Research Express | China Merchants Shekou Accepts Investor Inquiry: An In-Depth Analysis of the 154.7 Billion Yuan Revenue, the Cyclical Logic Behind It, and the 2026 Strategic Plan

Overview of the Earnings Call

On March 17, 2026, China Merchants Shekou held its 2025 Earnings Call and Investor Communication Meeting. The company reached all investors through online live broadcasts on Panoramic Network (全景网) and the company’s official website. The company’s management team attended collectively, including Chairman Zhu Wenjie, Executive Vice General Manager Nie Liming, Vice General Manager Wu Bin, Lü Bin, and Yu Zhiliang, Financial Controller and Secretary to the Board of Directors. The management team engaged in in-depth exchanges with investors regarding the company’s performance, strategic planning, and market concerns.

Interpretation of Key Issues

Core Advantages Through the Cycle: Four Pillars Supporting Steady Development

Regarding competitive advantages during a period of deep industry adjustment, management stated that China Merchants Shekou’s core competitiveness comes from four aspects: First, the strategic support of China Merchants Group. As a central SOE with an “A” rating from the State-owned Assets Supervision and Administration Commission (SASAC) for 21 consecutive years, the Group provides a solid backing in areas such as resource integration and capital-industry synergy. Second, firm strategic resilience and execution capability. Since 2021, the company has advanced the “three transformations.” In 2025, it clarified its positioning as “strengthening the industry’s top five and becoming China’s leading real estate park comprehensive development and operation service provider,” focusing on “precise investment, product upgrades, value-added operations, and asset revitalization.” Third, steady financial control. The “three red lines” has continued to stay within a reasonable range, building a diversified, low-cost financing system supported by the credit profile of a central SOE. Fourth, comprehensive end-to-end development capability. It has formed a closed-loop ecosystem integrating development business (product lines such as the Xuxi and Xixi series), asset operation (commercial, industrial parks, apartments), and property services.

Policies and the Market: Focusing on Core Strategy Under Cautiously Optimistic Judgment

Regarding the impact of recent policy optimization in core cities, management said that the current market is in a phase of base-building and repair. There are signs of recovery in visits and transactions after the Spring Festival and in the first half of March, but the company needs to remain cautiously optimistic. Two signals are being conveyed by policy: first, the determination to implement precise and targeted regulation “city by city”; second, institutional support to promote high-quality development of the industry. In terms of strategy, the company will continue to focus its development business on core first-tier and strong second-tier cities. In 2025, investment in the “top 30 cities with strong conviction” will account for 100%, and nearly 90% of investments will go to the core ten cities (63% to first-tier cities). In 2026, the company will strictly implement the “six good” investment system (good cities, good teams, good sectors, good turnover, good products, good operations). For asset operation, it will accelerate business-format upgrades and the capitalization of REITs. For property services, it will enhance competitiveness through market expansion, service optimization, and more refined management.

Performance Analysis: Main Reasons for the 2025 Decline and the “15th Five-Year Plan” (Fifteen-Five) Repair Path

In 2025, the company’s revenue was RMB 154.7 billion (down RMB 24.2 billion year over year). Gross profit decreased by RMB 4.8 billion, and joint-venture investment income decreased by RMB 2.3 billion. The performance decline was mainly driven by three factors: First, the industry saw both volume and price decline at the same time. National commodity housing sales fell from RMB 18 trillion in 2021 to RMB 8 trillion in 2025, undermining companies’ profitability. Second, impairment losses of more than RMB 4 billion were accrued. Third, depreciation on investment properties and fixed assets totaled more than RMB 3 billion. Management said that as the industry builds its base and repairs, in recent years the company’s high-quality projects focused on core cities will gradually recognize profits. During the “15th Five-Year Plan” period, the company will repair the income statement and deliver sustainable returns by digesting existing inventory burdens and promoting transformation and upgrading.

Land and Capital: In 2026, Investment Focus on the “Six Good” Standards; Strengthening Financing to Reduce Costs and Control Risk

In the land market, in 2025, residential land in 300 cities nationwide recorded transaction GFA of 620 million sq. m. (down 14% year over year), and the land premium totaled RMB 2.3 trillion (down 11%). Property developers generally focused on core cities. In 2026, the company will adhere to “invest based on sales, carefully select opportunities,” and strictly follow the “six good” investment standards, prioritizing projects with high turnover and high returns. On the financing side, the industry’s financing environment is currently moderately accommodative. The company will focus on “reducing costs, matching, and controlling risk”: further lowering financing costs on the basis of a 2.74% financing cost, optimizing asset and liability duration and currency matching, strictly observing the “three red lines,” and strengthening sales collections and cash-flow management.

Sales and Asset Operations: Core Cities Contribute Over 60% of Performance; Asset Operations as a Second Growth Curve

In 2025, the company’s sales ranking rose to fourth in the industry. Performance in core cities stood out: Shanghai’s all-carrier sales exceeded RMB 50 billion (No. 1 market share), Beijing was RMB 19.3 billion (No. 5), Hangzhou was RMB 16.9 billion (No. 4), Shenzhen was RMB 15.0 billion (No. 3), and Chengdu surpassed RMB 10 billion (No. 5). The top five cities together contributed over 60% of the company’s performance. In 2026, the sales plan will be broadly in line with last year, adhering to “produce based on sales, and collect payments with quality.” In asset operations, in 2025, income under the management accounting basis was RMB 7.63 billion, with concentrated commercial (26%), apartments (18%), and industrial parks (17%) as core segments. Gross floor area for these segments was 3.40 million, 1.75 million, and 3.12 million sq. m., respectively. In the future, the company will optimize its structure through business-format upgrades, the deconsolidation and listing of REITs, and the disposal of non-core assets.

Product Upgrades: Use the “Good Homes” System to Meet Improvement Needs

The company continues to deepen the “Good Homes” standard system and advance product upgrades across four dimensions: customer research, standards, technology, and teams, to elevate product levels. It precisely captures improvement-oriented demand and optimizes unit design and living scenarios. It improves standards across seven dimensions such as safety, comfort, green features, and smart capabilities, increasing investment in details such as quietness and waterproofing. It advances the application of whole-home smart and green building technologies. Through the systems for Chief Designers (5), Product Managers (16), and flexible teams, it strengthens full-cycle management to balance quality upgrades and cost control. In 2025, product strength ranked fourth in the industry. Multiple projects achieved strong market sales; for example, the Xi’an project opened on March 15 and sold out immediately.

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Responsible editor: Xiao Lang Express News