Gemdale Group is cutting through the noise and is emerging from the most difficult period?

Produced by | Zhongfang.com

Reviewed by | Li Xiaoyan

As one of the “Four Pillars” of the real estate industry known for “招保万金” (recruiting, guaranteeing, saving, and earning billions), and once a benchmark for “three red lines” green-rated property developers, China Evergrande Group has faced phased challenges during the industry’s deep adjustment period. With dual backing from state-owned capital and insurance funds, orderly debt resolution, focus on core cities, and coordinated light and heavy asset management, the company is proactively adjusting and repairing, demonstrating the resilience and confidence of a veteran developer through cycles.

When the “three red lines” policy was implemented in 2020, China Evergrande Group was among only five green-rated developers in the TOP30 industry rankings, alongside Poly, China Overseas, China Resources, and China Merchants Shekou, forming an industry safety benchmark. After five years of industry reshuffling, central state-owned enterprises have consolidated their leading positions through resource advantages, while China Evergrande Group, with mixed ownership, entered a period of adjustment under the dual pressures of deleveraging and market downturn, with phased fluctuations in sales and profits. This is not only a result of strategic contraction but also an inevitable sign of industry cleanup and departure from high leverage, high turnover models.

Data shows that China Evergrande Group’s contracted sales in 2025 are expected to reach 30.02 billion yuan, a slight decline year-over-year; its performance forecast indicates a net loss attributable to shareholders of between 11.1 billion and 13.5 billion yuan, mainly due to reduced sales recognition and cautious inventory impairment provisions. This is a one-time financial statement pressure release, not a sign of operational disorder. The company is actively increasing inventory clearance and strengthening asset quality, which reflects a prudent financial bottom line and clears obstacles for future lean operations.

From an industry perspective, most private and mixed-ownership developers have experienced scale contraction during this adjustment, but China Evergrande has not defaulted on debt nor faced delivery risks, maintaining the core safety line of operations, fundamentally different from companies facing crises.

China Evergrande Group originated from a state-owned enterprise in Futian District, Shenzhen, with a stable equity structure and strong shareholder support, serving as a key safeguard through cycles. Futian Investment, as the founding shareholder, has consistently ranked as the second-largest shareholder. In January 2026, Yang Yuqiu, Chairman of Futian Investment, joined the board, further strengthening state-owned influence, providing solid support in financing, resource connection, and project collaboration. In 2023, the company transferred project equity to Futian Investment, raising 3.251 billion yuan, effectively supplementing liquidity and demonstrating the joint efforts of state capital and the listed company.

As the largest shareholder, Fude Life Insurance has long supported the company’s development. Although short-term stock price fluctuations have impacted book gains, it has always been deeply involved in corporate governance, deploying professional teams into the board and management to promote strategic focus and cash flow management. As the major shareholders gradually withdraw, the company’s equity structure has become more concentrated and stable, significantly improving decision-making efficiency.

After Ling Ke stepped down in 2023, Xu Jiajun took over as chairman, with Li Ronghui from Fude Life serving as president and CFO, completing a smooth leadership transition. The new management team focuses on cash flow safety, debt repayment, and project delivery, quickly advancing organizational optimization and cost reduction, maintaining stable operations without disruptions, demonstrating the advantages of mature governance.

Facing liquidity pressures in the industry, China Evergrande Group adheres to a policy of “collect first, pay later,” with significant achievements in debt resolution. The company completed scheduled debt repayments in the public market in 2025, with ongoing optimization of short-term debt structure. Its credit rating remains at AAA with a stable outlook, a rare achievement in the industry.

As of the third quarter of 2025, the company’s cash and cash equivalents totaled 14.34 billion yuan. Although there is a short-term liquidity gap, the overall risk is manageable through asset disposals, project cooperation, sales proceeds, and shareholder support. The company has fully suspended land acquisitions in the public market in 2025, focusing on receivables and debt repayment; after easing debt pressures in the second half of 2025, it cautiously made small replenishments in core cities like Hangzhou and Shanghai, with precise deployment and restrained pace, returning to rational investment.

On the operational front, the company insists on delivery and livelihood protection, with all ongoing projects progressing normally, maintaining stable quality and performance capabilities, safeguarding brand reputation and homeowner rights—fundamental to restoring market confidence.

In response to new industry models, China Evergrande Group has abandoned scale obsession, shifting toward high-quality, stable, and sustainable development, establishing three core paths:

1. Focus on core cities for development, exit non-core regions, and create high-quality residences driven by product strength to reduce inventory, moving away from high-turnover expansion.

2. Balance light and heavy assets, with project agency, property services, and asset management becoming new engines. By 2025, project agency revenue is expected to grow rapidly, with China Evergrande maintaining a top-three position in the agency industry. Light-asset businesses have low capital input, stable cash flow, and weak cyclicality, effectively smoothing development fluctuations.

3. Lean management to reduce costs and improve efficiency—optimizing organizational structure, cutting management expenses, and enhancing operational effectiveness to generate management-driven benefits.

In the first two months of 2026, although sales declined year-over-year, the base was already low. With new projects entering the market in core cities, increased contribution from light assets, and effective inventory clearance policies, sales are expected to gradually stabilize. Industry policies remain supportive, and a recovery in core city markets will create favorable external conditions for China Evergrande’s recovery.

Historically, China Evergrande Group has endured multiple real estate cycles, always maintaining a prudent foundation. Founded in 1988, restructured in 1996, and listed in 2001, it has over 30 years of deep industry experience, accumulating quality land reserves, mature management systems, and broad brand recognition. Even with a short-term scale contraction, its development capacity, product reputation, financing strength, and shareholder resources remain among the industry’s top tier.

The industry has shifted from scale expansion to quality and prudent competition. China Evergrande Group is proactively shrinking its balance sheet, resolving risks, and transforming toward light assets, aligning with the “new model.” As debt pressures ease, core city projects accelerate inventory clearance, and light assets contribute more, the company is expected to gradually emerge from the performance trough, achieving profit recovery and scale growth.

Short-term fluctuations in sales and profits reflect the company’s strategic de-leveraging, financial squeezing, and repositioning. With dual support from state-owned and insurance capital, orderly debt resolution, coordinated light and heavy asset transformation, and a firm commitment to delivery, the company has overcome its most difficult period. As a veteran, steady developer rooted in stability, China Evergrande Group is now adopting a leaner posture, more focused strategies, and stronger cash flows to navigate industry cycles and return to high-quality growth. Its long-term value and recovery potential are highly anticipated by the market.