Valley One, and Phase 2 of Tianjin Meijiang One have been put into construction and have achieved sales. This year, it is expected that new products such as Chongqing Bay and the Tianjin Meijiang land parcels will enter the market.

In terms of funding acquisition, as of the date of the announcement, Fantasia and its joint venture and associate companies obtained aggregate approved amounts of about RMB 23.02 billion for special loans for ensuring delivery of homes in various regions, aggregate approved bank supporting financing amounts of about RMB 11.27 billion, approved financing amounts of about RMB 4.78 billion for “white-list projects,” and obtained additional funding of about RMB 6.41 billion by introducing an asset management company to cooperate in project development. In the future, the group’s funding sources will still mainly come from the above channels.

Fantasia believes that as of the end of 2025, the group together with its joint venture and associate companies had total land reserves of about 10,777.2 thousand square meters (equity land reserves of about 7,651.3 thousand square meters). Of this, unsold land reserves were about 8,678 thousand square meters (unsold equity land reserves of about 6,050 thousand square meters). With the real estate market stabilizing, sufficient land reserves will be an important foundation for Fantasia to resolve real estate project debt problems and support the gradual restoration of operations in the real estate segment.

It is worth noting that although Fantasia has completed publicly announced domestic and overseas open-debt restructuring, its total outstanding interest-bearing liabilities still reach RMB 188.26 billion. The company still needs to handle other borrowing issues. As of the date of the announcement, the principal amount of borrowings due but not yet repaid totaled approximately RMB 1108.0 billion, and it has led to the possibility that the principal of borrowings totaling approximately RMB 322.5 billion may be required to be repaid early.

As of December 31, 2025, about RMB 154.85 billion of Fantasia’s borrowings are secured by collateral provided by Fantasia’s assets. The group continues to negotiate with other existing lenders to promote a long-term solution to debt issues through measures such as extensions, refinancing, or restructuring. Because lenders are dispersed and the market continues to change, it still takes time to determine extension plans one by one.

In this regard, the auditor, Hong Kong BDO Limited, said that based on factors including Fantasia’s net loss in performance, the size of current and non-current borrowings, and the total amount of cash on hand, there are multiple uncertainties regarding the company’s ability to continue as a going concern, which may give rise to material doubts about the group’s ability to continue as a going concern; therefore, it is unable to express an opinion on whether the going-concern basis of preparation is appropriate.

Liu Shui, general manager of corporate research at CEC Insight Research Institute, said that completion of debt restructuring does not mean that an enterprise has truly “gotten back on track.” It mainly resolves short-term liquidity risks and buys time to repair the assets and liabilities statement. If sales do not proceed smoothly and operations do not improve, the risk of a cash-flow break occurring again still remains. Therefore, debt restructuring must be treated as a new starting point, not an end point.

For property developers to truly restore their “blood-making” capability and achieve sustainable operations, the core task is to accelerate sales cash collection and revitalize existing stock assets—this is the fundamental way to restore cash flow. At the same time, focus on core-advantage businesses such as real estate development, held-to-operate operations, and entrusted development, and dispose of or divest non-core and low-efficiency assets. A broad-based recovery in industry sales is also an important foundation for property developers’ operational recovery.

(This article comes from Yicai Finance)