In a recent development, Hong Kong-listed property management company Qifu Life Services (HK.03686), which previously earned substantial profits through investments in “gold and silver”, sold silver at a high point at the beginning of 2026 only to quickly reinvest in gold and silver. As the prices of gold and silver corrected, the company incurred an approximate fair value loss of around 83.4 million yuan in precious metal investments in the first half of the year, leading to a shift from profit to loss in its financial performance.
On August 17th, Qifu Life Services issued a profit warning update, announcing a significant turnaround in its performance for the first half of 2026. The company projected a loss of 2.4 million to 4.4 million yuan for the first half of the year, in contrast to a profit of 75.1 million yuan in the same period last year, marking a shift from profit to loss.
The key reason for the performance reversal was the substantial fair value loss incurred in precious metal investments.
As of the end of June 2026, the company’s precious metal investments resulted in an approximately 83.4 million yuan fair value loss, including around 59.9 million yuan loss in distributed silver bars, about 10.6 million yuan loss in undistributed gold bars, and roughly 12.9 million yuan loss in distributed gold bars. The aforementioned losses primarily belonged to unrealized floating losses.
Of particular note is that prior to this downturn, Qifu Life Services had just made significant profits from its silver investments.
In 2020, Qifu Life Services began large-scale purchases of silver bars. From February 25th to 28th of that year, the company continuously bought silver, investing approximately 102.5 million yuan throughout the year to purchase 800,000 ounces of silver bars.
Following the rise in silver prices, the company subsequently sold parts of its holdings. In 2022, the company divested silver in three batches, realizing a net income of about 15 million yuan.
Subsequently, the company continued to bet on silver.
From July to August 2024, the company invested a further 77.9 million yuan in purchasing silver bars. In 2025, the increase in silver prices further boosted the fair value gains of the company’s holdings, with silver investments becoming a significant factor in the company’s substantial profit growth that year.
In 2025, the company’s net profit surged by 191.8% year-on-year, with the fair value gains from silver bar investments accounting for approximately 2.03 billion yuan, representing over 70% of the net profit for that year.
However, there was a dramatic turnaround in operations in 2026.
In January of this year, Qifu Life Services liquidated all its undistributed silver bars at high gold and silver prices within five days, selling approximately 21.15 tons with a total price of about 3.88 billion yuan. Based on the book value of the company’s undistributed silver bars at the end of 2024, the estimated reference income from this sale was around 2.47 billion yuan.
However, just over ten days after the divestment, the company re-entered the precious metal market. From February to June 2026, Qifu Life Services invested approximately 355 million Hong Kong dollars in purchasing distributed silver bars, gold bars, and other assets. As gold and silver prices corrected, the company incurred an approximately 83.4 million yuan fair value loss in precious metal investments by the end of June.
In other words, the company had just sold silver at a high point and then made significant purchases of gold and silver, only to face the subsequent market correction.
This resulted in the company’s performance shifting from a profit of 75.1 million yuan in the same period of 2025 to an expected loss of 2.4 million to 4.4 million yuan in the first half of 2026.
Qifu Life Services primarily engages in property management, retail services, and other businesses, but its core operations have faced pressure in recent years.
The company had a revenue of around 421 million yuan in 2020, which decreased to about 320 million yuan by 2025. Meanwhile, the significance of precious metal investments in the company’s profits continued to rise.
By the end of 2025, the company managed 16 residential areas and 6 commercial properties, with a total contracted management area of approximately 10.189 million square meters.
In 2025, the fair value gains from silver bar investments amounted to approximately 2.03 billion yuan, contributing to a net profit of about 2.85 billion yuan for the year. In other words, the profits from precious metal investments accounted for over 70% of the company’s net profit that year.
This indicates that for a relatively small property company, investment returns have become a crucial factor affecting profits rather than just extra income outside their core operations.
Industry experts believe that after the real estate sector entered a period of adjustment, some property companies faced challenges in expanding their businesses with ample cash reserves but limited investment opportunities. Therefore, they began seeking ways to enhance financial returns through financial investments and wealth management.
However, the volatility of precious metal prices is much higher than that of traditional cash management products. When property companies allocate more funds to high-volatility assets, a miscalculation in market direction can quickly turn investment returns into a burden on performance.
Qifu Life Services’ experience of “earning from silver, selling at a high price, reinvesting, and facing a market correction” exemplifies these risks.
Public records indicate that the company’s controlling shareholder, chairman, and general manager is Meng Lihong, the wife of Qifu Group founder and real estate tycoon Peng Linji. In the early 1990s, under Peng Linji’s leadership, Qifu Group pioneered the large-scale development model in China, transforming a neglected swampy wasteland into the “First Township of China,” now known as Qifu New Township.
Senior Researcher at China Real Estate Think Tank, Song Ziqian, believes that following the adjustment of the real estate industry, the external expansion speed of property companies has slowed down, and the trend of property companies engaging in investment and financial management reflects the growth bottleneck faced by the industry. As the real estate sector enters an adjustment phase, property companies’ expansion pace has slowed, and a significant amount of cash assets need to find a way out.
“According to the data compiled by the China Real Estate Think Tank, the total cash reserves of property corporations listed on both the Hong Kong and A-share markets have exceeded one billion yuan. The question of where such massive funds will be allocated has become an issue that the industry cannot ignore,” Song Ziqian analyzed.
Regarding the controversy over small and medium-sized property companies venturing into cross-border investments, Bai Wenxi, Vice Chairman of the Chinese Corporate Capital Alliance, bluntly stated that Qifu Life Services’ operations had serious flaws, primarily showcasing a severe mismatch in fund cycles. The property-deposited funds were considered as “short-term liabilities” that could be used at any time, while precious metals represented long-cycle high-volatility assets, which could easily impact the cash flow of core operations, leading to a situation of “windfall gains are miraculous, losses are misappropriation of funds.”
“If some small and medium-sized property companies also face the dilemma of ‘having funds but lacking projects,’ they can easily move some idle funds from 2% bank wealth management to higher-yielding areas. However, the prerequisite is to incorporate the ‘what to invest in, how much to invest, who will do risk control’ into the company’s charter and establish a fire wall completely isolated from the core operations,” Bai Wenxi stated.