Key Takeaways:
Greentown China Holdings Ltd. (03900.HK) reported a 95.6% collapse in net profit for its 2025 fiscal year, as falling margins and significant asset write-downs erased earnings for the property developer.
"The company in the short term still needs to digest old inventory from 2021 and earlier, which carries lower gross margins, and pressure from impairments," Huachuang Securities, which maintained a "Recommend" rating on the stock, said in a research note.
Full-year revenue for 2025 dipped 2.3% year-on-year to 155.0 billion yuan. The dramatic profit decline to 71 million yuan was primarily caused by a 4.92 billion yuan asset impairment loss and a drop in property sales gross margin to 11.2%.
Huachuang Securities projects that Greentown's revenue will remain under pressure for the next two years, forecasting earnings per share of 0.22 yuan for 2026. The firm's HK$12.3 target price is based on a residual income model valuation of approximately 27.5 billion yuan.
Despite a challenging market, Greentown's sales from self-investment projects reached 153.4 billion yuan in 2025, with 84% of that coming from tier-one and tier-two cities like Hangzhou, Shanghai, and Beijing. The company has been active in land acquisition, spending 51.1 billion yuan on an equity basis for new projects, 86% of which are in top-tier cities.
The developer has also focused on optimizing its debt. As of the end of 2025, Greentown held 63.2 billion yuan in cash, with a cash-to-short-term debt ratio of 2.6 times. Its average financing cost decreased by 0.4 percentage points from the previous year to 3.3%.
The key risk for Greentown remains the intense competition in the land market, which could further impact profit margins, and the difficulty in offloading its lower-quality, older inventory at a faster-than-expected pace.
The sharp drop in profitability highlights the severe pressure on Chinese real estate developers, even those with strong brands in premium cities. Investors will be closely watching the company's ability to execute its sales strategy for new projects, like the Green Mansion project in Shanghai which saw a 90% sell-through on its initial launch, while managing the drag from older assets.
This article is for informational purposes only and does not constitute investment advice.
