On the evening of January 21st, China Communications Construction Real Estate, a central enterprise under the Communist Party of China, announced its performance forecast for the year 2024. It is expected to incur a net loss of 5.3 billion Chinese yuan (RMB) in 2024, with the loss amount further expanding compared to the previous year.
The decline in net profit for 2024 compared to 2023 at China Communications Construction Real Estate is attributed to three main factors. Firstly, due to different delivery schedules for the company’s real estate development business, the number of projects meeting delivery conditions in this period decreased compared to the same period last year. Additionally, amid increasingly fierce market competition, in order to accelerate inventory turnover and fund recovery, the company adjusted its sales strategy, leading to a year-on-year decline in the gross profit margin of delivered projects during the reporting period. Secondly, with an increase in completed real estate projects, the company’s interest expenses increased, resulting in a rise in financial expenses compared to the same period last year. Thirdly, during the reporting period, some of the company’s real estate projects showed signs of impairment. Following accounting standards, the company conducted preliminary impairment tests on inventory and, based on the principle of prudence, made provisions for impairment losses on real estate projects showing signs of impairment.
According to the financial report, as of the end of the third quarter of 2024, the book value of inventory at China Communications Construction Real Estate reached 89.166 billion yuan, accounting for 76.26% of the company’s total current assets.
China Communications Construction Real Estate also stated that based on preliminary estimates, the net assets attributable to equity holders at the end of 2024 may be negative, and the company’s stock trading may be subject to delisting risk warnings (stocks prefixed with “*ST”) by the Shenzhen Stock Exchange after the disclosure of the 2024 annual report.
On January 22nd, China Communications Construction Real Estate hit the limit down, with a market value of 5.872 billion yuan.
According to a report by “National Business Daily,” while anticipating significant losses in 2024, China Communications Construction Real Estate plans to make major adjustments to its core business.
The company announced that its current core business includes real estate development, sales, and leasing. It intends to transfer related assets and liabilities of the real estate development business it holds to its controlling shareholder, China Communications Real Estate Group. Following the completion of the transaction, the company will focus on light asset businesses such as property services, asset management, and operations to achieve strategic business transformation.
However, the specific range of assets involved in the aforementioned transaction still needs further negotiation between the parties. The transaction price has not been finalized either, and the specific price will be determined based on the asset appraisal value filed by state-owned asset supervision and management departments or other authorized units.
In a report dated January 13th by “Yicai,” Chinese real estate companies have a total of 482.8 billion yuan in bonds maturing in 2024, with an issuance scale of 215.8 billion yuan, indicating a significant gap in refinancing to repay maturing debts.
Research from the Ke Rui Research Center highlights that the debt maturity scale for real estate companies in 2025 will reach 525.7 billion yuan, with the third quarter being the peak repayment period, totaling around 157.4 billion yuan.