CMacOSLatin2 Shekou Results Meeting Sets Tone: Here's How to Kick Off the "15th Five-Year Plan"

Text/Leju Finance Li Yihe

“2026 will be the first year of the 14th Five-Year Plan, and the company will take big steps toward a high-quality development path characterized by lean operations and resilience.” At the annual performance meeting on March 17, the management of China Merchants Shekou Industrial Zone Holdings (001979.SZ) set the direction for the coming year.

The day before, China Merchants Shekou (001979.SZ) released its 2025 annual report. The full-year revenue was 154.728 billion yuan, with a net profit attributable to shareholders of 1.024 billion yuan, a slight decline year-over-year. However, amid the ongoing industry turbulence, it remains one of the few real estate companies still achieving positive profits.

The reasons for the change mainly include: first, the impact of industry downturn on the profitability of companies; second, the company prudently made impairment provisions during the period; third, depreciation was calculated for investment properties according to the cost method.

Management explained that these accounting treatments affected the company’s reported profits in the short term, but in the long run, they help solidify the company’s asset quality and prepare for leaner operations in the future.

During the reporting period, China Merchants Shekou, with its firm corporate and product strategies, efficient management, prudent finances, and a well-coordinated diversified business system, has carved out a high-quality development path for a leading enterprise in the new real estate cycle amid deep industry transformation.

01

Focused on core strategies, industry ranking improved further

In the past year, the real estate sector continued to differentiate amid 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, with a total signed sales amount of 196.009 billion yuan, ranking fourth overall, 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 areas, sales-driven investment, and selective investment strategies. In 2025, China Merchants Shekou ranked in the top three in full-caliber sales amounts 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.

At the performance meeting, management noted that the five core cities contributed over 60% of last year’s overall performance, confirming the foresight and correctness of the company’s focus on core cities strategy. “We rely on cities with solid fundamentals and strong market resilience to support the company’s stable performance during the industry downturn.”

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

Building on this, over the past year, the company continued to increase investment in core cities. It acquired 43 land parcels in total, with a 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.

Its investments in the “Strong Heart 30 Cities” account for 100%, and nearly 90% in the “Core 10 Cities,” with investments in first-tier cities accounting for 63% of total investment, further increasing from the previous year. It acquired 5 parcels in Shanghai, 3 each in Shenzhen, Beijing, Chengdu, and Hangzhou, and 2 in Xi’an.

As of the end of 2025, China Merchants Shekou’s total unsold land reserve was about 22 million square meters, with 47% in the “6+10 core cities,” 76% in the “Strong Heart 30 Cities,” and 25% in the Guangdong-Hong Kong-Macao Greater Bay Area. In terms of business types, residential accounts for 64%.

Management indicated that, based on current project schedules, the total available sale value in 2026 is expected to reach 340 billion yuan. In terms of city tiers, 81% of this is in the “6+10” core cities, and 94% in the “Strong Heart 30 Cities.” Supply will mainly be concentrated in the first half of the year, with additional supply from newly acquired land in the second half. These high-quality land reserves will continue to support the company’s future performance.

02

Market in bottoming and recovery phase, maintaining cautious optimism

Since 2021, the industry has undergone more than four years of deep adjustment. Recently, national and local governments have introduced policies to optimize purchase and loan restrictions, stabilize the market and housing prices, boosting confidence and industry morale.

However, China Merchants Shekou’s management also pointed out that we must be clear-eyed that the current market is still in a bottoming and recovery phase, and we adopt a cautious optimism. In the short term, efforts focus on boosting confidence; in the medium to long term, it is a gradual process of bottoming out and recovery.

Regarding investment and sales this year, management stated at the performance meeting that in 2026, investment will generally continue to follow the principle of sales-driven, selective investment in key regions and cities. The company will adhere to endogenous growth, selecting the best projects, with each project meeting the “six good” investment standards to ensure effective resource allocation. New land acquisitions will focus more on project turnover speed and realized returns.

Sales planning remains similar to last year, with full-caliber sales roughly stable. The company will continue to follow the principles of sales-driven production, sales-driven investment, and prudence, avoiding blind pursuit of scale, but aiming for quality growth with receivables.

Management expressed confidence that, despite the weak industry recovery and deep differentiation, China Merchants Shekou will leverage the synergy of its three main businesses, keenly grasp policy opportunities, and continuously strengthen and enhance its market position to create sustainable value for shareholders.

03

Implementing the “Good Housing” strategy to build core competitiveness

Over the past year, with the promotion and deepening of the “Good Housing” concept, China Merchants Shekou has carried out numerous practices and explorations.

In November last year, at the 27th China High-Tech Fair, the company released the “Good Housing Quality Standards White Paper,” leading the industry from “housing for living” to “housing for quality living” with innovative standards. It was the first enterprise to publish the “Good Housing” standards at the fair.

