Who can remain as steady as China Merchants Shekou during the industry downturn?

Listing | China Visitor Network

Review | Li Xiaoyan

On March 9, China Merchants Shekou released a sales and land acquisition brief for February 2026, achieving a signed sales area of 323,000 square meters and a signed sales amount of 7.765 billion yuan that month; from January to February, the cumulative signed sales area was 595,200 square meters, with a signed sales amount of 15.439 billion yuan. During the same period, the company’s 2025 performance forecast showed a decline in net profit year-over-year. Against the backdrop of deep industry adjustments and a differentiated market recovery pace, this report reflects common industry pressures but also highlights the resilience, strategic focus, and recovery momentum of leading state-owned enterprises amid cyclical fluctuations. Overall, China Merchants Shekou employs a balanced strategy of steady sales, cautious investment, optimized structure, and strong transformation, maintaining the fundamentals during the industry bottoming phase and building momentum for new growth, laying a solid foundation for subsequent recovery and high-quality development.

From the sales performance perspective, China Merchants Shekou showed significant month-over-month improvement and short-term pressure year-over-year at the start of 2026, with clear marginal improvement trends. In February, sales area and sales amount increased by approximately 18.7% and 1.2% respectively compared to January, with both core indicators rebounding, breaking the sluggish market trend at the beginning of the year, and demonstrating steady recovery in project absorption capacity and marketing execution. Industry data shows that in the first two months of 2026, the top 100 real estate companies’ total sales amount decreased by about 30% year-over-year, with leading companies generally experiencing around 25% decline. China Merchants Shekou’s sales amount for January-February decreased by 20.6% year-over-year, outperforming the industry average and maintaining a stable position among the top five developers, with the resilience of high-quality projects in core cities continuing to stand out.

Short-term fluctuations in year-over-year data are essentially due to cyclical industry adjustments and seasonal factors. The earlier Chinese New Year in 2026, along with phased impacts on returning home purchases and offline marketing, combined with a relatively high base in the same period of 2025, led to decreases of approximately 22.6% and 25.6% in sales area and sales amount in February respectively. However, compared to the overall industry, the decline at China Merchants Shekou is controllable, and the month-over-month recovery trend is more indicative—this suggests that the company’s layout in core first- and second-tier cities, the positioning of improved products, and the accumulation of brand and quality are translating into tangible sales recovery momentum, preparing for the “small spring” in the housing market in March.

On the land investment side, China Merchants Shekou continues to adopt a cautious and steady “sales-driven land acquisition” strategy, with no new land reserves added since the January 2026 brief. During a period when industry inventory digestion pressure remains and market recovery has yet to fully stabilize, this approach of “not blindly expanding reserves and focusing on cash flow safety” exemplifies typical prudent management by central enterprises. The company prioritizes resources for clearing existing projects, revitalizing existing assets, and optimizing debt structures to reduce capital pressure from investment expenditures, ensuring the safety margin of operating cash flow. In the long term, cautious investment does not mean abandoning expansion but waiting for better land acquisition opportunities, focusing on high-quality land in core cities and key sectors to reserve resources for future sales and profit growth, balancing “steady investment” with “strategic development.”

In terms of performance, China Merchants Shekou’s 2025 forecast shows short-term profit pressure but a stable operational foundation. The forecast indicates that net profit attributable to the parent company is expected to be between 1.005 billion and 1.254 billion yuan, a decline of 69%-75% year-over-year; net profit excluding extraordinary items is expected to be between 154 million and 231 million yuan, down 91%-94%, continuing the downward trend from 2024. Objectively, profit decline is a common challenge during industry adjustments, not a reflection of individual management issues: on one hand, the company adheres to cautious principles, making asset impairment provisions for some projects and actively strengthening asset quality for long-term development; on the other hand, the scale of project deliveries in 2025 decreased, leading to a decline in operating income year-over-year, while joint venture investment income and equity sale gains also decreased, jointly impacting profit performance.

