The business inflection point is approaching, and Country Garden announces a "second entrepreneurship."

Q&A · How debt restructuring helps Country Garden reduce its trillion-yuan liabilities?

21st Century Business Herald reporter Wu Shuying

Country Garden has released its 2025 financial report. Benefiting from gains from debt restructuring, Country Garden has become one of the private real-estate developers that has completed systematic debt restructuring and achieved accounting profitability.

According to the announcement, in 2025 Country Garden recorded operating revenue of approximately RMB 154.9 billion and net profit of RMB 1.5 billion. On the sales side, Country Garden achieved equity contract sales of approximately RMB 33.01 billion, with equity sales area of approximately 4.02 million square meters. After debt restructuring, its interest-bearing liabilities dropped by approximately RMB 105.5 billion compared with end-2024. By the end of 2025, total assets were approximately RMB 812.1 billion and net assets were RMB 44.3 billion. Meanwhile, in 2025 it delivered a total of about 170k housing units. From 2023 to 2025, over the three-year period, it cumulatively delivered nearly 1.15 million homes.

Country Garden’s latest financial report marks that its three-year “self-rescue” effort has achieved decisive results. Analysts said that, as a leading private real-estate developer, Country Garden’s performance has signaling significance for the real-estate industry’s bottoming-out and stabilization.

Debt restructuring repairs performance

According to the financial report, in 2025 Country Garden achieved a turnaround to profitability on the books. The core driver behind Country Garden’s shift to profitability stems from systematic financial repair brought by the implementation of debt restructuring.

On December 30 last year, Country Garden’s offshore restructuring officially became effective, and both new debt and equity instruments had been issued. In addition, Country Garden’s onshore restructuring plan also passed smoothly. It will start, in sequence, cash repurchases, share options, and general creditor options. Currently, it has already initiated a cash repurchase program with an upper limit of RMB 450 million and is expected to be completed in April this year.

If the gains from debt restructuring are excluded, Country Garden’s operations are still in a phase of losses. The main factor is that asset impairment is more substantial due to the overall condition of the real-estate market. According to the financial report, in 2025 Country Garden recorded a gross loss of RMB 170k.

According to the announcement, because uncertainty remains in the real-estate market, Country Garden recorded a full-year provision of approximately RMB 44.5 billion for inventories (land and projects under construction) corresponding to its existing projects. In addition, due to the compounded impact of multiple adverse factors—including the macroeconomic environment, the industry environment, and the negative financial conditions of counterparties—Country Garden also recorded impairment losses of RMB 10.5 billion for financial assets and financial guarantees.

It needs to be pointed out that Country Garden’s operating profit also turned positive last year. In 2025, Country Garden’s operating profit was RMB 43.12B, compared with an operating loss of RMB 19.13B in the same period of 2024. This positive turnaround was also mainly driven by a reduction in financial expense spending.

Analysts noted that provisions for impairment and bad-debt reserves were made for inventories and amounts receivable from and payable to related parties, respectively, as a prudent accounting treatment. Country Garden’s expansion of its gross loss in 2025 should not be interpreted simply as a decline in operating performance. The main reason is that it recorded a large amount of impairment for inventories. If the impact of such impairments is excluded, its gross margin in the statements is still positive.

In any case, as the once-largest private real-estate developer by scale, Country Garden’s turnaround to profitability is still a positive signal for the current market environment. This suggests that there may be a turning point in its finances and is expected to boost market confidence in private real-estate developers’ credit repair and operational recovery.

Reconstructing the balance sheet

Debt restructuring has brought Country Garden not only financial statement repair, but also a major improvement in its debt indicators. With debt restructuring taking effect, Country Garden achieved three-way improvement in debt scale, maturity, and cost, marking a key shift from “risk mitigation” to “structural upgrade” at the financial level.

From the perspective of its liability structure, Country Garden’s total liabilities have shrunk significantly. According to the announcement, as of end-2025, Country Garden’s total liabilities were RMB 767.9 billion, down by RMB 216.7 billion from RMB 984.6 billion at end-2024. It needs to be noted that contract liabilities included in this figure have special attributes in the real-estate industry: they are home payments that have been received in advance but not yet recognized as revenue. In the future, as housing is delivered, they can be recognized as revenue and are not truly liabilities requiring cash repayment.

More attention-worthy is the sharp decline in interest-bearing liabilities. According to the announcement, as of end-2025, Country Garden’s interest-bearing liabilities were RMB 148.0 billion, a steep drop of RMB 105.5 billion from RMB 253.5 billion at end-2024, representing a decrease of as much as 42%.

Besides the sharp decline in liability scale, Country Garden, through onshore and offshore debt restructuring plans, has substantially optimized its debt structure and financing costs. For offshore debt, after restructuring, the maturity has been extended to a maximum of 11 years, and the financing costs of most new debt instruments have been reduced significantly to 1%–2.5%. This series of adjustments builds a “low-interest + long-term” debt structure, giving Country Garden a critical window to get ready for the next five years.

