On April 27, China’s real estate giant Rongsheng Real Estate Development Co., Ltd. (referred to as Rongsheng Development) released its 2024 annual report, showing a staggering 2622.1% year-on-year increase in losses, reflecting its own operational difficulties and also highlighting the severe reality of the sharp contraction in the Chinese real estate market.
According to the financial report, Rongsheng Development had approximately 38.009 billion yuan in operating income in 2024, a year-on-year decrease of 35.53%. The net profit attributable to the shareholders of the listed company was a loss of about 8.444 billion yuan, with the loss increasing by 2293.07% compared to the previous year. The net profit loss excluding non-recurring gains and losses was about 8.049 billion yuan, marking a striking 2622.1% year-on-year increase in losses.
Financial data shows that by the end of 2024, Rongsheng Development’s total assets were 161.762 billion yuan, a decrease of 21.42% year-on-year. The net assets attributable to shareholders of the listed company were 14.855 billion yuan, down by 37.03% year-on-year. The net cash flow generated from operating activities decreased by 14.39% year-on-year.
In terms of performance, Rongsheng Development had operating income of 47.244 billion yuan, 31.793 billion yuan, and 58.960 billion yuan in 2021, 2022, and 2023 respectively, with year-on-year growth rates of -33.94%, -32.70%, and 84.87% respectively. Net profit attributable to equity holders were -4.955 billion yuan, -16.311 billion yuan, and 3.850 billion yuan, with respective year-on-year growth rates of -166.06%, -229.16%, and 102.36%. During the same period, the company’s asset-liability ratios were 84.49%, 89.96%, and 87.19%.
Rongsheng Development openly admitted in the financial report that the company is “enduring tough times and stringent days” by enhancing capital usage efficiency, cutting unnecessary expenses, and others.
With its high asset-liability ratio, Rongsheng Development faces significant short-term debt repayment pressure. Industry analysis points out that mid-sized real estate companies similar to Rongsheng Development, if unable to alleviate financial pressures through debt restructuring or asset disposals, may encounter even greater risks in the future.
In recent years, the real estate market, as a pillar industry of the Chinese economy, has been adversely affected by the combination of policy adjustments, tightened financing, and declining market demand, leading the industry into a downturn. The substantial losses incurred by Rongsheng Development are a microcosm of this trend.
Data released by the China Index Research Institute previously indicated that in the first quarter of this year, the total sales of China’s top 100 real estate developers decreased by 9.8% year-on-year. The full-year sales total for 2024 saw a 30.6% year-on-year decline. “Sales champion” Poly Development’s sales last year decreased by 23.5% year-on-year, and net profit attributable to equity holders fell by 58.43%.
The contraction of the Chinese real estate market not only impacts real estate companies but also causes a chain reaction in upstream and downstream industries. Sectors such as building materials, home decoration, and bank lending have been affected, with some regions even experiencing a reduction in job opportunities. Meanwhile, the lack of confidence among property buyers further exacerbates the market’s downturn.
From a macro perspective, the continued downturn of the real estate market is dragging down China’s economic growth. Economists warn that if the real estate industry fails to stabilize, it will not only weaken the momentum of economic recovery but also potentially trigger systemic financial risks.