Hong Kong stocks Kaisa Group's stock price surges, expecting profits of no less than 50 billion yuan in 2025! Four distressed property developers focus on "turning losses around" collectively.

The Daily Economic News Reporter | Chen Ronghao
The Daily Economic News Editor | Chen Kemin, Wei Guanhong

On March 25th, Hong Kong-listed real estate company China Evergrande Group (HK01638, stock price 0.098 HKD, market value 942 million HKD) experienced a long-awaited strong performance, with its stock price surging over 60% intraday, and closing up 27.27% for the day.

Meanwhile, on the evening of March 24th, China Evergrande announced that the company expects to record a net profit attributable to shareholders of no less than 50 billion yuan in 2025, turning a profit from a loss of 28.5 billion yuan in the same period in 2024.

It is noteworthy that recently, CIFI Holdings, Oceanwide Group, and Country Garden have each released their 2025 earnings forecasts, announcing that they will achieve profitability through debt restructuring. The Daily Economic News (hereinafter referred to as “the reporter”) has found that the total disclosed book profits of China Evergrande, CIFI Holdings, Oceanwide Group, and Country Garden have reached between 74 billion and 78.7 billion yuan.

Four Troubled Real Estate Companies Focused on “Turning Losses into Profits”

China Evergrande’s profit forecast of no less than 50 billion yuan marks the beginning of a “restructuring and turnaround wave” among distressed property developers.

The reporter’s review of data from the four companies that have disclosed turnaround forecasts shows that these distressed firms’ performance recovery features clear characteristics of “large scale, concentrated timing, and similar pathways.” The combined book profits from their restructuring exceed 74 billion yuan, making it the biggest highlight in the 2025 real estate industry annual reports.

Reviewing China Evergrande’s announced details, the company’s offshore debt restructuring involves approximately $13.37B USD, with debt reductions of about $8.6 billion USD achieved through issuing new notes and mandatory convertible bonds. The debt maturity is extended by an average of five years, with no principal repayment pressure before the end of 2027, and new notes have a coupon rate lowered to 5%–6.25%. This large non-cash gain from restructuring supports the projected profit of at least 50 billion yuan for 2025.

In fact, China Evergrande is not the first real estate company this year to turn losses into profits via debt restructuring. The reporter notes that in the 2025 performance forecasts disclosed by these companies, CIFI Holdings, Oceanwide Group, and Country Garden have also joined the “turnaround” camp.

On the evening of March 23rd, Country Garden released a profit forecast estimating a net profit of 1 billion to 2.2 billion yuan in 2025, mainly due to non-cash gains from debt restructuring; on the evening of March 20th, Oceanwide Group forecasted a net profit attributable to shareholders of 6 billion to 7.5 billion yuan, mainly from non-cash gains from domestic and overseas debt restructuring; on March 16th, CIFI Holdings announced an expected net profit attributable to shareholders of 17 billion to 19 billion yuan in 2025, primarily due to a one-time gain of about 40 billion yuan from offshore debt restructuring completed at the end of 2024.

It is worth noting that the debt restructuring for these four companies is concentrated mainly in the second half of 2025. Analyzing their debt resolution plans for 2025 shows that China Evergrande’s offshore debt restructuring agreement was approved in September 2025; CIFI and Country Garden’s restructurings took effect between December 29th and 30th, 2025; Oceanwide’s offshore debt restructuring was finalized on March 27th, 2025, and the key domestic debt restructuring plan was approved on November 26th, 2025.

Industry Experts: Currently Only “Book Profits”

Some industry insiders say that this kind of “turnaround” is mostly a financial statement improvement and does not mean the companies’ fundamentals have substantially improved.

“These companies’ turnaround through debt restructuring mainly reflects financial adjustments rather than operational improvements. Such short-term profit boosts can ease delisting pressures and boost market sentiment, but after excluding restructuring gains, these four companies’ core businesses—real estate development, sales, and cash flow generation—still remain loss-making,” said Fu Yifu, a research fellow at the China Merchants Bank.

Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, also explained the “accounting logic” behind this collective profit recovery: “According to accounting standards, when a real estate company reaches a debt restructuring agreement with creditors, the difference between the forgiven principal, interest, or the present value of deferred payments and the book value must be recognized as a one-time gain or loss. For example, in China Evergrande’s case, nearly all of the 50 billion yuan profit came from debt reduction, not from sales receipts or asset appreciation.”

Under the “Enterprise Accounting Standards No. 12—Debt Restructuring,” debt restructuring refers to a transaction where, without changing the counterparty, the creditor and debtor agree or are court-ordered to renegotiate the terms of debt repayment, including timing, amount, or method. For debt restructuring involving modifications to other terms, the debtor should recognize the new financial liability based on the revised terms, and the difference between the restructured debt’s book value and its fair value is recognized as investment income or other gains, reflected in current net profit.

Bai Wenxi pointed out that this “paper wealth” has obvious non-cash and unsustainable characteristics. It is a one-time gain that will not recur the following year. Overemphasizing this collective profit turnaround can mislead the market into thinking the industry has fully recovered. In reality, core indicators such as gross profit margin, cash flow, and land reserve quality still require separate assessment.

“Relying solely on financial restructuring cannot fundamentally solve the problems. Companies need to achieve substantive improvements in operations, management, and strategy,” Fu Yifu said. To truly escape difficulties, property developers must see a recovery in sales to generate positive cash flow, optimize their asset structure by disposing of low-efficiency assets, establish a healthy financial system that controls debt levels, and complete business transformations aligned with new development models.

Bai Wenxi added that currently, distressed developers generally face a trust crisis among homebuyers, with project absorption rates weaker than those of healthy companies. Only when financing channels are substantially restored, gross profit margins rise above 15%, and return on equity (ROE) turns positive, can they be considered to have escaped operational difficulties. This recovery often takes an additional 2 to 3 years.

Reporter | Chen Ronghao
Editor | Chen Kemin, Wei Guanhong, Du Hengfeng