Profit scale at its lowest in nearly 10 years, China Communications Construction's "new team" faces a test | Financial Report Review

Ask AI · How can the new leadership team break the dilemma of continuous profit decline?

On April 2nd, China Communications Construction Company (CCCC) held its 2025 annual performance briefing.

“

In fiscal year 2025, CCCC’s net profit attributable to the parent company was 14.75B yuan, a significant decrease of 36.92% compared to 2024, marking two consecutive years of decline, and the profit scale reached its lowest level in nearly 10 years.

Reporter Li Ye | Beijing Report

Is profit growing, and how is it growing? It’s never just a math problem; it also depends on the company’s market strategy. CCCC is facing such a challenge.

On April 2nd, Chairman Song Hailiang of CCCC stated at the 2025 annual performance and cash dividend briefing: “The company still has many shortcomings in development.”

The “shortcomings” Song Hailiang mentioned are reflected in the “Five, Six, Seven”: facing five major contradictions in management efficiency, enterprise scale, business structure, and economic output; six major shortcomings in thinking, strategy, and digital intelligence; and seven prominent issues such as insufficient ideological liberation, weak innovation-driven development, and ineffective party-building integration. Some issues are more prominent under industry cycle influences, further constraining the company’s operational development, and urgently need systematic solutions.

This speech was prompted by an unsatisfactory annual report card.

On March 30th, CCCC released its 2025 annual report. According to the report, in 2025, CCCC achieved operating revenue of 731.11B yuan, a year-on-year decrease of 5.29%, ending the previous continuous growth trend; net profit attributable to the parent was 14.75B yuan, a sharp decline of 36.92% from 2024, marking two consecutive years of decline, and the profit scale reached its lowest in nearly a decade.

The management did not shy away from the reasons for the performance decline. Nor could they.

Song Hailiang summarized: First, the overall downward trend in the infrastructure industry, with a significant reduction in large projects, making it difficult for the company to remain unaffected; second, adjustments in the real estate sector, with significant impacts from inventory clearance issues; third, the company has absorbed some historical potential losses and risks; fourth, the company is pushing forward with comprehensive transformation and upgrading, cultivating new productive forces, which has temporarily impacted current profits.

Last June and July, the leadership teams of CCCC and its parent company, China Communications Construction Group (CCCC Group), underwent major adjustments, forming a new core team led by Song Hailiang and Zhang Bingnan.

“Since the new team was established, we have adhered to the principles of ‘striving for progress, seeking truth from facts, resolutely avoiding false accounting, and doing our best to resolve historical issues and potential risks,’ ensuring that the financial data for 2025 is authentic, credible, and objectively reflects the company’s operating status,” said Song Hailiang.

━━━━

Achievements and Challenges

During the reporting period, CCCC’s net cash flow from operating activities was 15.33B yuan, an increase of 22.6% from the previous year. Quarterly, the net cash flow from operating activities was -48.91 billion yuan in Q1, -28.39 billion yuan in Q2, 11.51 billion yuan in Q3, and 81.12 billion yuan in Q4.

The large net inflow of cash in Q4 is usually due to the集中收回工程款 at year-end, reflecting effective cash flow management. Regarding this, Liu Zhengchang, CFO and Board Secretary of CCCC, stated that it mainly benefits from establishing a “cash is king” management philosophy. First, on the business side, the company strictly practices “contracts with revenue, profits with revenue, and cash flow with profits,” strengthening investment quality evaluation. Second, on the management side, standardizing fund payment management, strengthening internal fund coordination and collaboration, and continuously reducing comprehensive financing costs. Lastly, on the asset side, firstly, seizing policy windows, increasing collection efforts, and proactively deploying key regions through top-level coordination and high-level engagement mechanisms, while paying close attention to local implicit debt resolution measures; secondly, accelerating “asset realignment” and disposal.

Meanwhile, accounts receivable remain high.

In 2025, CCCC’s accounts receivable balance reached 190.86 billion yuan, with a net of 11.51B yuan after bad debt provisions, up 14.28% from 157.73B yuan at the end of 2024, and a cumulative increase of 35.4% from 138.02B yuan at the end of 2023.

According to the announcement released by CCCC, in 2025, the company provisioned 116.47B yuan for impairment, accounting for 0.48% of the average total assets that year, directly reducing the total profit in the consolidated financial statements by the same amount.

