8.3 Trillion Yuan Shenzhen Real Estate Flagship, Aggressively Offloading 4.3 Billion Yuan Burden

AI Zhu Wenkai: How to Lead the Company’s Profit Recovery After Taking Office?

Source: Visual China

Reporter: Li Huilin Editor: Tan Lu

Shenzhen’s real estate giant continues to shed burdens.

On March 17, China Merchants Shekou Industrial Zone Holdings Co., Ltd. (招商蛇口) announced that by 2025, revenue will decline to 154.728 billion yuan, with net profit around 10.24 billion yuan, a year-on-year drop of over 70%.

Behind the sharp profit decline is a large-scale “asset reduction” effort, with 招商蛇口 making a one-time impairment provision of 4.27 billion yuan.

“These accounting treatments impact the company’s profits for the current period. In the long run, they are about strengthening asset quality and preparing for future lean operations,” said management at the earnings conference.

Despite this, the state-owned giant with total assets of 835 billion yuan remains one of the few profitable real estate companies in the industry, and ranks among the top four nationwide in sales scale.

The industry is still bottoming out. For Zhu Wenkai, who has been in office for more than half a year, stabilizing this giant ship and restoring profits are core tasks.

Risk Prevention and Burden Reduction

As project absorption cycles lengthen and prices come under pressure,招商蛇口’s previous high-priced land acquisitions have become operational burdens.

By the end of 2025, its inventory will reach 362.3 billion yuan, including 71.7 billion yuan of completed projects.

Management regards inventory clearance as a key risk control measure. In this impairment provision, inventory accounted for the majority, with 3.269 billion yuan set aside, representing 76.5% of the total.

These inventories involve nine projects in second- and third-tier cities.

According to statistics from 《21CBR》, these projects’ land acquisitions mainly occurred before 2022, during the rapid growth phase of real estate, when land prices were relatively high.

Among them, the project with the largest impairment provision is Chongqing China Merchants Yutianfu, with 878 million yuan provision.

This project mainly features small high-rise buildings, villas, flats, and stacked villas. It was first acquired in 2019, with additional investments later. During the Mid-Autumn and National Day holidays in 2025, it ranked top in Chongqing’s West District in both transaction volume and value.

“A stacked villa with a building area of 150 square meters used to cost over 1.8 million yuan per unit, now it’s just over 1.6 million yuan,” a local agent told reporters.

There are also some distressed projects being handled.

For example, 招商湾区1872 in Guangzhou is招商蛇口’s first project in Nansha District. In 2021, after 110 rounds of fierce bidding, it was acquired for 4.131 billion yuan, with a nearly 36% premium, making it a high-priced hot land parcel at the time.

However, after listing, both volume and price were disappointing, and the project was ultimately converted into talent housing by the government. The financial report disclosed that招商蛇口 made a 76.64 million yuan impairment provision for this project.

Proactively “clearing mines” has become a norm for招商蛇口 in recent years. From 2020 to 2024, it has annually made significant inventory impairment provisions, totaling 13.7 billion yuan over five years.

The cost has been shrinking profits.

In 2025,招商蛇口’s impairment provision of 4.27 billion yuan directly reduced net profit by 2.918 billion yuan.

Yan Yuejin, Deputy Director of the Shanghai E-House Real Estate Research Institute, told 《21CBR》 that making asset impairment provisions helps companies comprehensively and accurately understand their asset base, providing a foundation for clarifying future operational directions and optimizing business layout.

Land Acquisition and Expansion

As the historical burdens are gradually digested, Zhu Wenkai’s team is increasing investments.

In 2025,招商蛇口 acquired a total of 43 land parcels, with a total land price of about 93.8 billion yuan, requiring a land payment of approximately 54.3 billion yuan, an increase of 20 billion yuan compared to the previous year.

Investment is mainly focused on core cities. Over the past year, nearly 90% of investment was in the “core 10 cities,” with 63% in first-tier cities.

