1.6 billion net profit! Country Garden leads the way in turning losses into profits, setting an example for private real estate companies

Ask AI · How does Country Garden’s debt restructuring achieve financial recovery?

Produced by | Zhongfangwang

Reviewed by | Li Xiaoyan

On the evening of March 30, Country Garden released its 2025 annual report, achieving a net profit of 1.6 billion yuan for the year, officially ending three consecutive years of losses, and becoming the leading private real estate enterprise to complete a systematic debt restructuring and realize accounting profit. Against the backdrop of deep industry adjustments in real estate and over 70% of A-share listed real estate companies reporting losses, this performance is not only a milestone result of Country Garden’s three-year self-rescue efforts but also marks a critical turning point in the resolution of risks for private real estate companies, injecting key confidence into the industry’s recovery.

Country Garden’s ability to turn losses into profits this time mainly stems from comprehensive systemic financial recovery driven by domestic and international debt restructuring. On December 30, 2025, the offshore debt restructuring of Country Garden officially took effect, with new debt and equity instruments successfully issued; the domestic restructuring plan also passed smoothly, and will proceed with sequential steps of cash buybacks, stock, and general debt options. Currently, the cash buyback cap of 450 million yuan has been initiated and is expected to be completed in April. The “debt-to-equity swap” arrangement has created deep stakeholder interests binding between investors and Country Garden, reflecting both the capital market’s tolerance and support for systemic risks in the real estate sector and investors’ firm expectations for future growth and value recovery of Country Garden.

From a financial perspective, Country Garden’s debt-equity structure has been significantly optimized, with interest-bearing liabilities dropping sharply from 253.5B yuan at the end of 2024 to 148B yuan, a reduction of 42%, or 1,055 billion yuan; total liabilities also decreased from 105.5B yuan to 767.9B yuan, a reduction of 216.7B yuan; as of the end of 2025, the company’s total assets are approximately 812.1B yuan, with net assets rising to 44.3B yuan. A small amount of remaining liabilities will also be transferred into equity following the execution of mandatory conversion of convertible bonds, further increasing the company’s net assets. However, it is worth objectively noting that excluding the debt restructuring gains, Country Garden’s operational side still faces a phased loss, with an impairment provision of about 44.5 billion yuan for existing project inventories in 2025, and an impairment loss of 10.5 billion yuan on financial assets and financial guarantees. This is influenced both by the overall weakening of the real estate market in terms of volume and price, and by the company’s prudent financial approach based on accounting principles. After the impairment provisions are made, the company’s historical financial burden is alleviated, paving the way for subsequent operational recovery.

In addition to the core breakthrough of debt restructuring, Country Garden has also achieved a transition from “stopping the bleeding” to gradually restoring “self-sustaining” capacity through multiple measures such as asset revitalization, organizational restructuring, and light-asset transformation. Regarding asset revitalization, since 2022, Country Garden has actively promoted asset disposals, raising over 70 billion yuan in total, with proceeds prioritized for “ensuring delivery” projects, creating a virtuous cycle of “disposal—revenue—delivery.” In 2025, approximately 170k homes were delivered, covering about 19.82 million square meters across 28 provinces and 204 cities. From 2023 to 2025, nearly 1.15 million units were delivered, maintaining industry-leading delivery volumes.

On organizational optimization, since 2023, Country Garden has implemented five rounds of restructuring, reducing the number of regional divisions from 60 to 10, continuously optimizing staff levels, and implementing multiple rounds of salary reductions, with senior management taking the lead in significant pay cuts. Over the past three years, core management has remained stable, providing strong support for strategic execution and stable operations. In the face of pressure on traditional real estate development, light-asset businesses such as entrusted management, construction agency, and commercial management have become new growth drivers. The Phoenix Zhituo subsidiary has undertaken over 200 entrusted management and construction projects, managing nearly 20 million square meters, with projects covering 20 cities nationwide and a managed value of over 170k yuan; the commercial management sector has also steadily developed, with 231k square meters of new management area added since 2024, and in February this year, winning the bid for the Wanda project in Foshan Guicheng, establishing its own commercial brand “Phoenix Hui,” and a long-term rental apartment brand “Bijia Apartments” with nearly 30k units, all profitable. This low-investment, steady-cash-flow light-asset model aligns perfectly with the industry’s shift from incremental development to stock operation.

Following the debt restructuring, Chairwoman Yang Huiyan officially proposed the “Second Entrepreneurship” development concept, positioning 2026 as the most critical year for the company’s transition from “delivering homes” to “normal operations,” aiming to lay a solid foundation for high-quality growth over the next 3-5 years. Strategically, Country Garden will accelerate the “One Body, Two Wings” transformation, with real estate development as the core business, supported by technology construction and entrusted management as two wings. It will also promote the iteration of the fourth-generation residential products, implementing diversified designs such as aging-in-place and pet-friendly features, shifting from “selling houses” to “providing lifestyle solutions.” On the talent front, the company revised the “Resigned Staff Rehiring Management Measures” to strengthen key positions, signaling a shift from lean management to operational recovery. The capital market has also responded positively to this transformation: in February, Country Garden was included in the MSCI China Small Cap Index, and in March, it was added to the FTSE Russell Global Equity Index series. As of March 21, mainland investors through the Hong Kong Stock Connect held 17.7% of Country Garden’s shares, up 2.4 percentage points from the end of 2024, reflecting ongoing market recognition and confidence.

As a leading private real estate enterprise, Country Garden’s turnaround from loss to profit during this adjustment period is highly symbolic for the industry. It not only provides a market-based, legal debt resolution model for distressed developers but also breaks market pessimism about private real estate firms, effectively boosting confidence in credit recovery and operational revival within the sector. Its shift from high-turnover development to “development + light-asset operation” also offers an important reference for exploring new development models in the industry.

Of course, Country Garden’s road to recovery is not without challenges. In 2025, the company’s contractual sales amount is about 33.01 billion yuan, a significant decline from its historical peak, and the pace of sales recovery remains slow. The overall real estate market still needs time to warm up; competition in light-asset sectors like entrusted management and commercial operation is intensifying, requiring continuous improvement in operational capacity and brand influence. The entire industry remains in a correction cycle, with demand recovery and market stabilization dependent on policy support and time, making a full operational rebound still a long-term task.

From its first loss after listing in 2022, to consecutive large losses in 2023 and 2024 totaling over 200 billion yuan, and finally to a successful turnaround in 2025, Country Garden has used debt restructuring as a breakthrough, deeply reconstructing its asset-liability structure, transforming into light assets, and innovating organizational structures—completing the critical leap from risk clearance to operational recovery. This is not only a rebirth for a top private developer but also signifies the “breaking the ice” moment for private real estate firms after industry adjustments. As 2026 is a key year for its operational transition, whether it can turn this financial inflection point into a substantial operational revival—shifting from “delivering homes” to normalized operations—will determine the success of its second entrepreneurship and profoundly influence the recovery pace of the entire private sector. Under the environment of continued supportive policies and gradually rationalizing markets, high-quality private developers like Country Garden are gradually emerging from the shadow of industry adjustment, injecting new momentum into the steady and healthy development of the real estate sector.