The “Good Housing” standards are based on three core values: “Smart and Safe Quality Homes,” “Natural and Harmonious Aesthetic Homes,” and “Long-lasting Neighborhoods.” They cover seven dimensions—“Worry-free Living, Comfort and Health, Green and Low-carbon, Smart and Convenient, Craftsmanship, Aesthetic Renewal, Thoughtful Service”—and 28 scenario modules, with 485 technical details. These standards have been scaled in over 20 benchmark projects nationwide and widely recognized in the market.

During the reporting period, flagship projects of China Merchants Shekou showcased many highlights, with over 20 new projects achieving pre-sale rates exceeding expectations.

Among these, 15 projects, including Kangding 19 in Shanghai, China Merchants Xi in Chengdu, Jin Chengxu in Chengdu, China Merchants Xu in Changsha, Wutong Academy in Xi’an, and Lin Yu Lakeside in Shanghai, were listed among the top ten national works of 2025, helping the company rank 4th in the 2025 China Real Estate Product Power TOP 100. Six projects, including China Merchants Xi in Beijing and Phase II of Foshan Huaxi, received the “Good Housing” top product awards.

Regarding “Good Housing” and “Good Products,” management said that the company will continue to increase R&D investment, manage products throughout their lifecycle, and ensure quality upgrades. Specifically, the company will implement five major enhancement initiatives around display experience, delivery quality, sales premiums, management systems, and living services, continuously creating benchmark projects to make product strength a core competitive advantage that can withstand cycles and lead the industry.

04

Upholding financial security, maintaining prudent financial management through cycles

As a state-owned developer, China Merchants Shekou strictly safeguards financial security. At last year’s annual performance meeting, the chairman emphasized the need to adhere to “four no-loss” strategies, one of which is maintaining sufficient cash flow.

Over the past year, the company proactively adapted to industry changes, optimized cash flow management, and strictly maintained financial safety. Its full-year operating cash flow reached 9.693 billion yuan, with ending cash of 86.127 billion yuan, demonstrating 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, all remaining within the “green zone” of the “three red lines,” indicating a healthy debt structure.

The company also actively implemented new real estate financing models, adhering to simple, efficient, and safe financing principles. It fully repaid 12 billion yuan of perpetual bonds, secured 14.1 billion yuan in operating property loans, and significantly optimized its debt structure.

Meanwhile, leveraging its strong credit profile, China Merchants Shekou continued to reduce financing costs. In 2025, it added 17.94 billion yuan in public market financing, with coupon rates among the lowest in the industry at the same period; its overall funding cost at year-end 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, the company has built a diversified, smooth, and low-cost financing system. By flexibly utilizing bank loans, bond issuance, asset securitization, and REITs markets, it continuously broadens financing channels, optimizes debt maturity structures, and provides abundant low-cost funds for business expansion and innovation.

Excellent financial management not only provides a solid guarantee for navigating industry cycles but also injects continuous endogenous momentum for high-quality development. At the performance meeting, management said that future financing efforts will focus on three areas: first, further reducing costs; second, improving matching; third, controlling risks.

05

Diversified business ecosystem synergy, “three transformations” driving high-quality growth

China Merchants Shekou centers its business around “development, asset operation, and property services,” driven by innovation, and is committed to advancing “three transformations”: shifting from development-centric to balanced development of development and operation; moving from heavy assets to a combination of light and heavy assets; and transitioning from homogeneous competition to differentiated development, aiming for high-quality growth.

During the period, besides strengthening development, the company’s diversified businesses also achieved good results.

In asset operation, its commercial centers, industrial parks, apartments, office buildings, and hotels all saw growth. The total income from managed properties was 7.63 billion yuan, up 2.2% year-over-year. The company added 29 new projects totaling 1.77 million square meters, focusing on core cities and key formats, including 12 apartments, 8 commercial properties, and 3 industrial parks.

As a platform, China Merchants Property Services (招商积余) continued to deepen reforms, strictly control cash flow, and improve efficiency and quality, achieving balanced growth in scale and benefits. During the period, it reported revenue of 19.273 billion yuan and net profit of 655 million yuan. As of the end of the period, it managed 2,473 projects covering 377 million square meters.

Leveraging its resources and ecosystem advantages, China Merchants Shekou also seizes emerging industries and opportunities of the times.

On one hand, it continues to promote the value realization of existing assets through public REITs. In 2025, it launched the second phase of the Bosera Shekou Industrial Park REIT, planning to expand REITs by acquiring infrastructure projects in Guangming District, Shenzhen, and Qianhai Yibao Park in Nanshan District, including warehouses and auxiliary buildings.

This further consolidates its full lifecycle development model of “investment, financing, construction, management, and divestment,” promoting healthy asset circulation and enhancing sustainable operational capacity.

During the “14th Five-Year Plan,” management said that the overall strategy is to optimize development, strengthen operations, expand services, and improve risk management. “We aim to transform from a traditional developer into a ‘developer + operator + service provider,’ becoming China’s leading integrated real estate park development and operation service provider. This is our direction and our goal.”