Longfor Group's revenue last year was 97.3 billion, with operations and services business serving as the ballast.

Ask AI · How Can the Operations and Services Business Help Longfor Go Through the Industry Downturn?

Jiemian News reporter | Wang Tingting

On March 27, privately held real estate developer Longfor Group (00960.HK) released its 2025 performance results.

“Last year, the company successfully navigated through the highest peak of its debt; going forward, it will continue to gradually repair profits on the premise of financial security and stability.” At the company’s earnings call held that day, Zhao Yi, Executive Director and CFO of Longfor Group, told Jiemian News that the group’s profit trough will be in 2025–2026, and starting in 2027 it will gradually recover.

Over the past year, due to the continued downturn in the real estate industry, Longfor Group recorded a loss in profit after core equity from its core equity attributable profit.

Zhao Yi explained to Jiemian News that this was mainly driven by the broader environment: in recent years, the volume and pricing in the real estate development market have continued to decline, and the company’s development business has faced significant pressure on its gross profit margin on sales. This pressure will be reflected in a concentrated way in the settlement cycle over these two years, which is also a problem the whole industry may face together.

“The operations and services business that we have cultivated during this cycle is acting as a ballast and stabilizer.” Zhao Yi said to Jiemian News, “Going forward, these two businesses will maintain double-digit growth every year.”

According to Longfor Group’s 2025 annual results report, in 2025 the company achieved operating revenue of RMB 97.31 billion. Of that, the total revenue from the operations and services business was RMB 26.77 billion, increasing its share of total revenue to 27.5%. Full-year profit after core equity was RMB 7.92 billion. The overall gross margin was over 50%, and the net profit margin was about 30%.

Specifically, in the operations segment composed of commercial investment and asset management, commercial investment’s 2025 rental income increased year over year by 4% to RMB 11.21 billion, and the occupancy rate remained at a high level of 97%; the asset management routes include six businesses: long-lease apartments, industrial offices, serviced apartments, vibrant commercial streets, women’s and children’s hospital, and healthy aging and elder care, with revenue of RMB 2.98 billion in 2025.

The services business includes property services and intelligent development. Among them, property services’ total revenue for the full year was RMB 11.23 billion, with more than 2,100 projects under management and a total managed area of about 360 million square meters. In 2025, Longfor’s Long Zhizao achieved operating revenue of RMB 1.3 billion. During the year, it added 13.87 million square meters of entrusted development area, with entrusted development sales of RMB 20.62 billion, and delivered area of 2.93 million square meters.

In Longfor Group’s plan, at the latest in 2028, the revenue from the operations and services business will exceed the revenue from real estate development. “Our development revenue will continue to maintain a certain scale, but operations and services will contribute the group’s main profits. This is also a very solid cornerstone for the group’s safety.”

For its 2026 targets, Longfor management said that the real estate development business will continue to tackle inventory destocking, focusing on high-quality cash collection; the operations and services business will continue to realize its growth potential.

“For 2026, we have prepared more than RMB 100 billion in cooperate-able and saleable supply sources, of which about 85% of the supply is located in first- and second-tier cities, and 30% of the supply is new projects plus new phases of existing projects. The Group will continue to tackle inventory destocking and, based on market conditions, maintain flexible supply.” Chen Xuping, Chairman of the Board of Directors and Chief Executive Officer of Longfor Group, said.

For commercial investment specifically, in 2026 Longfor plans to open about 9 malls, of which 5 are heavy-asset and 4 are light-asset. For property services, it will continue to improve service quality and efficiency, achieve high-quality external expansion, and drive healthy growth in the business.

Reducing the debt scale in an orderly manner has been a key keyword for Longfor in recent years.

According to Longfor management, in 2025 the company completed safe redemptions totaling RMB 13.5 billion in domestic bonds and RMB 9.23 billion in offshore syndicated loans denominated in Hong Kong dollars. As of December 31, 2025, Longfor Group’s total borrowings were RMB 152.81 billion, down RMB 23.51 billion from the end of the previous year. It held cash of RMB 29.20 billion. Its net gearing ratio was 52.2%, the cash-to-short-term-debt multiple was 1.85, and the asset-liability ratio after excluding advance receipts was 54.7%.

“2025 is the highest peak year for group-level debt maturities. The company repaid RMB 22 billion throughout the year. From 2026 onward, the group-level debt maturing each year is limited. In 2026, the remaining amount maturing during the year is around RMB 6 billion.” Chen Xuping pointed out that by the end of this year and into January next year, all of Longfor’s domestic bonds and domestic MTNs will be fully repaid.

Although Longfor has worked hard to hold the financial safety bottom line, it remains cautiously optimistic about the real estate industry in 2026.

Chen Xuping said that since the second half of 2021, the real estate industry’s deep adjustment has lasted for five years. Over these five years, the transaction volume in the new home market has fallen by nearly 50%, and second-hand home prices have dropped by close to 40%, with the adjustment magnitude being substantial.

“With such a deep decline, policies have continued to be intensified. This year, the overall market’s decline is expected to narrow significantly. At the same time, the rebound in second-hand home transactions will then be transmitted to the new home market and release replacement demand.”

Chen Xuping added that since the first quarter of this year, some hot cities have seen stabilization in second-hand home transaction volumes. In addition, in the new home market, some improvement-oriented high-quality products in better locations have also sold well, and the industry is expected to achieve a turnaround from falling to stabilizing.