2025 China Resources Land Financial Report Review: Equity investments increased by 28% within the year, and development gross profit margin decreased to 15.5%

Introduction

On March 30th, China Resources Land held its 2025 Annual Performance Conference. Chairman Li Xin stated, “During the ‘14th Five-Year Plan’ period, the company strategically planned a new business model of ‘three growth curves with efficient coordination and aligned efforts, achieving comprehensive high-quality development,’ marking a complete departure from the old development model of ‘three highs’ in the past.”

01

Profit: Operating revenue increased by 0.9%, gross profit margin of development business declined to 15.5%

In 2025, China Resources Land achieved a total operating revenue of 281.44 billion yuan, up 0.9% year-over-year. Among them, sales and development business revenue was 238.16 billion yuan, operating rental income from operational real estate was 25.44 billion yuan (a 9.2% increase YoY, showing strong performance), and fee-based light-asset management revenue was 17.83 billion yuan.

In terms of profitability, gross profit was 59.74 billion yuan, with a gross margin of 21.2%, down 0.4 percentage points YoY. Net profit was 32.82 billion yuan, with a net profit margin of 11.7%. The core pressure on the decline in gross margin comes from the development sales business. In 2025, the settlement gross profit margin of the development business was 15.5%, down 1.3 percentage points. Although the average settlement price increased by 10.5% to 24,599 yuan per square meter, land cost rose by about 14%, leading to a 12.3% increase in settlement unit cost, which pulled the settlement gross margin down to 15.5%.

China Resources Land’s gross margin for the development sales business reached a historical high of 42.9% in 2018, then continued to decline, falling below 20% in 2024 to 16.8%, and further decreasing to 15.5% in 2025. Conversely, the operational real estate rental income segment’s gross margin increased by 1.8 percentage points YoY to 71.8%, offsetting some of the decline.

CFO Zhao Wei said that against the backdrop of a stabilizing real estate market, the overall gross profit level of China Resources Land is expected to steadily rebound in the future. It is possible to improve by more than three percentage points based on the current foundation, and this will not rely solely on increasing the proportion of operational real estate rental income.

By the end of 2025, China Resources Land had signed but unsettled revenue of 164.58 billion yuan, with an estimated 123.48 billion yuan to be settled in 2026, laying the foundation for 2026 revenue.

Management expects that by the end of the “14th Five-Year Plan,” China Resources Land’s sales revenue from development and sales will remain around 200-250 billion yuan, maintaining a leading position in the industry; rental income from operational real estate will stay above 30 billion yuan, with quality and scale remaining the industry’s top; fee-based light-asset management revenue will continue to grow well, with an annual growth rate exceeding 10%, reaching over 20 billion yuan.

Figure 1: Profitability of China Resources Land in 2025 and 2024

Data source: CRIC

02

Cash flow: Full-year equity investments of 67.37 billion yuan, up 28%

As of the end of 2025, China Resources Land’s cash reserves were 116.99 billion yuan, a decrease of 16.22 billion yuan from 133.21 billion yuan at the end of 2024, a decline of 12.2%.

From sales, China Resources Land achieved contracted sales of 233.6 billion yuan in 2025, down 10.5% YoY. Structurally, thanks to a focus on high-tier cities, first-tier city sales accounted for 45%, an increase of 7 percentage points YoY. COO and Vice President Chen Wei stated that the company’s overall salable resources are about 450 billion yuan, not including resources from newly acquired land in 2026; structurally, the focus remains on core cities, with 92% of projects in first- and second-tier cities. He estimates that the sales scale in 2026 will be roughly the same as in 2025.

In terms of investment, in 2025, China Resources Land acquired 33 projects with a total land price of 91.66 billion yuan; equity investments totaled 67.37 billion yuan (compared to 52.65 billion yuan in 2024), an increase of about 28.0%, indicating a higher investment intensity. Management emphasized adhering to the principle of “spending according to income,” controlling investment scale, and promoting resource reallocation through land reserves, land exchanges, and equity exits. In 2025, about 25.5 billion yuan of land reserves were revitalized.

03

Assets and liabilities: Net debt ratio rose to 39.2%, cash-to-short-term debt ratio of 2.32

As of the end of 2025, China Resources Land’s asset-liability ratio was 61.1%, down 3.8 percentage points YoY, achieving five consecutive years of reduction. The book value of shopping center assets was 240.35 billion yuan, accounting for 22.3% of total assets, with the proportion of operating real estate assets continuing to increase as a “ballast stone.” The book value of inventory properties was 398.09 billion yuan, down 9.8% from the beginning of the period.

At year-end, total borrowings were 281.47 billion yuan; net interest-bearing debt ratio was 39.2%, up 7.3 percentage points from 31.9% at the end of 2024. The cash-to-short-term debt ratio was approximately 2.32, and the asset-liability ratio after deducting pre-received payments was about 56%. All three indicators meet the “green” standard, indicating sufficient financial safety margins.

At year-end, China Resources Land’s weighted average financing cost decreased to 2.72%, down 39 basis points from 3.11% at the end of 2024, setting a new record low. In the first half of 2025, it issued medium-term notes totaling 11.5 billion yuan, with coupon rates between 1.90% and 2.20%, at very low market levels. S&P, Moody’s, and Fitch maintained investment-grade credit ratings of BBB+/Stable Outlook, Baa1/Stable Outlook, and BBB+/Stable Outlook, respectively.

Management clearly stated, “We insist on profitable revenue and cash-generating services, viewing cash flow safety as the lifeline of the company,” and plan to accelerate asset capital cycles through regular REITs fundraising. They aim to launch REITs with an average scale of 5-10 billion yuan annually, with a long-term goal of 30-50 billion yuan, helping to reduce capital immobilization on assets.

Overall, China Resources Land’s 2025 annual report shows a pattern of “steady revenue, favorable profit structure, and slightly increased leverage.” However, it should be noted that the sales side of development business still faces cyclical industry pressures, and profitability in 2026-2027 remains uncertain. Future focus should include cost control in development projects, especially in core cities where land competition intensifies, to prevent rising land costs from further eroding future settlement profit margins. Additionally, while increasing investment, close monitoring of the rising trend of net debt ratio is necessary. Lastly, operational pressures in office buildings (occupancy rate 77.7%) and hotels (occupancy rate 67.3%) should be watched, with efforts to continuously improve occupancy and yields.

IN THE END

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