China Railway Construction Real Estate drops out of the trillion-yuan camp, and by 2025, it will suffer a net loss of 3.1 billion. Will Sun Hongjun be able to reverse the downward trend?

March 30, the state-owned enterprise infrastructure giant China Railway Construction Corporation Limited (CREC) released its 2025 financial report.

During the reporting period, the group generated operating revenue of 1.03 trillion yuan, down 3.50% year over year; net profit attributable to shareholders was 10.3k yuan, down 17.34% year over year.

Among them, real estate has become one of the “laggards.” In 2025, CREC’s real estate platform, China Railway Construction Real Estate Group Co., Ltd., posted a net loss of 3.1 billion yuan.

Compared with real estate developers widely known to the public such as Vanke, Evergrande, and Country Garden, CREC Real Estate is not directly listed, and thus has relatively less name recognition. But on the lists by CRIC and Centaline Index Institute, CREC Real Estate’s full-coverage sales in 2025 were 73.34 billion yuan, ranking 12th in the industry, and it is a “dark horse” among central SOEs.

However, as the person steering the helm, Sun Hongjun faces considerable pressure. Since Sun Hongjun took office as chairman in 2024, CREC Real Estate’s revenue has continued to decline, and its profits turned to losses again in 2025. By the end of the third quarter of 2025, the company’s short-term funding gap exceeded 20 billion yuan.

Where will this “dark horse” that wants to speed up go in the future?

1

Expand land acquisition against the tide; sales revenue fell by 23.1 billion yuan in 2025

Compared with the “eight bureaus” of China Construction that have risen in recent years, China Railway Construction Real Estate—another “dark horse”—has been a bit more low-key, but in fact it has a lot of backing.

In April 2007, China Railway Real Estate Development Co., Ltd. (hereinafter: China Railway Real Estate) was formally established, with an initial registered capital of 500 million yuan. At that time, the company was held by China Railway Construction Corporation, China Railway Construction Group Co., Ltd., China Railway 12th Bureau Group Co., Ltd., and the Fourth Survey and Design Institute of Railways, with stakes of 40%, 20%, 20%, and 20% respectively.

After that, through two rounds of equity transfers and renaming, China Railway Real Estate became a wholly owned subsidiary of CREC, and its name was changed to China Railway Construction Real Estate Group Co., Ltd. (i.e., “CREC Real Estate”).

By the end of 2025, CREC’s total assets exceeded 2 trillion yuan, making it one of the 16 central SOEs whose real estate is a main business, as approved by the State-owned Assets Supervision and Administration Commission.

With a construction-and-infrastructure giant of such scale backing it, CREC Real Estate has built a series of products such as “Xipai,” “Jiangnan,” “International,” and “Yu,” and, when the housing market was in a downturn, it embarked on a path of expansion against the tide.

Data from Centaline Index Institute shows that from 2022 to 2023, the amount of land acquired with rights and interests by CREC Real Estate was 37.1 billion yuan and 40.4 billion yuan respectively, placing it among the top 10 nationwide in terms of rights-and-interests land acquisition amount.

Meanwhile, the company’s industry ranking rose from 26th in 2021 to 15th in 2022; in 2023, it remained at 15th.

With the halo of a central SOE, CREC Real Estate’s industry ranking advanced quickly, but during the period of deep adjustment in the real estate sector, the company could not escape the “chain” of weak sales either.

For example, Beike shows that “China Railway Construction · Beijing Wutong Qianshan” in Pinggu, Beijing was completed in 2021. By the end of September 2025, the project had invested 18.36B yuan and sold 678 million yuan, with sales progress only 35.69%. Regarding the difficulty in clearing inventory, the company said it was because the location is relatively remote and there are many competing projects nearby.

Similarly, “China Railway Construction · Chengdu Xipai Huanhua” in Chengdu started construction in 2018. By the end of September 2025, the project had invested 20k yuan and sold 1.81B yuan, with sales progress of 69.37%, and the remaining commercial, apartment units, and parking spaces had not been fully sold.

