Insight into Annual Reports | Parent Net Profit Drops 68%, Four Consecutive Years of Contraction, China Overseas Hong Kong & Macao Struggles to Hide the Downward Trend

Ask AI · How can China Shipping Hongyang’s second- and third-tier city strategy amplify risks of falling performance?

Among Hong Kong-listed property developers, China Shipping Hongyang—focusing on a “blend of the middle and America” approach and deeply rooted in second- and third-tier cities—also turned in its 2025 results in late March.

No surprises—only signs of ongoing contraction: in 2025, China Shipping Hongyang saw both revenue and profit drop sharply, with its scale of earnings nearly halving and entering a multi-year downward performance channel. On the other hand, the state-owned-entity backdrop helps cushion the impact: financial metrics stay in the green, cash flow remains positive, and it continues to pay dividends—showing a typical cross-section where risk and stability coexist.

Performance decline intensifies:

Revenue “three straight declines,” net profit “four straight drops”

In 2025, China Shipping Hongyang’s core profitability indicators continued to trend downward, and the magnitude of the decline further expanded, entering a multi-year earnings contraction cycle.

The annual report shows that in 2025, China Shipping Hongyang achieved full-year operating revenue of RMB 36.87B, down sharply 19.7% year over year; gross profit was RMB 3.2B, down 16.8% year over year; and the overall gross margin was 8.7%, basically unchanged from 8.4% in 2024.

Data source: company reports, Eastmoney. Beijing News Shell Finance reporter Duan Wenping infographic

Despite gross margin being kept stable and strict control over selling and administrative expenses compressing costs, the market downturn’s effect on revenue slippage, as well as the widening losses of equity-accounted joint ventures and associates, ultimately caused China Shipping Hongyang’s net profit to drop sharply, and its earnings resilience continued to weaken.

In 2025, China Shipping Hongyang’s net profit attributable to shareholders was RMB 305 million, plunging 68.07% year over year; basic earnings per share were RMB 0.086, down sharply from RMB 0.268 in 2024.

Looking across a longer period, China Shipping Hongyang’s revenue and profit decline is not short-term volatility, but a trend that has persisted for years.

On the revenue side, revenue has been declining for three straight years: from a peak of RMB 57.49 billion in 2022 down to RMB 36.87B this year, a reduction of more than 30%. Net profit attributable to shareholders has fallen for four straight years as well: from over RMB 5 billion in 2021 down to single digits; the decline has widened year by year—down 26.94% in 2023 and 58.55% in 2024, then further expanding to 68.07% in 2025.

Data source: company announcements, Eastmoney. Beijing News Shell Finance reporter Duan Wenping infographic

Breaking down China Shipping Hongyang’s business structure, real estate development remains an absolute core business. The second growth curve has not taken shape yet, and its inherent ability to withstand cycles is insufficient. Specifically, property development revenue was RMB 36.38B, accounting for 98.66%; income from commercial property operations was only RMB 493 million, accounting for 1.34%.

As for property development, in 2025 China Shipping Hongyang achieved contracted sales of RMB 32.19B, down 19.8% year over year; contracted sales area was 2.9379 million sq. meters, down 15.7% year over year. Its equity contracted sales were RMB 27.97B, down 18.4% year over year. This also means that the company’s future performance growth may continue to face pressure.

Data source: company announcements, Eastmoney. Beijing News Shell Finance reporter Duan Wenping infographic

Highly concentrated allocation:

Heavily invested in second- and third-tier cities, regional risk is amplified

As a property developer branded by a “middle-and-U.S.” positioning and focused on second- and third-tier cities, China Shipping Hongyang in 2025 continued to stay with a second-tier-and-third-tier layout. Its land acquisition structure and the distribution of total land reserves are highly concentrated in second- and third-tier cities, further amplifying the risk of regional market fluctuations.

The annual report shows that in 2025, China Shipping Hongyang added 22 projects in 13 cities. The total GFA of新增 land reserves was about 2.9288 million sq. meters, and the total cost of land acquisition was RMB 11.71B. Investment intensity increased, but the choice of cities was uniformly second- and third-tier plus strong third-tier cities: Hefei, Lanzhou, Yinchuan, Tangshan, Hohhot, and others—without any presence in first-tier or core new first-tier cities.

By end-2025, the company’s total land-reserve GFA was 11.9923 million sq. meters, with equity land reserves of 10.2551 million sq. meters. In terms of regional distribution, it is also highly concentrated in second- and third-tier cities, with a very low proportion of land reserves in first-tier and core second-tier cities.

Data source: company announcements. Beijing News Shell Finance reporter Duan Wenping infographic

Among them, Lanzhou, Hefei, and Shantou rank top three by land-reserve scale, at 1.9071 million sq. meters, 1.6624 million sq. meters, and 1.3955 million sq. meters respectively, together accounting for over 40% of total land reserves. Next come the Mongning region, Weifang region, Huizhou region, Yangzhou region, Tangshan region, Yanchang-Tongzhou region, etc.

With the current property market showing clear city-level differentiation, demand resilience remains stronger in first-tier and core second-tier cities, while most second- and third-tier cities are facing issues such as population outflows, high inventory levels, longer destocking cycles, and downward pressure on home prices. China Shipping Hongyang’s highly concentrated layout in second- and third-tier cities may therefore face risks such as slower destocking and sales pressure.

Financial base is solid:

Dividend despite headwinds, cash flow “four straight positives”

Although performance is under pressure and the layout is constrained, China Shipping Hongyang has still held the safety bottom line thanks to its state-owned background and prudent financial strategy, with operating cash flow staying positive for four consecutive years.

In terms of debt control, the company’s financial indicators continued to improve. As of end-2025, cash reserves exceeded RMB 26.86B. The net leverage ratio fell from 33.1% at the end of last year to 31.7%, and the “three red lines” remain in the “green tier.” The asset-liability ratio, for the first time since its establishment, fell below 70%, making its finances increasingly robust. During the year, the weighted average financing cost was 3.4%, staying at a low level in the industry. Its financial soundness and ability to withstand risks stand out.

Regarding dividend policy, despite a sharp decline in earnings, the company still continues to pay dividends to return to shareholders. As of December 31, 2025, the company declared a final dividend of HKD 2.5 cents per share. Combined with the interim dividend of HKD 1 cent per share paid earlier, the total dividends for the full year will be HKD 3.5 cents per share. Although this is down from 10 HK cents in 2024, with a full-year payout ratio of about 36.0%, in the broader environment where most of the industry is pausing or reducing dividends, it also reflects management’s confidence in long-term operations.

Overall, China Shipping Hongyang’s 2025 financial results show the characteristics of “risk and stability coexisting.” On one side, revenue and profit have been declining for years, risks from the second- and third-tier city layout have accumulated, and the growth bottleneck and regional pressures urgently need to be addressed. On the other side, the company’s financial base is solid, leverage is controllable, and dividends are continuing—giving the company time to adjust and transform.

Going forward, amid accelerating industry differentiation, if China Shipping Hongyang wants to reverse its poor performance momentum, it urgently needs to optimize its land acquisition layout, appropriately increase the share of land reserves in core cities, and at the same time speed up destocking of projects in second- and third-tier cities and revitalize existing assets. Under the premise of protecting financial safety, it must find a new breakthrough in growth to solve its development predicament.

Beijing News Shell Finance reporter Duan Wenping

Editor Yang Juanjuan

Proofreader Lu Xi