Ask AI · Why Has China Railway Construction Corporation’s Real Estate Performance Continued to Be Under Pressure Since Sun Hongjun Took Office?

Produced by | Frontline of Entrepreneurship

Author | Wu Lei

Editor | Egg Boss

Design | Xing Jing

Review | Song Wen

On March 30th, the state-owned infrastructure giant China Railway Construction Corporation released its 2025 financial report.

During the reporting period, the group achieved revenue of 1.03 trillion yuan, down 3.50% year-on-year; net profit attributable to the parent was 10.3k yuan, down 17.34% year-on-year.

Among them, real estate became a “drag.” In 2025, China Railway Construction’s real estate platform, China Railway Construction Real Estate, reported a net loss of 3.1 billion yuan.

Compared to well-known property developers like Vanke, Evergrande, and Country Garden, China Railway Construction Real Estate is not publicly listed and is not as famous. However, according to the CRIC and Centaline rankings, China Railway Construction Real Estate’s total sales in 2025 reached 73.34 billion yuan, ranking 12th in the industry, making it a “dark horse” among central enterprises.

However, as the helm of the company, Sun Hongjun faces considerable pressure. Since he took office as chairman in 2024, China Railway Construction Real Estate’s revenue has repeatedly declined, and profits turned into losses in 2025. By the end of the third quarter of 2025, the company’s short-term funding gap exceeded 20 billion yuan.

Where is this “dark horse” rushing to accelerate towards in the future?

1. Expanding land acquisitions against the trend, sales dropped 23.1 billion yuan in 2025

Compared to the rising “China State Construction Eight Sons” in recent years, China Railway Construction Real Estate is relatively low-key, but it actually has a significant background.

In April 2007, China Railway Real Estate Development Co., Ltd. (hereinafter referred to as China Railway Real Estate) was officially established with an initial registered capital of 500 million yuan. At that time, the company was held by China Railway Construction Corporation, China Railway Construction Group Co., Ltd., China Railway No.12 Bureau Group, and the Fourth Survey and Design Institute of Railways, holding 40%, 20%, 20%, and 20%, respectively.

Subsequently, after two rounds of equity transfers and a name change, China Railway Real Estate became a wholly owned subsidiary of China Railway Construction, renamed China Railway Construction Real Estate Group Co., Ltd. (i.e., “China Railway Construction Real Estate”).

By the end of 2025, China Railway Construction’s total assets exceeded 2 trillion yuan, approved by the State-owned Assets Supervision and Administration Commission as one of the 16 central enterprises mainly engaged in real estate.

Backed by such a large infrastructure giant, China Railway Construction Real Estate has developed series products such as “Xipai,” “Jiangnan,” “International,” and “Yu,” and has begun its counter-trend expansion during the downturn in the property market.

According to Centaline data, from 2022 to 2023, China Railway Construction Real Estate’s equity land acquisition amounts were 37.1 billion yuan and 40.4 billion yuan, ranking among the top 10 nationwide in equity land acquisition.

Meanwhile, the company’s industry ranking rose from 26th in 2021 to 15th in 2022, and maintained 15th place in 2023.

Under the halo of a central enterprise, China Railway Construction Real Estate’s industry ranking has advanced rapidly, but during the deep adjustment period of real estate, the company is also struggling with sluggish sales.

For example: Beike shows that the “China Railway Construction · Beijing Wutong Qingshan” project in Pinggu, Beijing, was completed in 2021. By the end of September 2025, this project had invested 18.36B yuan and sold 678 million yuan, with a sales progress of only 35.69%. The company stated that the difficulty in clearing inventory was due to its relatively remote location and many surrounding competitors.

Similarly, in Chengdu, the “China Railway Construction · Chengdu Xipai Huanhua” project started construction in 2018. By the end of September 2025, the project had invested 20k yuan and sold 1.81B yuan, with a sales progress of 69.37%, but remaining commercial, apartment, and parking spaces had not yet been sold.