It is worth noting that even during this profit adjustment period, China Merchants Shekou remains one of the few real estate companies in the industry maintaining continuous profitability without losses, demonstrating the financial resilience and risk resistance of a central enterprise. Compared to many private developers facing debt defaults, project suspensions, and delisting risks, China Merchants Shekou benefits from the credit backing of China Merchants Group, stable financing channels, and a reasonable debt structure, ensuring operational continuity and financial security. The consecutive profit adjustments in 2024 and 2025 are strategic choices to actively respond to industry cycles and optimize the balance sheet, rather than passive pressures. This “proactive risk reduction and focus on high quality” approach aligns with the industry’s long-term transformation direction.

In response to industry changes, China Merchants Shekou has accelerated its multi-faceted transformation from traditional development to “development + operation + services,” cultivating new profit growth points—this is the core confidence behind the company’s cycle resilience. While maintaining a stable core development business, the company is vigorously developing commercial operations, long-term rentals, industrial parks, and property management, leveraging the advantages of China Merchants Property Services to build a full-cycle urban service ecosystem. Holding assets with stable cash flow and strong cyclical resistance can effectively hedge short-term fluctuations in development, helping the company transition from a “real estate developer” to a “comprehensive urban service provider,” enhancing profitability sustainability and stability.

Meanwhile, the company continues to optimize organizational structure and management efficiency by removing regional company layers, directly managing city-level companies from headquarters, reducing management levels, and improving decision-making efficiency to lower management costs; focusing on core cities and projects, exiting inefficient markets and non-core businesses, and concentrating resources on high-margin, high-absorption projects. On the product side, the focus remains on quality, emphasizing improved housing needs, aligning with the current market’s “core city recovery and improved demand” segmentation, and creating differentiated advantages amid homogeneous competition.

From the industry landscape, the real estate market is shifting from “scale expansion” to “quality and efficiency improvement,” with accelerated industry consolidation and increasing market share of leading central and state-owned enterprises. As a top 5 SOE developer, China Merchants Shekou benefits from brand, capital, and resource advantages, with significant competitiveness in project mergers and acquisitions, core city land reserves, and industrial resource integration. With ongoing policy support—such as credit, tax, and purchase restrictions—market confidence is gradually restoring, and the recovery trend in core cities’ housing markets is clear. The company’s strategic layout and product structure are expected to benefit from the industry’s improved pattern, with sales and profits gradually returning to a healthy trajectory.

Objectively, China Merchants Shekou still faces challenges such as slower-than-expected industry recovery, sluggish profit repair, and ongoing market segmentation. Short-term fluctuations in data also reflect the complexity and difficulty of market recovery. However, these are industry-wide issues rather than individual company shortcomings. During this critical bottoming and stabilization phase, China Merchants Shekou prioritizes stability and quality, with month-over-month sales recovery, cautious investment to control risks, active asset and liability optimization, and accelerated transformation—all aimed at long-term high-quality development.

Cyclical fluctuations are normal in the industry; the ability to navigate cycles is the core competitiveness. The sales performance and long-term strategic deployment at the start of 2026 demonstrate the responsibility and wisdom of a leading central enterprise. Short-term performance fluctuations and YoY sales declines are temporary during the industry adjustment; the month-over-month recovery trend, stable financial health, and clear transformation path are the key factors shaping the company’s future development.

Looking ahead, as the housing market enters a “small spring,” with demand gradually releasing and the company’s cautious management and transformation efforts taking effect, China Merchants Shekou is expected to achieve sustained sales recovery and gradual profit improvement. In the new journey of market returning to residential attributes and high-quality development, the company will continue to adhere to long-term principles, build a solid foundation through prudent management, and stimulate growth through innovation. Amid industry segmentation, it aims to seize opportunities, create long-term value for shareholders, and contribute to urban development and people’s well-being as a central enterprise.