Southern Property Limited (Southern Property) announced on September 18 that it will sell its real estate development and leasing business-related assets and liabilities for 1 yuan (RMB) each, involving 17 equity assets and 13.357 billion yuan of debt.
On the 18th, Southern Property issued a total of 40 announcements, including the “Significant Asset Sale and Related Party Transaction Report (draft)”.
According to the “Significant Asset Sale and Related Party Transaction Report (draft)”, it is proposed to transfer the real estate development and leasing business-related assets and liabilities to Shanghai Linglin Property Limited at the price of 1 yuan, including: 17 equity assets of real estate development and leasing businesses held by the listed company; relevant accounts receivable of the equity assets to be transferred by the listed company headquarters, and other assets related to real estate development and leasing businesses, as well as other debts of the listed company headquarters, totaling 13.357 billion yuan.
In response, Southern Property stated that this transaction is beneficial for enhancing the profitability and sustainable operation capability of the listed company, and it helps in mitigating the risk of delisting for the listed company. However, influenced by factors such as the slowdown in the macroeconomy and the real estate industry, the future operation of the listed company may still face certain risks. Even after the completion of this transaction, the listed company may still be exposed to the risk of losses.
According to a real estate industry analyst quoted by Caijing on September 18, “The essence of this 1-yuan transfer transaction is to take over negative assets. The buyer needs to bear all the liabilities and future operational risks of the target company. For the seller, the intention is to get rid of the bad assets that drag down the performance of the listed company and avoid further losses.”
As reported by the Daily Economic News on September 18, Southern Property has long been planning to divest its real estate development business. In 2022, Southern Property announced its withdrawal from the real estate sector, but progress has been slow. This time, the effort to exit the real estate industry has been intensified.
Public records show that Southern Property was established in 1998 and is a comprehensive development and operation enterprise covering various property types with commercial real estate as its main focus. In 2009, Southern Property became the first listed commercial real estate company after the resumption of IPO in the real estate industry. In April 2014, Power Construction Real Estate officially became Southern Property’s largest shareholder, marking Southern Property’s transition from a private enterprise to a subsidiary of a state-owned enterprise. However, in recent years, Southern Property’s operations have been under pressure due to adjustments in the real estate industry.
According to reports from the Daily Economic News, Southern Property has incurred losses for four consecutive years since 2021, with net profits attributable to the parent company’s shareholders in 2022 to 2024 totaling -8.23 billion yuan, -16.93 billion yuan, and -22.38 billion yuan respectively, resulting in a total loss of 47.54 billion yuan.
As of the end of 2024, the net assets attributable to the parent company were -17.53 billion yuan, and the non-recurring net profits in the recent three years have been negative. In accordance with relevant regulations of the China Securities Exchange’s Listing Rules, Southern Property’s stock has been subject to delisting risk warnings since April 30, 2025, and has been renamed “*ST NanZhi”. Additionally, if any of the following conditions occur in 2025, the company’s stock will be delisted: including audited total profits, net profits, and net profits after deducting non-recurring gains that are all negative, and the deducted operating income is less than 300 million yuan; the audited year-end net assets are negative; the financial accounting report receives an audit opinion that is qualified, unable to form an opinion, or negative.
Looking at the first half of 2025, Southern Property’s operational situation has not shown improvement. On August 28, Southern Property released its 2025 interim report, which showed that the company’s operating income for the first half of the year was 8.2 billion yuan, a year-on-year decrease of 39.54%. The net profit attributable to the listed company’s shareholders was -8.98 billion yuan, a year-on-year decrease of 20633.52%, and the net assets attributable to the listed company’s shareholders were -26.51 billion yuan, a year-on-year decrease of 51.21%. As of now, Southern Property’s total assets stand at 202.62 billion yuan, a decrease of 3.78% year-on-year.
Yan Yuejin, Deputy Director of E-House Research Institute, shares the same view, stating that this initiative is a necessary step taken by the company to maintain its listing qualifications. He told Caijing, “This type of transaction is not uncommon in the A-share market, especially for listed companies facing delisting risk, it is a common practice to maintain the listing status by divesting bad assets.”
The market believes that it will take time to verify Southern Property’s desire to boost the company through restructuring.