Annual Report Review | Cinda Real Estate's Delayed "Asset Cleanup"

Viewpoint.com, in 2024, Cinda Real Estate achieved operating revenue of 8.028 billion yuan, which was the first time since the company’s revenue broke 10 billion yuan in 2016 that it fell to a double-digit figure. At the same time, it fell into losses, with net profit of -0.809 billion yuan year-on-year down 234.41%; and net profit attributable to the parent company of -0.784 billion yuan year-on-year down 255.12%.

But this is not the bottom for Cinda Real Estate. Recently, it has once again turned in a loss-making 2025 annual performance.

On April 1, the 2025 annual report released by Cinda Real Estate showed that during the period, operating revenue was 4.584 billion yuan, down 42.9% year-on-year; net profit, based on the loss of 0.809 billion yuan in 2024, further widened to a loss of 8.723 billion yuan; net profit attributable to the parent company was -7.875 billion yuan, decreasing by 7.091 billion yuan compared with -0.784 billion yuan in the same period last year.

On the same day as the annual report was disclosed, Cinda Real Estate announced that it plans to accrue asset impairment losses of 6.225 billion yuan for 2025.

This accrual directly reduces the company’s total profit for the current period by 6.225 billion yuan, and at the same time results in a reduction of approximately 5.549 billion yuan in 2025 net profit attributable to shareholders of listed companies.

Even if this accrual is ignored, Cinda Real Estate still recorded a profit-and-loss loss in 2025, and it was clearly worse than in 2024.

Massive impairment accruals became the main driver of Cinda Real Estate’s huge loss in 2025, but the market is paying more attention to whether, after clearing historical burdens, the company can successfully move forward lightly, and repair its profitability and financial statements in the next stage.

A long-delayed “clearing of burdens”

Cinda Real Estate’s performance had already been previewed earlier.

In the earnings forecast released in January this year, regarding the expectation of losses, Cinda Real Estate explained two reasons.

On the one hand, the centralized delivery scale of real estate development projects during the period decreased, leading to a year-on-year decline in operating revenue and gross profit margin; on the other hand, there were impairment indicators for some real estate development projects and external financial investments, and based on market conditions and the principle of prudence, it accrued the corresponding impairment provisions.

Over the past year, although the market performance has rebounded from time to time, overall it is still in an adjustment phase, and companies are also facing operational pressure.

Data from the National Bureau of Statistics shows that in 2025, the sales area of newly built commercial housing was 88,101 million square meters, down 8.7% year-on-year; of which the sales area of residential housing declined by 9.2%. The sales value of newly built commercial housing was 83,937 billion yuan, down 12.6%; of which residential sales value decreased by 13.0%.

Affected by the market environment and other factors, Cinda Real Estate’s business performance has continued to fluctuate on the basis of its earlier trends.

It is understood that in 2025, Cinda Real Estate’s real estate business achieved revenue of 3.344 billion yuan, down 47.85% from the previous year, becoming the main reason for the company’s full-year revenue decrease; gross profit margin of the business was 4.13%, down 11.49 percentage points from the previous year.

In fact, in recent years, Cinda Real Estate has repeatedly lowered its full-year operating plans.

For 2024, the company expected full-year contracted sales of 15 billion yuan and cash collection of 14 billion yuan; ultimately it achieved sales of 8.269 billion yuan and cash collection of 8.209 billion yuan, with completion rates all below 60%.

For 2025, Cinda Real Estate’s earlier plan was to achieve sales of 10.5 billion yuan and cash collection of 10 billion yuan. According to this latest disclosed performance report, it ultimately achieved sales of 9.827 billion yuan and cash collection of 10.708 billion yuan. Based on this, it completed 93.6% of the sales target for 2025 and exceeded the cash-collection target.

Based on historical data, in 2021, 2022, and 2023, Cinda Real Estate achieved sales amounts of 32.518 billion yuan, 22.418 billion yuan, and 19.505 billion yuan, respectively, corresponding to cash collections of 31.2 billion yuan, 22.541 billion yuan, and 20.728 billion yuan.

After both sales and cash collection fell below 10 billion yuan in 2024, they finally returned to the 10-billion scale again in 2025, though there is still room for improvement in sales performance.

Looking ahead to 2026, Cinda Real Estate remains cautious and further lowered its targets: it plans sales of 8 billion yuan and cash collection of 7 billion yuan.

On the same day as the release of its full-year performance for 2025, Cinda Real Estate also disclosed a “Announcement on Accruing Asset Impairment Provisions.” Compared with the “clearing of burdens” that property developers were accustomed to using earlier, Cinda Real Estate’s true financial situation seems to have genuinely come to the surface at this time.

The announcement states that Cinda Real Estate conducted a comprehensive review and analysis of impairment indicators in the related assets as of December 31, 2025, and accrued asset impairment provisions for assets that may incur impairment losses; it plans to accrue asset impairment losses of 6.225 billion yuan for 2025.