High-quality land is expensive. In 2025,招商蛇口 secured multiple high-premium land parcels.

In March, it paid about 2.7 billion yuan for a land parcel in Chengdu High-tech Zone, with a premium rate of 70.4%, and a floor price of 31,700 yuan per square meter, making it Chengdu’s “land king.”

In July, it won a residential land parcel in Qianhai Guicun District, Shenzhen, for 2.155 billion yuan, with an 86.1% premium, and a transaction floor price of about 84,200 yuan per square meter, becoming Shenzhen’s “price king.”

In 2025,招商蛇口’s total sales revenue reached 196 billion yuan, ranking in the top three in 10 cities including Shanghai, Shenzhen, Chengdu, and Xi’an.

Earlier this year, Zhu Wenkai praised the development business at an internal meeting: steady progress and surpassing targets.

However, profit recovery still takes time. In 2025,招商蛇口’s gross profit margin from development was 15.33%, still not stabilizing.

“Over the past two or three years,招商蛇口 has invested in many good projects, and profits will gradually be realized,” management believes that downward pressure on profits will ease over time.

In 2026, 招商蛇口 expects total available-for-sale value of about 340 billion yuan, with 83% in residential properties. So far this year, only one land parcel has been acquired.

Source: TuChong

“The direction and precision of investments determine the company’s safety margin,” Zhu Wenkai emphasized. All new projects must go through the “Six Good Evaluations” system to ensure every penny is spent on the most valuable opportunities.

To control risks, Zhu Wenkai and the management team are simultaneously reducing leverage and increasing cash reserves.

In 2025,招商蛇口 fully paid off 12 billion yuan of perpetual bonds, reducing total debt to 564 billion yuan. Meanwhile, total assets decreased to 835 billion yuan, shrinking the balance sheet by about 25 billion yuan in one year.

Organizational Restructuring

In response to challenges,招商蛇口’s organizational structure has undergone frequent changes.

Zhu Wenkai, previously General Manager, took over as Chairman in September 2025. At the same time, Nie Liming was appointed General Manager. Both are veterans with long-standing careers in招商系.

In 2025, Zhu Wenkai’s salary was 2.5492 million yuan, a promotion and raise. The previous year, as General Manager, his annual salary was 2.3235 million yuan.

Zhu started as a planning manager at招商地产, serving as assistant general manager, deputy general manager, and general manager of招商局海南开发投资有限公司, making him a versatile talent.

Before his appointment,招商蛇口 had just completed a major organizational restructuring, abolishing five regional companies and directly managing city companies from the group headquarters to achieve a “flat” management structure.

At the earnings conference, Zhu Wenkai proposed learning “agile management,” starting in 2026, classifying, flattening, elevating, and penetrating all business and projects.

For example, for development projects,招商蛇口 will develop classification assessment plans based on each city.

Source: TuChong

“Previously, each city was evaluated based on profit and scale. Now, some focus on profit, others on absorption and revitalization,” Zhu said.

He now bears the heavy responsibility of transformation.

“招商蛇口’s overall strategy is to optimize development, strengthen operations, expand services, and improve risk management,” Zhu emphasized. The goal is to shift from a traditional developer to a ‘developer + operator + service provider’.

In 2025,招商蛇口’s asset operation and property services revenue reached 7.173 billion yuan and 16.726 billion yuan respectively, both growing positively and accounting for about one-sixth of total revenue.

“Use more innovative ideas to expand into new tracks, improve efficiency, and grow asset management and light-asset businesses,” Zhu Wenkai set the goal at the start of the year.

Under his leadership, in 2026, non-development business units will eliminate middle management layers, with all projects directly managed by headquarters, and establish a tiered management system for core cities and key projects.

“2026 is a critical year for招商蛇口 to reduce burdens, strengthen the body, and move forward lightly,” he encouraged internally, emphasizing the need for resilience and perseverance to “clear mountains and build bridges when encountering water.”