(Source: China Railway Construction Real Estate Announcement (unit: billion yuan))

This kind of clearance risk is gradually becoming apparent in China Railway Construction Real Estate. According to CRIC data, in 2022, China Railway Construction Real Estate’s total sales reached 128.1 billion yuan, down 10% year-on-year; in 2023, it further declined by 5% to 121.63 billion yuan.

According to CRIC and Centaline rankings, in 2024, the company’s total sales fell to 96.44 billion yuan, dropping out of the billion-yuan camp. In 2025, total sales further declined by 23.1 billion yuan to 73.34 billion yuan.

The pressure from this continuous decline in sales is probably most clear to Sun Hongjun, the party secretary and chairman of the company, and Chen Jianjun, the deputy party secretary, general manager, and vice chairman.

On March 23rd this year, Sun Hongjun and Chen Jianjun appeared simultaneously at a meeting of China Railway Construction Real Estate— the 2026 Business Operations Conference. The meeting’s tone was: go out, explore markets, and strive to achieve annual business goals.

Specifically, the focus is on stabilizing the housing development business, using less capital to leverage more projects, quickly expanding the light-asset business “second growth curve,” forming scale effects through effective expansion, and cultivating new strategic businesses to accelerate implementation.

In short, for scale, China Railway Construction Real Estate still needs to accelerate.

2. Sun Hongjun’s less than 2-year tenure as chairman, profit loss of 3.1 billion yuan in 2025

For China Railway Construction Real Estate, 2024 was a pivotal year.

At the end of July 2024, China Railway Construction Real Estate announced that due to work changes, Li Xinglong would no longer serve as chairman and party secretary, and no new chairman was appointed at that time.

Until September 2024, the controlling shareholder China Railway Construction issued a notice appointing Sun Hongjun as party secretary and chairman of the company.

Public information shows that Sun Hongjun was parachuted from a sister company of China Railway Construction, having long served in China Railway Construction Group.

(Chart / China Railway Construction Real Estate Announcement)

It’s worth noting that before this, the previous two chairmen, Wu Shiyan and Li Xinglong, had both gained extensive experience within China Railway Construction Real Estate, gradually rising to general manager and chairman. During the more than one month when the chairman position was vacant, the company’s general manager, party secretary, and vice chairman Chen Jianjun was responsible for overall work, but he did not further advance.

So why did the appointment of China Railway Construction Real Estate’s chairman break the internal promotion norm? Was it due to dissatisfaction with past performance by the controlling shareholder, or were there other arrangements? After Sun Hongjun’s appointment, did the controlling shareholder impose new performance requirements? We attempted to inquire with China Railway Construction Real Estate, but as of press time, no response has been received.

From the results, since taking office, Sun Hongjun’s tenure coincided with the downturn in the real estate market. China Railway Construction Real Estate’s performance not only failed to grow but actually declined sharply.

From a sales perspective, according to CRIC data, in 2024, China Railway Construction Real Estate’s sales fell out of the billion-yuan range, and in 2025, it further dropped by over 20 billion yuan.

This directly led to declines in revenue and profit. China Railway Construction Real Estate disclosed that in 2024, the company achieved revenue of 3.02B yuan, down 26% year-on-year; net profit attributable to the parent was only 5.3959 million yuan, a 95% plunge.

(Chart / China Railway Construction Real Estate Announcement)

Compared to the meager profit, minority shareholders reaped substantial gains. China Railway Construction Real Estate disclosed that in 2024, minority shareholders took away as much as 1.9B yuan in profits.

Additionally, according to the parent company China Railway Construction’s financial report, China Railway Construction Real Estate’s 2025 revenue was 46.65B yuan, slightly down from 2024; net loss was 1.24B yuan, turning from profit to loss. (Editor’s note: The company achieved a net profit of 46.47B yuan in 2024.)

(Chart / China Railway Construction 2025 Financial Report)

However, “Frontline of Entrepreneurship” noticed that in China Railway Construction Real Estate’s 2025 third-quarter financial statement, its revenue for the first nine months was 3.14B yuan, and if we compare, the company achieved about 32.1 billion yuan in revenue in the fourth quarter of 2025. This huge discrepancy is truly surprising to outsiders. (Editor’s note: China Railway Construction’s 2025 third-quarter report did not disclose China Railway Construction Real Estate’s revenue data.)