Source: CREC Real Estate announcements (unit: 3.02B yuan)

And this inventory-clearing risk is gradually becoming visible in CREC Real Estate. According to data from CRIC, in 2022, CREC Real Estate’s full-coverage sales reached 128.1 billion yuan, down 10% year over year; in 2023, it fell further by 5% year over year to 121.63 billion yuan.

On the lists from CRIC and Centaline Index Institute, in 2024, the company’s full-coverage sales dropped to 96.44 billion yuan, directly falling out of the “billion-yuan” camp. In 2025, the company’s full-coverage sales were 73.34 billion yuan, falling another 23.1 billion yuan.

Given the pressure brought by sales continuing to decline, the party secretary and chairman Sun Hongjun, who steers the company, and Chen Jianjun, the deputy party secretary, general manager, and vice chairman, are likely the most aware.

On March 23 this year, “the two top executives,” Sun Hongjun and Chen Jianjun, both appeared at a meeting of CREC Real Estate—its 2026 business work meeting. The meeting’s tone was set as follows: go out, run the market, and make every effort to sprint toward the annual business targets.

Specifically in terms of business, it means to stabilize the basic business of housing development, leverage more projects with less capital, quickly grow the “second growth curve” for light-asset business, form scale effects through effective expansion, and fully cultivate emerging businesses so as to achieve faster rollout.

In short, for scale, CREC Real Estate still needs to run faster.

2

Sun Hongjun has served as chairman for less than 2 years; in 2025, profit fell into a loss of 3.1 billion yuan

For CREC Real Estate, 2024 was an important turning point.

In late July of that year, CREC Real Estate announced that, due to work changes, Li Xinglong would no longer serve as the company’s chairman and party secretary. At that time, it was not simultaneously appointed as the new chairman.

Until September 2024, the controlling shareholder CREC issued a notice appointing Sun Hongjun to take over as party secretary and chairman of the company.

Public information shows that Sun Hongjun was seconded from a “sister company” of CREC Real Estate, and he had long served in China Railway Construction Group.

Photo / CREC Real Estate announcement

It is worth noting that before this, the company’s two previous chairmen, Wu Shiyan and Li Xinglong, had both gained experience at CREC Real Estate for many years, progressively rising to general manager and chairman. During the period of more than one month when the chairman position was vacant, the company’s general manager, deputy party secretary, and vice chairman Chen Jianjun had handled overall work, but he did not move further up.

So why did CREC Real Estate break with the internal promotion convention in its appointment of a chairman? Was it because the controlling shareholder was dissatisfied with the company’s past performance, or were there other arrangements? After Sun Hongjun took office, did the controlling shareholder propose new performance requirements? In this regard, “Start-up Frontline” tried to learn from CREC Real Estate, but as of the time of publication, it had not received a response.

But based on the outcome, after Sun Hongjun took office, coinciding with the real estate market trough, CREC Real Estate’s performance not only failed to grow, but instead fell straight down.

From the sales perspective, according to CRIC data, CREC Real Estate’s 2024 sales revenue directly fell out of the “billion-yuan” camp, and in 2025 it dropped by more than 20 billion yuan again.

This directly drove the declines in revenue and profit. According to disclosures by CREC Real Estate, in 2024, the company achieved operating revenue of 1.9B yuan, down 26% year over year; net profit attributable to shareholders was 5.3959 million yuan, down 95% year over year.

Photo / CREC Real Estate announcement

Compared with the meager profits obtained by CREC Real Estate, minority shareholders reaped substantial gains. CREC Real Estate disclosed that in 2024, minority shareholders took away as much as 46.65B yuan in profit.

Also according to the parent company CREC’s financial report data, in 2025, CREC Real Estate achieved operating revenue of 1.24B yuan, slightly down compared with the same period in 2024; net profit was a loss of 46.47B yuan, turning from profit to loss directly. (Editor’s note: In 2024, the company achieved net profit of 3.14B yuan.)

But “Start-up Frontline” noted that in CREC Real Estate’s third-quarter 2025 financial statements, the company’s revenue for the first nine months of 2025 was 1.24B yuan. If compared, the company achieved about 32.1 billion yuan of revenue in the fourth quarter of 2025. This huge difference truly surprised outsiders. (Editor’s note: CREC 2025 Q3 report did not disclose revenue data for CREC Real Estate.)

