China Merchants Shekou: Building Resilience Forward, Steadily Reaching Far

In 2025, the real estate market continues to experience ongoing adjustments and fluctuations. The total new commercial housing sales area for the year reached 881 million square meters, with sales revenue of 8.39 trillion yuan, down 8.7% and 12.6% year-on-year, respectively.

On the operational side, previous data shows that out of more than 70 A-share real estate companies that have disclosed earnings forecasts, over 70% are expected to report losses, with less than 30% showing profits. The market is exploring new balances amid deep adjustments, with industry differentiation becoming the most prominent feature. During this period, China Merchants Shekou (招商蛇口) has established itself as a leading enterprise through firm corporate and product strategies, efficient management, prudent finances, and a diversified operating system with strong collaboration, charting a high-quality development path in the new real estate cycle amidst profound industry transformation.

On the evening of March 16, China Merchants Shekou (001979.SZ) released its 2025 annual report. For the year, the company achieved operating revenue of 154.728 billion yuan and net profit attributable to shareholders of 1.024 billion yuan, representing a decline of varying degrees compared to the previous year. However, in the context of a persistently volatile industry, it remains one of the few real estate companies to achieve positive profitability.

Targeted Investment and “Good Housing” to Strengthen Performance Moat, Climbing the Rankings “Against the Market”

Over the past year, the real estate sector continued to differentiate during adjustments, with only 10 companies achieving annual sales exceeding 100 billion yuan. China Merchants Shekou accumulated signed sales area of 7.1612 million square meters and signed sales amount of 196.009 billion yuan, improving its industry ranking by one position to fourth place, firmly maintaining a top-five position in the industry. It is one of the few companies to “rise against the trend.”

This impressive achievement is attributed to its focus on core assets, sales-driven investment, careful selection, and the deep implementation of its “Good Housing” strategy.

In targeted investment, in 2025, China Merchants Shekou achieved full-caliber sales rankings in the top three in cities including Shanghai, Shenzhen, Chengdu, Xi’an, Changsha, Nanjing, Zhengzhou, Suzhou, Foshan, and Nantong, and entered the top five in 15 of the 30 key cities nationwide.

Deep cultivation in these core cities has helped China Merchants Shekou maintain strong resilience amid a market that is bottoming out and stabilizing.

In 2025, the company continued to increase investment in core cities, acquiring a total of 43 land parcels with a combined gross floor area of about 4.4 million square meters and a total land price of approximately 93.8 billion yuan, of which about 54.3 billion yuan was paid in land costs.

Investments in the “Top 10 Core Cities” accounted for nearly 90% of total investments, with 63% invested in first-tier cities—an increase from the previous year. The company acquired five parcels in Shanghai, three each in Shenzhen, Beijing, Chengdu, and Hangzhou, and two in Xi’an, securing high-quality land reserves.

These quality land reserves will continue to support China Merchants Shekou’s future performance.

Notably, with the promotion and deepening of the “Good Housing” concept, China Merchants Shekou has carried out numerous practices and explorations to implement this strategy.

Not only contributing to industry advancement toward new development models, but also demonstrating core strength to withstand cycles. In November last year, at the 27th China High-Tech Fair, China Merchants Shekou released the “Good Housing Quality Standards White Paper,” leading the industry from “housing for living” to “housing with quality,” becoming the first enterprise to publish “Good Housing” standards at the event.

The “Good Housing” standards are based on three core values: “Smart and Safe Quality Homes,” “Natural and Harmonious Aesthetic Homes,” and “Long-lasting Neighborhoods,” covering seven dimensions—“Worry-free Living, Comfort and Health, Green and Low-Carbon, Intelligent Convenience, Craftsmanship, Aesthetic Renewal, Thoughtful Service”—with 28 scenario modules and 485 technical details. These standards have been scaled and implemented in over 20 benchmark projects nationwide, gaining broad market recognition.

During the reporting period, flagship projects of China Merchants Shekou showcased many highlights, with over 20 new projects across the country exceeding expected absorption rates at launch.

Among these, 15 projects including Kangding 19 in Shanghai, China Merchants Xī in Chengdu, Jin Chengxu in Chengdu, China Merchants Xu in Changsha, Wutong Academy in Xi’an, and Lin Yu Lake in Shanghai were listed among the top ten national works of 2025, helping China Merchants Shekou rank fourth in the “Top 100 Product Power of Chinese Real Estate Companies 2025.” Six projects, including China Merchants Xī in Beijing and Huaxi Phase II in Foshan, received the “Good Housing” Top 20 awards and special recognition.

