Subtraction to Clear Obstacles, Addition to Improve Quality: Can Cmacorp Shekou Turn the Tables?

Question AI · How will the new management’s transformation strategy reshape product quality?

Despite profit pressures, China Merchants Shekou’s core operations and risk defenses remain stable, demonstrating the resilience of state-owned real estate companies through industry cycles.

Produced by | China Visit Network

Reviewed by | Li Xiaoyan

“Direction is correct; effort is meaningful.” On March 17, at the 2025 annual performance briefing, new Chairman Zhu Wenkai’s opening remarks precisely anchored the strategic direction of the new team. This was the first public appearance after China Merchants Shekou completed its core position replacements in September 2025, with Zhu Wenkai appointed chairman and Nie Liming as general manager. It also marks a challenging and transformative annual report card for the new team.

By 2025, the real estate industry continued its deep adjustment and bottoming process. Amid declining sales and prices, China Merchants Shekou delivered a significantly declining profit report. The annual report shows the company achieved operating revenue of 154.728 billion yuan, down 13.53% year-on-year; net profit attributable to shareholders was 1.024 billion yuan, down 74.65%; and net profit after deducting non-recurring gains and losses was 169 million yuan, a 93.10% decrease. Behind these figures, there is a reflection of industry cycles and a proactive “subtraction” approach by China Merchants Shekou to solidify its foundation, leaving room for future “addition” and growth re-acceleration.

The sharp profit decline is the most closely watched indicator in the 2025 annual report. General Manager Nie Liming clarified at the performance briefing that the decline mainly stems from three core factors directly related to industry environment and cautious management strategies.

First, the impact of industry cyclical adjustments. In 2021, nationwide sales of new commercial housing were about 18 trillion yuan, falling to around 8 trillion yuan in 2025—almost halving in scale. The industry-wide decline in volume and price directly affected companies, with China Merchants Shekou’s development business revenue decreasing by 16.33% year-on-year, reflecting the real market downturn. Second, large asset impairment provisions. Based on prudence, the company recorded 4.41 billion yuan in asset impairment losses in 2025, with inventory write-downs accounting for 76.5% (3.268 billion yuan), becoming a major pressure on current profits. Third, depreciation of investment properties. Using the cost method, depreciation of 3.7 billion yuan was recorded, further compressing profit margins.

It is noteworthy that impairment provisions mainly targeted projects acquired at high prices between 2020-2022, especially Chongqing China Merchants Yutianfu (impairment of 879 million yuan, with a land premium rate of about 130% in 2021) and Xiamen Bay Lake Zhenjing (impairment of 433 million yuan). These reflect the market’s absorption pressure on high-priced projects during adjustment periods and demonstrate China Merchants Shekou’s proactive release of historical burdens and commitment to asset quality. When these impaired projects are transferred in the future, their book costs will be reduced, which may temporarily impact profits but will help lighten the load and lay a foundation for future profit recovery.

Despite profit pressures, China Merchants Shekou’s core operations and risk defenses remain robust, demonstrating the resilience of state-owned enterprises through industry cycles. Financial data shows the company generated a net cash flow from operating activities of 9.693 billion yuan in 2025, with a year-end cash balance of 86.127 billion yuan, ensuring solid support for project operations and debt repayment. The debt structure continued to optimize, with a debt-to-asset ratio of 64.17%, net debt ratio of 72.46%, and a cash short-term debt ratio of 1.19 at year-end—all maintaining green zone indicators, highlighting controllable risks. During the year, the company successfully cleared 12 billion yuan of perpetual bonds, issued 14.1 billion yuan in operational property loans, and raised 17.94 billion yuan in new public market financing, with coupon rates in the lower industry range. The year-end comprehensive funding cost was 2.74%, down 25 basis points from the beginning of the year, showcasing financing advantages and cost control capabilities.

In terms of market layout, China Merchants Shekou acquired 43 land parcels totaling 938 billion yuan in land value in 2025, nearly doubling its land acquisition amount, focusing on core 10 cities, with investment in first-tier cities accounting for 63%. Notably, high-premium land acquisitions in core areas like Chengdu High-tech Zone and Qianhai in Shenzhen reflect long-term confidence in these cities’ value and reserve high-quality resources for future market recovery. Meanwhile, the company adheres to a “sales-driven production and investment” approach, avoiding blind scale pursuit, ensuring investment and sales pace are aligned, and balancing short-term risks with long-term value.

Behind the performance pressures, China Merchants Shekou faces core challenges related to product quality and brand positioning, which are key factors limiting its market reputation and long-term growth.

In 2025, China Merchants Shekou’s total sales volume was approximately 196 billion yuan, remaining among the industry leaders but still declining over 10% year-on-year. The weak sales are mainly due to shortcomings in product delivery and service. In Shanghai, complaints from homeowners about “misrepresentation” of “forest-themed residences” turning into “flat airports,” unfulfilled promises of vehicle and pedestrian separation, and after-sales service delays damaged brand reputation. The new management team has clarified rectification directions. Zhu Wenkai stated at the performance briefing that during the “14th Five-Year Plan,” the company will shift from a traditional developer to a “developer + operator + service provider,” focusing on improving development, strengthening operations, expanding services, and enhancing risk management. The goal is to build a “good housing” system to comprehensively improve product and delivery quality. Currently, the company has drafted the “China Merchants Shekou Good Housing Quality Standards,” covering seven dimensions, 28 scenario modules, and 485 technical details, aiming to implement over 20 benchmark projects. Through standardized and refined product systems, they seek to address the mismatch between quality and brand perception.

2026 marks the beginning of China Merchants Shekou’s “14th Five-Year Plan” and a critical year for transforming reform momentum. Facing a trend of industry stabilization and increasing city differentiation, the company has clarified a growth path centered on “quality and receivables,” focusing on three main directions.

First, prioritize quality to reshape product strength and delivery. Fully implement the “Good Housing” standards, strengthen full-cycle project management, from planning and design to construction and delivery, establishing rapid response and rectification mechanisms for quality issues, fulfilling commitments to homeowners, restoring brand reputation, and increasing customer repurchase and recommendation willingness.

Second, safeguard cash flow by optimizing investment and sales rhythm. Adhere to “sales-driven production,” strictly control land acquisition and development pace, prioritize high-turnover, high-absorption projects to improve receivables; focus on high-quality land in core cities, plan precisely, avoid blind expansion, balance scale and profit, and ensure cash flow safety and debt risk control.

Third, leverage transformation to cultivate new growth drivers. Relying on the resources of China Merchants Group, strengthen the layout of light-asset businesses such as industrial parks, commercial operations, and property services, increasing non-development revenue share, and building a diversified “development + operation + service” growth pattern. This reduces dependence on single development projects and enhances cyclical resilience.

In the short term, China Merchants Shekou still faces industry adjustment residuals and profit recovery pressures; but in the long term, with clear strategic positioning and defined pathways, through “subtraction” to release historical burdens and solidify a stable foundation, and through “addition” to enhance quality and foster new momentum, it is gradually forging a high-quality transformation path.

The industry’s bottoming and recovery trend is emerging. For China Merchants Shekou, 2026 will be not only a year for performance recovery but also a crucial year for brand rebuilding and core competitiveness consolidation. By focusing on quality, maintaining stability, and empowering transformation, China Merchants Shekou is poised to stabilize its footing amid deep industry adjustments and steadily move toward “becoming better and stronger.”