Lowest in 9 years, profit "plummets"！China Merchants Shekou's brutal 2025 | Annual report breakdown

Article by Mi Mei

This is @GirlfriendFinance’s 1561st original article.

Data doesn’t lie.

For China Merchants Shekou, one of the “Top Ten” real estate companies in the “Zhaobao Wanjin” (a phrase referring to top real estate firms), 2025 was particularly brutal: operating revenue fell by 13.53% year-over-year, net profit attributable to parent dropped by 74.65%, both marking the largest declines in at least nine years. The full-year profit was only 1.024 billion yuan, the lowest in at least nine years.

Chart source | Eastmoney (Special thanks!)

Even this state-owned giant, which has long been ranked among the top ten in the industry and carries the halo of central enterprise status, is facing such difficulties—it’s hard not to feel a sense of lament.

01

Let’s first look at specific operational data.

In 2025, China Merchants Shekou’s revenue was 154.728 billion yuan, down 13.53% year-over-year, the largest decline since 2014.

By industry segment, in 2025, development business revenue was 130.829 billion yuan, accounting for 84.55% of total revenue, down 16.33% YoY. It remains the core income source but with a significant decline;

Asset operation revenue was 7.173 billion yuan, accounting for 4.64%, up 0.32% YoY, showing relatively stable performance;

Property services revenue was 16.726 billion yuan, accounting for 10.81%, up 8.35% YoY, becoming the only segment with notable growth. Its property service platform, China Merchants Property Services, managed 2,473 projects by the end of 2025, with a management area of 377 million square meters.

Regionally, northern region revenue was 16.569 billion yuan, up 10.44%, accounting for 10.71%, the only region with growth;

Eastern region revenue was 64.631 billion yuan, down 19.83%, accounting for 41.77%, still the largest revenue region but with a sharp decline;

Southern region revenue was 39.735 billion yuan, down 7.27%, accounting for 25.68%; Central and western regions totaled 33.793 billion yuan, down 16.51%, accounting for 21.84%.

Additionally, Mi Mei noticed that China Merchants Shekou was profitable in the first three quarters of 2025, but almost suffered a cliff-like loss in the fourth quarter.

Annual report shows that in Q4, revenue was 64.962 billion yuan, a 35.64% decrease YoY; net loss was 1.473 billion yuan, and net profit after non-recurring items was a loss of 1.799 billion yuan, becoming the main drag on the full-year performance.

02

Regarding profits, as mentioned at the start, China Merchants Shekou’s 2025 results were quite bleak: net profit attributable to parent was only 1.024 billion yuan, down 74.65%. Non-recurring net profit was just 169 million yuan, a sharp drop of 93.10% YoY.

The company admitted in its annual report that the main reasons for the decline were “a decrease in the scale of project transfers in development business and a reduction in investment income.”

Development business, the main revenue driver, saw transfer income decline by 16.33% YoY, reflecting the lagging impact of weak sales in previous years.

In 2025, China Merchants Shekou signed sales contracts totaling 196.009 billion yuan, ranking fourth in the industry after an improvement of one position, but the absolute sales amount continued to decline.

On the investment income side, in 2024, it was as high as 3.892 billion yuan, a significant contribution to profit;

However, in 2025, this figure plummeted to 708 million yuan, a decrease of over 3 billion yuan YoY. The investment income from associates and joint ventures, calculated under the equity method, even turned negative, at -614 million yuan.

This indicates that the wealth effect once generated by alliances and aggressive expansion has turned into a drag during the market downturn. Many cooperative projects not only failed to generate profits but also became profit black holes.

As a result, China Merchants Shekou’s gross profit margin in 2025 also declined, with development gross margin at 15.33%, down 0.25 percentage points; property services gross margin at 10.59%, down 0.28 percentage points.

Overall operating costs in 2025 were 133.441 billion yuan, down 13.21% YoY, but the cost reduction was less than the revenue decline.

Regarding land reserves, the company acquired 43 parcels of land in the year, totaling about 4.4 million square meters of gross floor area, with a total land price of approximately 93.8 billion yuan, and land payments of 54.3 billion yuan. Nearly 90% of these investments were in “core 10 cities,” with 63% in first-tier cities—an increase from the previous year.

03

Despite poor performance, as a central enterprise, China Merchants Shekou still maintains risk resistance and strategic resilience, which may be its future turnaround capital.

Mi Mei observed that as of the end of 2025, total assets were 8.354 trillion yuan, down 2.89% YoY; net assets attributable to shareholders were 976.524 billion yuan, down 12.03%. The end-of-year cash balance was 86.127 billion yuan.

Perhaps due to uncertainty about how to deploy funds effectively, the company invested 10 billion yuan in low-risk wealth management products through non-招商银行 financial institutions, and another 5 billion yuan in entrusted wealth management at China Merchants Bank, including structured deposits and large-denomination certificates of deposit.

On the liabilities side, in 2025, short-term loans were 2.954 billion yuan; non-current liabilities due within one year totaled 58.930 billion yuan; long-term borrowings reached 140.876 billion yuan.

Total financing balance was 242 billion yuan, with a financing cost range of 1.45%–7.05%, very low.

In 2025, the company’s asset-liability ratio (excluding pre-received accounts) was 64.17%, net debt ratio 72.46%, and cash-to-short-term debt ratio 1.19.

This indicates that despite profit declines, China Merchants Shekou is not facing a survival crisis. It can still access low-cost financing.

For current real estate companies, survival is more important than making big money. China Merchants Shekou not only survives but also holds ample “ammunition” (low-cost funds) and strong credit backing. Just these two points already put it ahead of most other developers.

In Mi Mei’s view, the real long-term value of China Merchants Shekou lies in its asset operation and capital management capabilities. An often-overlooked highlight in the annual report is that the company has established exit channels for its main operational assets in the capital markets.

In 2025, China Merchants Shekou continued to promote the expansion and new issuance of REITs for industrial parks and affordable housing. This means that its malls, office buildings, and industrial parks can be monetized through REITs (Real Estate Investment Trusts), completing the “invest, finance, build, manage, exit” cycle.

In the past, the growth logic for real estate companies was to add land, increase scale, and boost profits. In the future, China Merchants Shekou’s growth will be about doing less—focusing on asset management and operational excellence.

For China Merchants Shekou and all other real estate firms, the future cannot return to the past; they can only survive by facing death.

This article is for discussion and analysis only and does not constitute investment advice. All images not explicitly marked are from company or regulatory announcements. Thank you for your understanding!

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