This includes: accounts receivable and other receivables, based on aging and individual major items, for a total bad debt provision of about 106 million yuan; debt investments with credit impairment provision of 1.479 billion yuan; inventories with allowance for price declines of 4.28 billion yuan; investment properties of 274 million yuan; goodwill of 5.6491 million yuan; and long-term equity investments of 80.1812 million yuan.

The announcement points out that this round of accrual of asset impairment provisions is expected to reduce Cinda Real Estate’s total profit for 2025 by 6.225 billion yuan and is expected to reduce the company’s net profit attributable to shareholders of listed companies for 2025 by approximately 5.549 billion yuan.

This also became the main reason for Cinda Real Estate’s large-scale loss in 2025.

“A builder-for-hire handle” at the bottom of the valley

In this newly released annual report, Cinda Real Estate also adjusted the company’s development strategy. It changed from the prior development framework of “real estate development, coordinated mergers and acquisitions, and management services, with equal emphasis on major and minor weights among the three business lines” to “vigorously develop distressed real estate investment and light-asset business, gradually increase the scale of light-asset business, and build a business portfolio that combines both light and heavy assets.”

One of the key handles for Cinda Real Estate to develop its light-asset business is builder-for-hire contracting.

In terms of project reserves, in 2025 Cinda Real Estate newly acquired projects with an approximate permitted gross floor area of 1.6183 million square meters. Among them, the equity area in cooperation projects is about 222.8 thousand square meters, the area of builder-for-hire projects is about 1.1854 million square meters, the builder-for-hire project area accounts for as much as 73.2%.

As of now, the builder-for-hire model is still very limited in improving performance.

According to data, among the approximately 559.7 thousand square meters of real estate sales area accumulated by Cinda Real Estate in 2025, the equity sales area in cooperation projects is about 181.2 thousand square meters, while the sales area of builder-for-hire projects is about 96.8 thousand square meters.

Of the full-year accumulated sales amount of 9.827 billion yuan, the equity sales amount in cooperation projects is about 3.077 billion yuan, the sales amount of builder-for-hire projects is about 1.724 billion yuan, and the builder-for-hire sales amount accounts for about 17.54%.

Meanwhile, from 2021 to 2023, the sales amounts from Cinda Real Estate’s builder-for-hire projects were 0.67 billion yuan, 5.78 billion yuan, and 6.81 billion yuan, respectively, increasing year by year. The share of total sales gradually rose from 2.06% to 34.91%.

In 2024, the sales amount of Cinda Real Estate’s builder-for-hire projects fell sharply to only 1.162 billion yuan, down 82.9% year-on-year, and its share of total sales was also cut in half to 14.05%.

Although builder-for-hire project sales in 2025 showed a clear rebound, the contribution to Cinda Real Estate has still remained at a relatively low level.

At present, Cinda Real Estate’s reserved projects have a permitted gross floor area of 3.7556 million square meters, including an equity area in cooperation projects of 251.8 thousand square meters and a builder-for-hire project area of 1.9326 million square meters. In the long run, builder-for-hire projects will still contribute more sales amount to Cinda Real Estate.

At a previously held 2025 third-quarter earnings briefing, Cinda Real Estate’s general manager Zong Guoguo had stated clearly: “With major changes in the supply-demand relationship in China’s real estate market, there is a large scale of inventory assets that need to be revitalized, optimized, and updated and renovated. This requires more project resources for alleviation and rescue and for repairing value. As a result, the demand from broad financial institutions for real-estate-related professional services continues to increase.”

“In the new situation, the company strengthens group coordination and obtains projects through various ways, such as coordinated expansion, industry M&A, project investment, operating builder-for-hire contracting, joint construction, and entrusted management. With business sources becoming more diverse, the pace of transformation and development will accelerate.”

The path to development is already clear. Can Cinda Real Estate still move forward in a healthier and more sustainable way?

By the end of 2025, Cinda Real Estate’s total assets were 76.599 billion yuan, up 0.165 billion yuan from 76.434 billion yuan at the beginning of the year; total liabilities were 57.565 billion yuan, up 7.067 billion yuan from 50.498 billion yuan at the beginning of the year; shareholders’ equity attributable to the parent company was 15.964 billion yuan, down 7.875 billion yuan from 23.839 billion yuan at the beginning of the year; and the asset-liability ratio was 75.15%, up 9.08 percentage points from 66.07% at the end of the prior year.

It is obvious that Cinda Real Estate, amid the pressure to turn profit back into positive territory, is also facing risks from an increasing liability scale. How to balance the two is the key to whether Cinda Real Estate can truly get out of its predicament.

Disclaimer: The content and data in this article have been compiled by Viewpoint based on publicly available information and do not constitute investment advice. Please verify before use.

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