What is the reason for China Railway Construction Real Estate’s profit loss in 2025? With minority shareholders taking a huge share of profits, is there consideration to reduce the “small shareholding” control? How will the company achieve over 30 billion yuan in revenue in the fourth quarter? Why is there such a huge gap between the first three quarters and the fourth quarter’s revenue data?

We attempted to inquire with China Railway Construction Real Estate, but as of press time, no response has been received.

3. Short-term funding gap exceeds 20 billion yuan, inventory reaches 146.1 billion yuan

Three days before holding the 2026 Business Operations Conference, China Railway Construction Real Estate held a financial work meeting. The meeting clearly required that in 2026, cost reduction and efficiency improvement should continue, with a full effort to ensure the safety of the capital chain.

The reason for this is largely due to the heavy financial pressure currently faced by China Railway Construction Real Estate.

As of the end of the third quarter of 2025, the company’s interest-bearing liabilities reached 1.24B yuan. Of these, short-term interest-bearing liabilities due within one year totaled 14.35B yuan. Additionally, accounts payable amounted to 87.46B yuan.

At the same time, the company’s monetary funds were only 32.13B yuan. Roughly calculating based on cash and short-term interest-bearing liabilities, the short-term funding gap has already exceeded 20 billion yuan.

China Railway Construction Real Estate also admits that although the company has relatively ample cash reserves, the increasing scale of maturing debts in the short term will still pose certain short-term repayment pressures.

(Chart / China Railway Construction Real Estate Announcement)

In fact, the company holds huge inventories waiting to be monetized. As of the end of September 2025, the book value of China Railway Construction Real Estate’s inventories was 146.1 billion yuan, accounting for 63.63% of total assets.

If these inventories can be turned over quickly, the company could rapidly recover cash flow. But the problem is that the current real estate market is in a deep adjustment period. Even backed by a central enterprise, China Railway Construction Real Estate cannot escape the impact of the market environment, as reflected in the frequent decline in sales.

To ease the financial pressure, the company has been attempting to accelerate financing since the beginning of 2026.

On March 10th, China Railway Construction Real Estate announced the completion of a 2.34 billion yuan corporate bond issuance, with a coupon rate of 2.76%, of which 330 million yuan was subscribed by related parties. According to the plan, this bond will be used to replace two maturing bonds in 2026.

Earlier in February, the company also issued 1.01 billion yuan of medium-term notes at a rate of 2.43%, intended to fully replace the company’s own funds used to repay “23 Railway Construction Real Estate MTN001.”

(Chart / China Railway Construction Real Estate Announcement)

In the downturn of the real estate market, maintaining financing ability is not easy for China Railway Construction Real Estate. However, will further increasing financing exacerbate debt repayment pressure? How to resolve the current short-term funding gap? Will the controlling shareholder China Railway Construction step in to support? We attempted to inquire with China Railway Construction Real Estate, but as of press time, no response has been received.

In fact, the past year, the parent company China Railway Construction also faced performance pressure. In 2025, the group achieved revenue of 1.03 trillion yuan, down 3.50% year-on-year; net profit attributable to the parent was 15.94B yuan, down 17.34%.

(Chart / China Railway Construction 2025 Annual Report)

In the 2025 annual report, China Railway Construction Chairman Dai Hegen clearly stated that 2026 is the “Fifteenth Five-Year Plan” beginning year and a key year for China Railway Construction to accelerate transformation, upgrade, and comprehensive quality and efficiency improvement, requiring full effort to ensure a good start to the “Fifteenth Five-Year Plan.”

In this “must-win battle,” China Railway Construction probably does not want 2026 to deliver another set of declining revenue and profit figures, and whether China Railway Construction Real Estate, with its losses, can avoid dragging down the overall performance will depend on the results Sun Hongjun delivers.

Note: The cover images and uncredited pictures in the article are from China Railway Construction’s official website.