Unlike some troubled real-estate companies, Country Garden has been able to keep its net assets positive until now, which is also a relatively rare metric. According to the financial report, as of end-2025, Country Garden’s total asset size was RMB 812.1 billion, and net assets were RMB 44.3 billion. According to people close to Country Garden, in the future there will still be a small amount of liabilities moving into the equity category as a result of the execution of conversion for mandatorily convertible bonds, thereby further strengthening equity.

Waiting for an operational turning point

In addition to debt restructuring, Country Garden’s biggest positive news in 2025 should be that it successfully passed the delivery peak.

According to the announcement, in 2025 Country Garden completed delivery of approximately 170k homes in total. It delivered approximately 19.82 million square meters in total, involving 204 cities across 28 provinces. From 2023 to 2025 over the three-year period, the cumulative delivery volume was nearly 1.15 million units. According to disclosures from Country Garden, over the past three years, Country Garden has almost allocated all resources to the “ensuring delivery of properties” task, which to some extent constrained the timing of launching new projects for sales.

In addition, although its sales scale cannot match its peak period, thanks to the advantages of its long-term deep cultivation and solid foundations across lower-tier markets, Country Garden’s sales base has still shown resilience. In 2025, Country Garden’s equity contract sales were approximately RMB 33.01 billion, with equity sales area of approximately 4.02 million square meters.

In Country Garden’s home base, Guangdong, it still retains market influence. Taking Shaoguan as an example: since its layout in 2006, Country Garden has cumulatively developed more than 30 large-scale residential communities, with projects covering three districts and seven counties. In 2025, Country Garden became Shaoguan’s “sales champion” with sales revenue of RMB 17.7B.

Country Garden said that 2026 is the start year of the “14th Five-Year Plan” transition—also the most critical year for the Group to shift from “ensuring delivery of properties” to normal business operations. It will fully implement core work such as “high-quality delivery, risk resolution, repairing debts and assets, and continued operations,” so as to progressively restore normal operating conditions and keep operating cash flow positive. The final goal is to keep both the company’s total cash flow and profit at “double positive.” The headquarters and regional teams will coordinate and advance. By improving mechanisms, the company will systematically enhance talent teams and rebuild its core capabilities to get through cycles. It will persist in exploring a path of “second entrepreneurship” in combination with actual circumstances, ensuring that all measures are implemented on the ground—“do one thing and do it to completion.”

People close to Country Garden analyzed that since this year’s “early spring” rally in the property market, first-tier cities such as Beijing and Shanghai have rebounded earlier. This proves that there is always real rigid demand and demand for improvement housing. Market repair in first-tier cities has become a clear signal that the market has stabilized. Under the “dual resonance” of both the policy floor and the market floor, Country Garden’s fundamental turnaround point has nearly shown itself in sync with the cyclical shift of the broader market environment, and it is expected to accelerate entry into a new stage centered on “stabilization.”

“One body, two wings” accelerates strategic transformation

In the face of a new cycle in the industry, Country Garden is accelerating its strategic transformation. By rebuilding its growth logic with a “one body, two wings” structure, its “light-asset” business development is gradually demonstrating results.

Starting in 2021, Country Garden began laying out the “one body, two wings” strategy early, with property development as the core. Two new business lines—technology-based construction and management-and-construction services—are expected to inject new momentum into performance growth.

As one of the “two wings,” Tengyue Janke Group has been deeply involved in the construction industry for more than 40 years, covering four major segments: the construction segment, the leasing segment, the home decoration segment, and the robotics segment. Its business covers markets nationwide across 26 provinces and cities, as well as overseas markets such as Malaysia. It has completed over 4,000 construction projects cumulatively.

Among them, its subsidiary, Bozhilin, is developing nearly 50 types of construction robots. Currently, 28 construction robots have already been deployed for commercial applications. In intelligent construction services, it has achieved full coverage of all 34 provincial-level administrative regions in China. It is also present across 13 markets globally with more than 1,600 projects. To date, it has cumulatively delivered more than 5,000 units, with application area exceeding 40 million square meters. It performs well in market share among industry peers.

As the other wing of “two wings,” Fenghuang Zhituo Building Management Company serves all kinds of customers such as government institutions, urban investment companies, and asset management companies. It covers residential property, city supporting facilities, park bases, and overseas projects, among others. It provides customized management-and-construction services. It has cumulatively taken on more than 200 management-and-construction projects, with a cumulative managed area of nearly 20 million square meters.

Looking ahead, Country Garden stated in its financial report that it will draw on the experience of the “ensuring delivery of properties” campaign to drive a comprehensive shift in operations, gradually restore normal operations, maintain positive operating cash flow, and ultimately aim to keep both the company’s overall cash flow and profits positive. The headquarters and regional entities will coordinate to advance this effort. By improving mechanisms, they will systematically enhance talent teams, rebuild core capabilities to get through cycles, and persist in exploring a path of second entrepreneurship in combination with actual conditions, ensuring all measures are implemented on the ground—“do one and do it all the way.”