Regarding the collection of accounts receivable, Liu Zhengchang said that with the accelerated implementation of local government debt-to-asset policies, the company continued to include projects in debt-to-asset scope in 2025, which increases the certainty of receivables recovery, and will have a sustained positive impact on bad debt reversal and cash flow. In 2025, about 60.6 billion yuan of overdue receivables from local governments and state-owned enterprises will be resolved, to some extent improving cash flow and reducing impairment pressure.

━━━━

Real Estate Business Slows Down

CCCC’s main businesses are infrastructure construction, design, and dredging. In the investor interaction on December 12, 2025, CCCC explicitly stated: “Real estate is not the company’s main business.”

However, in-depth research shows that CCCC’s urban construction business includes many real estate-related projects.

The annual report shows that in 2025, the new signed contracts for urban construction and related projects within China amounted to 9.38B yuan, a decrease of 1.27% year-on-year, accounting for 56% of infrastructure construction business. By project type, housing construction, municipal engineering, ecological and environmental protection, water conservancy, urban comprehensive development, offshore wind power, urban rail transit, and others accounted for 46%, 14%, 5%, 2%, 2%, 1%, 1%, and 29% respectively of new contracts in urban construction.

In recent years, the deep adjustment of the real estate industry has caused significant impacts on related businesses.

Song Hailiang directly stated at the performance briefing that the deep adjustment of the real estate sector has a considerable impact on the company’s performance. Meanwhile, the company’s work in asset disposal and long-term asset devaluation has also affected current profits. “Last year, we disposed of and activated long-term assets on a scale of hundreds of billions. At the same time, the company provisioned 9.38B yuan for impairment.”

Other major business operations are also not optimistic.

According to the annual report, in 2025, CCCC’s new signed contracts for roads and bridges within China totaled 269.06 billion yuan, a decrease of 2.23% year-on-year, accounting for 16% of infrastructure construction; new signed contracts for design services were 42.5 billion yuan, down 19.27%; dredging projects totaled 964.4B yuan, down 7.87%.

Regarding these situations, CCCC analyzed in the annual report that the construction industry is facing a major test of “peak and decline,” shifting from a “growth mainly in incremental projects” stage to a stage emphasizing both incremental and stock projects, which will inevitably lead to deep adjustments and even restructuring in development concepts, models, management paradigms, organizational forms, and resource allocation.

━━━━

Overseas Business Achieves High Growth

According to the annual report, in 2025, CCCC’s overseas business achieved operating revenue of 9.38B yuan, an increase of 18.27%. During the same period, the company’s new overseas contracts totaled 106.89B yuan, up 9.09%, maintaining its position as the leading construction central enterprise abroad.

Specifically, projects over $300 million had a total contract value of 33.5 billion USD, accounting for 61% of new overseas contracts. In regional contribution, Asia (excluding Hong Kong, Macau, and Taiwan) (41%), Africa (35%), and Oceania (11%) were the main markets. In terms of business types, housing construction (24%), roads and bridges (22%), and railway construction (12%) were the main contributors.

Statistics show that by December 31, 2025, CCCC was operating in 139 countries and regions.

It is worth noting that in 2025, CCCC signed new contracts worth 36.8 billion yuan in the UAE and Saudi Arabia. Regarding whether the “Israel-Iran conflict” might impact the company, Song Hailiang said that so far, the preliminary assessment indicates limited losses, and ongoing tracking and evaluation are needed. The company has taken measures such as evidence preservation, will actively communicate with clients, and closely monitor Red Sea transportation. In the future, the company will leverage its “Greater Overseas” strategy as a competitive advantage, adhering to the “go out, go in, integrate, and fully unify” four-step approach to maximize domestic advantages.

For the new leadership team of CCCC, challenges remain.

“New year, new journey, new mission,” Song Hailiang concluded at the performance briefing. The company will aim for the “1545” strategic goal, based on industry development and its own foundation, leading innovation to improve quality and efficiency, implementing strategies to break through, focusing on value enhancement, strengthening capacity building, and ensuring a good start and steady progress in the 14th Five-Year Plan, advancing high-quality development and building a world-class enterprise.

For CCCC, the challenge is not only about telling a “growth story” through financial reports but also about addressing a more severe question: as the transportation infrastructure industry enters a new phase of total volume adjustment, how to stabilize the main business and how to form a second growth curve?

These core issues require not only answers but also results to prove.

“On-duty editorial team: Li Hongmei”

“Editor-in-chief: Ma Lin, Wen Hongmei”