Perspective Annual Report | Net profit attributable to the parent company fell 68%, contracting for four consecutive years, China Ocean Hongyang struggles to hide its decline

In the Hong Kong stock market’s property sector, China Overseas HongYong, which focuses on “moderate and beautiful” developments and deeply cultivates second- and third-tier cities, released its 2025 performance report in late March.

There were no surprises, only signs of continued contraction: in 2025, China Overseas HongYong’s revenue and profits both declined sharply, with earnings nearly halved, entering a multi-year downward trend. On the other hand, as a state-owned enterprise, it maintains a solid financial profile, with stable financial indicators, positive cash flow, and consistent dividends, presenting a typical picture of risk and stability coexisting.

Performance Decline Widens:

Three consecutive drops in revenue, four consecutive declines in net profit

In 2025, China Overseas HongYong’s core profitability indicators continued to decline, with the downward trend intensifying, marking a multi-year performance contraction.

Annual report data shows that in 2025, China Overseas HongYong achieved an operating revenue of 36.874 billion yuan, a significant decrease of 19.7% year-over-year; gross profit was 3.201 billion yuan, down 16.8%; overall gross profit margin was 8.7%, roughly flat compared to 8.4% in 2024.

Data source: Company reports, Eastmoney.com. Reported by Duan Wenping, The Beijing News Shell Finance. Illustration by Chart

Despite maintaining stable gross profit margins and tightly controlling sales and management expenses to cut costs, the revenue decline caused by market downturns, along with increased losses from joint ventures and associates, ultimately led to a sharp drop in net profit, weakening profit resilience.

In 2025, China Overseas HongYong’s net profit attributable to parent company was 305 million yuan, a plunge of 68.07% year-over-year, with earnings nearly halved; basic earnings per share were 0.086 yuan, a significant decrease from 0.268 yuan in 2024.

Looking at a longer cycle, the decline in revenue and profits is not a short-term fluctuation but a sustained multi-year trend.

In terms of revenue, it has fallen for three consecutive years, from a peak of 57.49 billion yuan in 2022 to 36.874 billion yuan this year, a reduction of over 30%. Net profit attributable to the parent has declined for four consecutive years, from over 5 billion yuan in 2021 to single digits, with the decline widening each year—26.94% in 2023, 58.55% in 2024, and further 68.07% in 2025.

Data source: Company announcements, Eastmoney.com. Reported by Duan Wenping, The Beijing News Shell Finance. Illustration by Chart

Breaking down China Overseas HongYong’s business structure, real estate development remains its core, with the second growth curve not yet formed, and limited inherent resilience against market cycles. Specifically, property development revenue was 36.381 billion yuan, accounting for 98.66%; commercial property operation revenue was only 493 million yuan, accounting for 1.34%.

In property development, in 2025, China Overseas HongYong achieved contracted sales of 32.185 billion yuan, down 19.8% year-over-year; sales area was 2.9379 million square meters, down 15.7%; contracted sales attributable to equity were 27.967 billion yuan, down 18.4%. This indicates that future performance growth may continue to face pressure.

Data source: Company announcements, Eastmoney.com. Reported by Duan Wenping, The Beijing News Shell Finance. Illustration by Chart

Highly Concentrated Deployment:

Heavy investment in second- and third-tier cities amplifies regional risks

As a developer focusing on “moderate and beautiful” projects and deeply rooted in second- and third-tier cities, China Overseas HongYong in 2025 continued its focus on these markets. Its land acquisition structure and total land reserves are highly concentrated in second- and third-tier cities, further amplifying regional market volatility risks.

Annual report shows that in 2025, the company added 22 new projects across 13 cities, with a total land reserve of approximately 2.9288 million square meters, and a land acquisition cost of 11.708 billion yuan. Investment intensity increased, but the city selection was exclusively second- and third-tier, including Hefei, Lanzhou, Yinchuan, Tangshan, Hohhot, and others, with no presence in first-tier or core new first-tier cities.

By the end of 2025, the company’s total land reserve amounted to 11.9923 million square meters, with 10.2551 million square meters of equity land. The regional distribution remains highly focused on second- and third-tier cities, with very low proportions in first-tier and key second-tier cities.

Data source: Company announcement. Reported by Duan Wenping, The Beijing News Shell Finance. Illustration by Chart

Among these, Lanzhou, Hefei, and Shantou rank as the top three in land reserve scale, with 1.9071 million, 1.6624 million, and 1.3955 million square meters respectively, collectively accounting for over 40% of total land reserves. Other regions include Mengning, Weifang, Huizhou, Yangzhou, Tangshan, and Yantong.

Currently, the real estate market shows clear city differentiation: demand in first-tier and core second-tier cities remains resilient, while most second- and third-tier cities face population outflows, high inventory levels, prolonged absorption cycles, and downward pressure on housing prices. The highly concentrated layout in second- and third-tier cities may lead to slower absorption and sales pressure.

Financial stability:

Dividends despite headwinds, four consecutive positive cash flows

Despite performance pressures and limited deployment, China Overseas HongYong, backed by a central enterprise, maintains a cautious financial strategy, safeguarding its safety margin, with four consecutive years of positive operating cash flow.

On debt management, the company’s financial indicators continued to improve. By the end of 2025, cash reserves exceeded 26.865 billion yuan, with net debt ratio dropping from 33.1% at the end of last year to 31.7%. The “three red lines” remain in the green zone, and the asset-liability ratio has fallen below 70% for the first time since establishment, indicating increasing financial robustness. The weighted average financing cost for the year was 3.4%, remaining low in the industry, highlighting strong financial security and risk resistance.

Regarding dividends, despite significant profit decline, the company persisted in returning value to shareholders. As of December 31, 2025, it paid a final dividend of HKD 0.025 per share, plus an interim dividend of HKD 0.01 per share, totaling HKD 0.035 per share for the year. Although this is lower than the HKD 0.10 in 2024, the payout ratio was about 36.0%. In an environment where many peers have suspended or reduced dividends, this reflects management’s confidence in long-term operations.

Overall, China Overseas HongYong’s 2025 financial report shows a coexistence of risk and stability: on one hand, revenue and profit have declined for several years, with risks accumulating in second- and third-tier markets, and growth bottlenecks and regional pressures needing solutions; on the other hand, its solid financial foundation, manageable debt levels, and continued dividends buy time for strategic adjustments.

Looking ahead, amid increasing industry segmentation, if China Overseas HongYong aims to reverse its performance decline, it must optimize land acquisition strategies, moderately increase the proportion of core city land reserves, accelerate project sales in second- and third-tier cities, and activate existing assets—all while maintaining financial safety—to find new growth drivers and break through development challenges.

Reported by Duan Wenping, The Beijing News Shell Finance

Editor: Yang Juanjuan

Proofreader: Lu Qian