Photo / CREC Real Estate 2025 Q3 financial statements (unit: yuan)

So what caused CREC Real Estate to incur a profit loss in 2025? With minority shareholders taking away large amounts of profit, did it consider reducing the “small shareholder operation” proportion? How did the company achieve more than 30 billion yuan of revenue in the fourth quarter? With such a wide gap between revenue data for the first three quarters and the fourth quarter, what exactly is the reason?

In this regard, “Start-up Frontline” tried to learn from CREC Real Estate, but as of the time of publication, it had not received a response.

3

Short-term funding gap exceeds 20 billion yuan; inventories as high as 146.1 billion yuan

Three days before holding the 2026 business work meeting, CREC Real Estate first held a financial work meeting. The meeting clearly required that in 2026, the company should continue to reduce costs and increase efficiency, and make every effort to ensure the safety of its capital chain.

The reason for this is largely rooted in CREC Real Estate’s current heavy funding pressure.

As of the end of the third quarter of 2025, the company’s interest-bearing liabilities totaled 14.35B yuan. Of this, interest-bearing liabilities due within one year totaled 87.46B yuan. In addition, there were 32.13B yuan of accounts payable.

In the same period, the company’s cash and cash equivalents were only 15.94B yuan. If calculated roughly using only cash and interest-bearing liabilities due within one year, the short-term funding gap already exceeded 20 billion yuan.

CREC Real Estate also admitted that although the company retained relatively sufficient monetary funds, the scale of debt due in the near term will increase, and it will still face a certain short-term repayment pressure.

In fact, the company has huge inventories waiting to be monetized. As of September 2025, the book value of CREC Real Estate’s inventories reached 146.1 billion yuan, accounting for 63.63% of total assets.

If these inventories could be turned over faster, the company could quickly recoup cash flow. But the problem is that the current real estate market is in a period of deep adjustment. Even with the backing of a central SOE, CREC Real Estate cannot escape the impact from the market environment—something that can be seen in the frequent declines in the company’s sales revenue.

To ease funding pressure, since the beginning of 2026, the company has been trying to accelerate financing.

On March 10, CREC Real Estate issued an announcement stating that it completed the issuance of 2.34 billion yuan of corporate bonds, with a coupon rate of 2.76%. Of this, related parties subscribed for 330 million yuan. According to the plan, the entire proceeds from these corporate bonds are intended to be used to replace the principal of two corporate bonds due in 2026.

Before that, in February, it issued 1.01 billion yuan of medium-term notes with an interest rate of 2.43%, intended to be fully used to replace its own funds used to repay “23 CREC Real Estate MTN001.”

Photo / CREC Real Estate announcement

During the downturn period of real estate, it is not easy for CREC Real Estate to maintain its financing capability. But would continuing to increase financing further intensify repayment pressure? How can the current short-term funding gap be resolved? Will the controlling shareholder, CREC, step in to provide support? In this regard, “Start-up Frontline” tried to learn from CREC Real Estate, but as of the time of publication, it had not received a response.

Actually, in the past year, the parent company CREC has also faced performance pressure. In 2025, the group achieved operating revenue of 1.03 trillion yuan, down 3.50% year over year; net profit attributable to shareholders was 11.55B yuan, down 17.34%.

Photo / CREC 2025 financial report

In CREC’s 2025 financial report, CREC’s chairman Dai Hegen clearly stated that 2026 is the starting year of the “15th Five-Year Plan,” and it is also a key year for CREC to accelerate transformation and upgrading, comprehensively improve quality and efficiency, and move toward excellence and innovation. It requires making every effort to ensure a winning start in the first battle of the “15th Five-Year Plan.”

In this “must-win battle,” it is likely that CREC does not want to present yet another “performance report” of simultaneous declines in revenue and profit in 2026. Whether CREC Real Estate, which has fallen into losses, can avoid being a drag will depend on the answer sheet handed in by Sun Hongjun.

*Note: The headline image and unnamed images in the article are from the official website of CREC.

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