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"

Source: The Paper

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 needs 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%; 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, firmly implements the operating strategy of “sales-driven investment and production,” and continuously improves capital efficiency. The net cash flow from operating activities for the year was 9.693 billion yuan, with a year-end cash balance of 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 cash-to-short-term debt ratio was 1.19. The company actively implements new real estate financing models, adhering to principles of simplicity, efficiency, and safety. During the year, it fully paid off 12 billion yuan of perpetual bonds and secured 14.1 billion yuan in operational property loans. In 2025, it added 17.94 billion yuan in public market financing, with coupon rates among the lowest in the industry for the same period; the year-end comprehensive funding cost was 2.74%, down 25 basis points from the beginning of the year.

In terms of development business, in 2025, the company achieved a total signed sales area of 7.1612 million square meters and a total signed sales amount of 196.009 billion yuan. The company ranked in the top three for 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 GFA, 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 in 2026 is expected to reach 340 billion yuan. In terms of business types, 83% will be residential; in terms of city tiers, the “6+10” core cities will account for 81%, and the “Strong Heart 30 Cities” for 94%; in terms of 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 sector, China Merchants Construction added 80 new projects (including consulting) during the year, with a signed area of 11.39 million square meters and contract revenue exceeding 800 million yuan. Over the years, it has undertaken more than 620 projects, totaling over 35 million square meters.

During the reporting period, the company’s property management business generated total revenue of 7.63 billion yuan, a 2.2% increase 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, located in Shanghai, Hangzhou, Chengdu, Shenzhen, and other core cities.

In terms of commercial operations, at the end of the period, the company managed 54 retail projects, with a total operational 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, with a leasing rate of 93% for projects open for over three years.

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 boosted market confidence and played a positive role.

He added that the new policies announced in Shanghai on February 25, which followed the Spring Festival, have led to a phased recovery in visitor and signing volumes in core areas. During the Spring Festival and March, visitor and transaction activity was quite good, and as of yesterday, mid-March, signs of market warming are evident.

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.

From a series of policies, two clear signals emerge. 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 blanket relaxations but tailored adjustments based on specific city and regional conditions, emphasizing policy coordination and step-by-step implementation. They aim to support reasonable housing demand while maintaining risk control, leveraging market mechanisms, and preventing large fluctuations. This is a positive signal.

The second signal is the government’s push for a new model of high-quality real estate development, from top-level design to institutional implementation. Stabilizing the real estate market is seen as essential for economic stability and preventing systemic risks. This approach supports residents’ reasonable housing needs and provides a long-term institutional framework for industry health.