Green City China recently held its 2025 mid-year performance conference, where it was reported that both revenue and gross profit of the company experienced a sharp decline. The net profit attributable to shareholders plummeted to 210 million yuan, a nearly 90% drop compared to the same period last year, marking the lowest mid-year net profit since its listing on the Hong Kong Stock Exchange in 2006.
During the conference on Monday, August 25th, CEO Geng Zhongqiang summarized the company’s operations for the first half of the year. As of June 30th, the company achieved a revenue of approximately 53.368 billion yuan, a 23.3% year-on-year decrease. The gross profit stood at 7.159 billion yuan, down 21.4% year-on-year, with a net profit attributable to the parent company’s shareholders of only 210 million yuan, marking a significant decline of 89.7%.
Additionally, the company made provisions for asset impairment and fair value adjustments totaling 1.938 billion yuan, a 10.7% increase compared to the previous year. The major reason behind this was the acceleration of inventory clearance leading to price markdowns.
Green City China Holdings Co., Ltd., established in 1995, is one of the leading real estate companies in China.
According to Economic Information Daily, in its first year of listing in 2006, Green City China recorded a mid-year revenue of 1.21 billion yuan, with a net profit attributable to shareholders of 257 million yuan. Now, the company’s half-year revenue is over 40 times that amount, yet the net profit is less than what it was 19 years ago.
Geng Zhongqiang identified two key reasons for the decline in performance: a decrease in delivery area by 22.7% compared to the same period last year and the promotion of long-term inventory clearance which resulted in provisions for impairment losses amounting to 1.933 billion yuan, including inventory impairment of approximately 1.717 billion yuan and credit impairment of around 216 million yuan.
Last year marked the final year of Zhang Yadong as the Chairman of the Board of Green City China, with an annual revenue of 158.5 billion yuan, and a net profit attributable to shareholders plummeting by 49% to 1.596 billion yuan, significantly reducing the company’s net profit.
Leading up to the annual performance conference on March 31st of this year, Green City China announced the appointment of Liu Chengyun, a member of the Party Committee and Vice General Manager of China Communications Construction Group, as the new Chairman of the Board of Green City China.
Despite the change in leadership, as evidenced by the disclosed figure of 210 million yuan in the mid-year report, the “leadership change” has not been able to reverse the downward trend in Green City’s performance and sharp decline in profits.
CEO Guo Jiafeng revealed during the conference that Green City China had aggressively acquired land in the first half of the year, adding 35 new projects with equity land payments totaling 36.2 billion yuan and new value of assets amounting to 90.7 billion yuan, with 88% of them located in first and second-tier cities. He projected that the land market in the second half of the year might not be as active as in the first half, prompting Green City to slow down its land acquisition pace, with a target land acquisition value of between 120 to 130 billion yuan for the year.
With an increased level of reserved land in the first half of the year, the company’s debt levels also rose. The mid-year report showed that as of June 2025, the net asset-liability ratio had increased by 7.3 percentage points to 63.9% compared to the end of the previous year, with total borrowings increasing by 4.3% to 143.027 billion yuan, bank loans amounting to 116.924 billion yuan, up by 11.8%, and bank deposits and cash decreasing by 8.5% to 66.795 billion yuan.
The mid-year data indicated that Green City achieved a total contracted sales of approximately 122.2 billion yuan in the first half of the year, ranking second in the industry. Of this amount, self-developed project sales reached about 80.3 billion yuan, equity sales roughly 53.9 billion yuan, placing the company fifth in the industry. According to Economic Information Daily, based on the overall sales volume, Green City China has solidified its position in the top three in the industry.
From the interim report, it can be observed that Green City’s sales expenses, administrative expenses, financial costs, and taxes all saw significant decreases. Administrative expenses amounted to 1.523 billion yuan, down by 9.9% year-on-year, sales expenses were 1.057 billion yuan, a 6.1% decrease, interest expenses stood at 2.953 billion yuan, a reduction of 745 million yuan, and taxes decreased by over 3 billion yuan from 13.49 billion yuan to 10.26 billion yuan.
Despite all the cost reductions at Green City China in the first half of the year, the net profit was only 210 million yuan. Why did it not see a significant increase?
The mid-year data revealed that losses from joint ventures and associates increased by 60 million yuan and additional provisions for asset impairment and credit impairment were made. In the first half of the year, 1.717 billion yuan was provisioned for asset impairment, an increase of approximately 300 million yuan, and 216 million yuan was set aside for credit impairment. Apart from those reasons, Economic Information Daily believes that the majority of the profits were taken by minority shareholders, which is the main factor.
The mid-term report indicated that Green City China’s mid-year net profit was 1.211 billion yuan, but minority shareholders claimed 1.001 billion yuan of the net profit, accounting for 83%, leaving only 210 million yuan for the company’s shareholders. In the same period last year, the portion of net profit taken by minority shareholders accounted for 38% of the total.
Here, the term “minority shareholders” refers to non-controlling shareholders. The practice of significant profit sharing by non-controlling shareholders is not uncommon in the real estate industry. Industry insiders point out that this phenomenon is related to cooperation in development projects, manipulation of small shareholdings, and increasing capital investment projects, which may bring potential risks such as “real stocks with false profits” and profit adjustments.
According to reports, since 2024, with the downturn in the real estate market squeezing profit margins, some minority shareholders, with the protection of equity security mechanisms or cooperation agreements, have been able to sustain relatively stable profit distribution. In the first half of 2024, 71 domestic real estate companies had a combined profit sharing of 9.546 billion yuan by minority shareholders, while the total net profit of these 71 companies was -65.597 billion yuan. Even in periods of operational losses for many real estate enterprises, minority shareholders continued to achieve positive returns.
Economic Information Daily pointed out that this year’s mid-year performance report of Green City indicates that the majority of the surplus profits of the public company were claimed by minority shareholders.