Behind Green City's Stable Management: Pleasing Partners but Failing Shareholders

“The real estate industry is in a period of transformation, and stable business operations are the top priority.” This is what Liu Chengyun, Chairman of Greentown China, said in an interview with the media earlier this year.

To put it plainly, over the past few years Greentown China’s development can indeed be summarized as stable operations. According to its just-released 2025 performance report, all of the company’s financial indicators remain steady and secure, with extremely low operating risk.

But then again. Behind its stable operations, Greentown China also has a major issue—low quality of earnings. In 2025, the company’s profit after tax decreased by 44.9%, and its net profit attributable to shareholders fell even more sharply by 95.6%, which is not good news for the company’s shareholders.

Financial stability and strong safety

The annual report shows that in 2025, Greentown China’s operating revenue was 154.966 billion, slightly down from 158.546 billion in 2024. However, considering that the entire industry is currently in a downturn cycle, Greentown China’s performance can still be described as solid.

In addition, in 2025, Greentown China’s total contracted sales were 251.9 billion, ranking second nationwide. Of this, self-invested projects accounted for 153.4 billion, and agency projects accounted for 98.5 billion.

By the end of 2025, Greentown China held cash and cash equivalents of 63.2 billion, with a cash-to-short-term debt ratio of 2.6x, setting a historical low in terms of repayment pressure. More importantly, the company’s weighted average financing cost was 3.3%, which places it among the lowest tiers in the industry. Operating cash flow has remained positive, demonstrating healthy operations of its core business.

It can be said that based on the full picture of the company’s annual report, amid increasing market uncertainty today, Greentown China is displaying more certainty regarding future operations.

A cliff-like plunge in net profit attributable to shareholders

However, Greentown China also has its own problems, namely earnings quality that is far from satisfactory, mainly reflected in net profit attributable to shareholders.

In 2025, the company’s profit after tax was 2.286 billion, a substantial decrease of 44.9% from 4.146 billion in 2024. The key factor behind the decline is that in 2025, Greentown China recorded cumulative losses of 1.134 billion in associates and joint ventures.

More importantly, the profit attributable to the company’s shareholders experienced a cliff-like drop—what is commonly referred to as net profit attributable to shareholders.

Out of the 2.286 billion profit in 2025, only 70.989 million belonged to the company’s shareholders. The remaining 2.215 billion was equity attributable to non-controlling interests. In 2024, profit attributable to the company’s shareholders reached 1.596 billion. By comparison, the decline in Greentown China’s net profit attributable to shareholders in 2025 amounted to 95.6%.

The main reason for this situation is that in the past few years, in order to maintain stable and steady growth and not increase its own risk, Greentown China chose a small-equity operator model for project development. In these projects, Greentown China only holds a small stake, but has decision-making power. Therefore, the profits generated by these projects are consolidated in the annual report; however, in the end, the profits need to be shared with the cooperation counterparties in proportion.

This model is a double-edged sword. While it can expand the scale with the lowest risk, the profit ultimately retained is not much.

In one sentence—Greentown pleases its counterparties, but lets its own shareholders down.

The annual report shows that as of the end of 2025, Greentown China’s total net asset value was 105.714 billion, of which 35.184 billion was attributable to the company’s shareholders, and 70.3 billion was attributable to non-controlling interests. The company’s shareholder stake was 33.3%. For another Zhejiang-based real estate developer, Binjiang Group, this figure was 54.5%.

A report alleging improper transfer of benefits related to the Tangshan project

On the day Greentown China released its performance results, the Hong Kong Stock Exchange received a letter of report from Tianhong Real Estate Development Co., Ltd.

Tianhong Real Estate accused Greentown China and relevant senior management personnel, including Zhou Lianying, Geng Zhongqiang, Li Jun, Shang Shucheng, and others, of, during the cooperative development of the Tangshan “Greentown · Guiyu Jiangnan” project, transferring business matters of the listed company free of charge to Shenyang Quanyun Village Construction Co., Ltd., which they actually controlled. The listed company funded the projects and bore the capital costs and operational risks, yet the related company monopolized the project revenue.

Tianhong Real Estate believes that the relevant conduct involves multiple serious violations, including matters that may constitute failure to disclose inside information in accordance with law, severe violations of regulations governing related-party transaction oversight, breach of directors’ duty of loyalty, improper transfer of benefits, and damage to the interests of the listed company.

In response, on April 5, Greentown China issued a statement saying that disputes involving the development entity and its de facto controller Wei of the Tangshan “Tianhong Jia Di Guan Lan” project (recorded name “Longxi Li Bihu Yuan”) between the company and its subsidiaries have entered judicial proceedings and are currently in the stage of court review.

Greentown China and the management team of its subsidiaries have always adhered to national laws and regulations, regulatory rules for listed companies, and corporate ethics standards. For malicious attacks and false accusations that are without any factual basis, they have reported to the police and handled the matter.

The second growth curve faces a quality test

Among Greentown China’s major business segments, property development contributes the most to sales. But if we are to talk about the highest gross profit margin, it is undoubtedly agency construction. With a gross profit margin approaching 40%, it ranks top among all segments and has become Greentown China’s second growth curve.

According to the annual report of Greentown Management (09979.HK), in 2025, agency construction revenue was 3.12 billion, gross profit was 1.239 billion, and after-tax profit attributable to owners of the company was 419 million.

Moreover, the scale of Greentown’s agency construction business is also continuously rising. As mentioned above, in 2025, among Greentown China’s 251.9 billion in total contracted sales, agency project sales reached 98.5 billion, accounting for nearly 40%, making it an undisputed industry leader.

However, Greentown’s agency construction business has also recently faced some challenges. Several projects in Shanghai developed by Greentown have encountered quality complaints from homeowners.

At the end of March, the owners of Ke Yun Jin Yue Huating, a project developed by Greentown’s agency construction, collectively published a written statement, hoping to resolve the garage leakage issues found during construction. Although the developer provided a response, the owners were still dissatisfied and further raised other concerns, such as roughness in exterior wall coating work.

In October last year, another residential project, Modern Jiangnan, developed by Greentown through agency construction, also faced complaints from homeowners. During the pre-occupancy viewing period, the owners found that the underground garages were far from what the advertisements and promotional materials showed. Even the garage renovation of relocated housing was inferior.

Frequent quality complaints have sounded a warning bell for Greentown’s agency construction business. For a company that has already secured the No. 1 seat in the industry, ensuring “zero quality issues” is an important factor for sustainable development going forward.

Hello everyone, this is Le Cai Ju. We are fully focused on Shanghai’s real estate market trends, including new home launches, second-hand transactions, land auctions, policy changes, and developments from property developers, aiming to bring readers the latest information.

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