Diversified Business Ecosystem Collaboration, “Three Transformations” Drive High-Quality Development

China Merchants Shekou centers its business around “Development, Asset Operation, and Property Services,” driven by innovation. It actively promotes “three transformations”: shifting from development-focused to balanced development of development and operation; moving from heavy asset reliance to a combination of heavy and light assets; and transitioning from homogeneous competition to differentiated development, all aimed at high-quality growth.

During the period, besides consolidating its development business, the company’s diversified operations also achieved notable progress.

In asset operation, the company’s commercial centers, industrial parks, apartments, office buildings, and hotels all experienced growth. The total income from managed properties reached 7.63 billion yuan, up 2.2% year-on-year. Over the year, 29 new projects were introduced, totaling 1.77 million square meters, focusing on core city formats, including 12 apartments, 8 commercial properties, and 3 industrial parks.

As a property management and light-asset operation platform, China Merchants Property Services (招商积余) further deepened reforms in 2025, strictly controlling cash flow and improving efficiency and quality, achieving balanced scale benefits. During the period, it generated revenue of 19.273 billion yuan and net profit of 655 million yuan. By the end of the reporting period, it managed 2,473 projects covering 377 million square meters.

Leveraging its resource and ecosystem advantages, China Merchants Shekou actively seizes opportunities in emerging industries and the times.

On one hand, it continues to promote the value realization of existing assets through public REITs. In 2025, it launched the second round of infrastructure acquisitions for Bosera Shekou Industrial Park REIT, planning to expand REITs through projects like the Guangming Science and Technology Park in Shenzhen’s Guangming District and warehouses in Qianhai, Nanshan District, including W6 and W7 auxiliary buildings.

This further consolidates its “investment, financing, construction, management, and exit” full lifecycle model for properties, fostering healthy asset circulation and enhancing sustainable operations.

On the other hand, as an experienced operator of industrial parks, the company empowers park enterprises through technology, capital, scenarios, and operations, and emphasizes investment in leading industries and supply chains within parks. It aims to develop parks into hubs for cultivating emerging industries and creating a self-controlled resource pool of innovative sectors.

Currently, its industrial fund investments exceed 5 billion yuan, with projects at various stages—some listed, some in IPO application, some in pre-listing guidance, and others in early startup phases. Innovative tech companies like Ying Shi Innovation and Mu Xi Co., Ltd. successfully went public during the period, becoming benchmark cases of industry-finance innovation and transformation.

Through investment, exit, and positive cycle management of industrial funds, the company’s results are gradually realized, generating financial returns, promoting synergy between core businesses and industrial parks, and advancing high-quality development. It also supports the cultivation and growth of strategic emerging industries.

Maintaining Financial Security, Steady Financial Management to Navigate Industry Cycles

As a state-owned enterprise developer, China Merchants Shekou strictly upholds financial security. During last year’s annual performance meeting, the chairman emphasized the importance of “four no-losses” in strategy, including “no capital loss,” which means maintaining sufficient cash reserves.

Over the past year, the company proactively adapted to industry changes, optimized cash flow management precisely, and strictly safeguarded capital safety, consistently implementing a “sales-driven investment and production” strategy to improve capital efficiency.

Its full-year net cash flow from operating activities reached 9.693 billion yuan, with cash and equivalents ending at 86.127 billion yuan, maintaining overall resilience.

At year-end, excluding pre-received accounts, the asset-liability ratio was 64.17%, net debt ratio 72.46%, and cash short-term debt ratio 1.19, with all three red lines remaining in the green zone, indicating a stable and reasonable debt structure.

The company actively implements new real estate financing models, adhering to principles of simplicity, efficiency, and safety. During the year, it fully cleared 12 billion yuan of perpetual bonds, secured 14.1 billion yuan in property loans, and optimized its debt structure.

Leveraging its strong credit profile, it continued to reduce financing costs in 2025, adding 17.94 billion yuan in public market financing, with coupon rates among the lowest in the industry. Its year-end comprehensive funding cost was 2.74%, down 25 basis points from the beginning of the year, maintaining industry-leading levels.

With the backing of a central enterprise platform and excellent credit, China Merchants Shekou has built a diversified, smooth, and low-cost financing system. By flexibly utilizing bank loans, bond issuance, asset securitization, and REITs, it continuously broadens financing channels, optimizes debt maturity structures, and provides abundant low-cost capital for business expansion and innovation.

Its outstanding financial management not only provides a solid foundation for navigating industry cycles but also injects continuous internal momentum for high-quality development.

Looking ahead, China Merchants Shekou states that, while consolidating its core development business, it will further strengthen cash flow management, refine investment strategies, accelerate business transformation and upgrading, and deliver high-quality products and services to meet market demands. It aims to evolve from a traditional real estate developer to a “developer + operator + service provider” integrated new development model, ensuring resilience and steady progress in industry adjustments, and achieving high-quality growth.

Related company: China Merchants Shekou (SZ 001979)