Amid the ongoing backdrop of the Chinese real estate debt crisis, even state-owned enterprise-backed real estate companies are facing financial challenges. Recently, China Communications Construction Real Estate (*ST 中地) announced the divestment of its real estate development business to its controlling shareholder, China Communications Construction Real Estate Group, at a symbolic price of 1 yuan.
According to the latest evaluation report, the transaction involves 51 companies with total assets valued at 43.47 billion yuan, but the liabilities amount to 47.39 billion yuan, resulting in negative net assets of 3.9 billion yuan. After professional assessment, the net assets remain negative at 2.98 billion yuan. Industry insiders pointed out that the 1 yuan price tag is symbolic, as China Communications Construction Real Estate Group is essentially taking on a heavy burden.
Since 2022, China Communications Construction Real Estate has been experiencing consecutive losses, amounting to 1.61 billion yuan in 2023 and further escalating to 5.18 billion yuan in 2024. Concurrently, sales revenue plummeted from 45.8 billion yuan in 2022 to 15.6 billion yuan in 2024. In April 2025, the company was already under the risk warning of delisting, with the stock abbreviation changed to “*ST 中地”. The divestiture of the real estate business is not only a temporary measure to clean up loss-making assets but also seen as a crucial move to safeguard the company.
Upon completion of the transaction, China Communications Construction Real Estate’s total assets will decrease from 107.6 billion yuan to approximately 2 billion yuan, and total liabilities will drop from 96.6 billion yuan to around 800 million yuan, reducing the debt-to-asset ratio from nearly 90% to 40%. Simultaneously, the company will officially transition from real estate development to a “light asset business” platform focusing on property management, asset management, and commercial operations.
However, the success of this transformation remains uncertain. On one hand, while property and asset management businesses are stable, their current scale is relatively small, with China Communications Property generating revenue of only 560 million yuan in 2023 and a net profit of less than 70 million yuan, making it challenging to fill the profit gap left by the real estate business. On the other hand, the listed status is not yet fully secure. To remove the “*ST” label, the company must successfully complete asset restructuring within the year, ensure positive net assets, and pass regulatory approvals.
China Communications Construction Group is a major central enterprise primarily engaged in construction engineering manufacturing, with its main focus on industries related to infrastructure transportation facilities. Currently, the group owns two real estate business platforms, China Communications Construction Real Estate Group and Greentown China. This transaction has also raised market concerns about the internal integration of state-owned enterprises.