Annual Report Season Takes the Lead! Cmacro Accumulation Sheds Burden Amid Growing Pains, How to Resolve Declining Profits?

Ask AI · How does China Merchants Property Services balance short-term pain and long-term strategy after asset disposals?

In the 2026 A-share property company annual report season, China Merchants Property Services (CMPS) was the first to release its full-year results. On March 13, the leading state-owned enterprise released its 2025 annual performance report, becoming the first property service company listed on the A-share market to disclose a complete annual report for the previous year.

The report shows that the company achieved total operating revenue of 19.273 billion yuan in 2025, a 12.23% increase year-on-year, maintaining steady growth. However, net profit attributable to shareholders of the listed company was 655 million yuan, down 22.12% year-on-year. The company pointed out that the profit decline was mainly due to one-time disposals of legacy real estate development projects. Excluding this impact, core net profit actually grew by 8.3% year-on-year.

At the earnings release on the afternoon of March 18, Chairman Lü Bin further clarified the strategic direction: during the “14th Five-Year Plan,” the company will follow China Merchants Shekou’s requirements to become China’s leading property asset management operator, and has set a mid- to long-term goal of “maintaining top five, striving for top three.”

Behind the clear industry ranking goals is the company’s determination to break through in a changing industry. However, in the context of stock-to-stock competition and refined operations entering a new phase, the 2025 annual report not only demonstrates the practical results of CMPS actively optimizing its asset structure but also objectively reveals new challenges in market expansion capabilities and profitability structure.

Revenue growth, how substantial is market-oriented expansion?

Looking at core revenue indicators, CMPS’s 2025 operational results have many highlights. In 2025, the company achieved total operating revenue of 19.273 billion yuan, up 12.23% year-on-year, just shy of 20 billion, and maintained double-digit growth amid industry deep adjustments. Property management remains the main revenue driver, contributing 18.603 billion yuan, a 12.83% increase.

The quality of this growth is reflected in the continued decline in dependence on related parties and a comprehensive leap in market-oriented expansion ability. According to the annual report, in 2025, the company signed new contracts totaling 4.48 billion yuan, an 11.19% increase. Of these, third-party contracts amounted to 4.169 billion yuan, up 13%, accounting for 93%.

The non-residential market remains the core foundation, with new contract signing of 3.695 billion yuan, accounting for 82.48%, up 8.8%. In specific sectors, new contracts in the aviation sector surged 85%, and universities grew 25%, demonstrating the company’s expansion in specialized fields. Notably, the market-oriented residential business achieved leapfrog growth, with new annual contracts of 474 million yuan, nearly 60% higher than the previous year. The company successfully launched landmark projects such as Shanghai Kangcheng and Xi’an Qinhan Yuyuan, and established a dedicated residential development team to enhance competitiveness.

Zhao Xiao, Deputy General Manager of CMPS, stated at the earnings conference that 2025 was the second year for the company to actively develop the market-oriented residential sector. A dedicated “Residential Development Special Organization” was established, led by the general manager, to systematically improve market competitiveness. He also pointed out that the company will focus on active regions such as the Bohai Rim, Pearl River Delta, Yangtze River Delta, and Beijing-Tianjin-Hebei, maintaining the basic residential and non-residential business while developing high-potential tracks like IFM (Integrated Facility Management) and universities.

“Offloading burdens” pressures profits, how to explain the profit decline?

Contrasting sharply with the impressive revenue performance is the comprehensive pressure on profits. The financial report shows that in 2025, CMPS achieved net profit attributable to shareholders of 655 million yuan, a significant decrease of 22.12%, roughly returning to the level of 2023. The net profit after deducting non-recurring gains and losses was 604 million yuan, down 24.39%. This marks the first double-digit decline in core profitability indicators since 2022.

CMPS’s 2025 financial performance appears to be characterized by “revenue growth without profit growth,” primarily due to one-time asset disposals. The annual report explicitly states that the company successfully transferred its stake in Hengyang Zhonghang, its controlling subsidiary, completing the disposal of its last remaining real estate development business. This led to a one-time reduction of 256 million yuan in net profit attributable to shareholders. Excluding this impact, net profit grew by 8.3% year-on-year.

“This indicates that the apparent profit decline was driven by proactive structural adjustments,” noted China Index Property Research. By transferring 60% of Hengyang Zhonghang’s equity, CMPS aimed to fully exit its legacy real estate development business, further focusing on property asset management and operations. While this short-term impact hurt profits, it benefits long-term asset lightweighting and clarity.

However, it’s important to note that CMPS still faces industry-wide pressure on gross profit margins. In 2025, the overall gross profit margin of property management was 10.01%, down 0.44 percentage points year-on-year. In the earnings conference, Secretary of the Board Chen Jiang admitted that due to market competition and rising rigid costs, the industry’s overall gross margin is declining, and “the gross margin of new projects is close to the bottom.”

A deeper challenge stems from the mismatch between business growth and gross profit structure. Data shows that among the business segments, the fastest-growing value-added services saw revenue increase by 48.46%, but their gross margin was the lowest among all segments, at only 8.16%.

Meanwhile, the asset management segment, which has the highest gross margin, saw its revenue decline 0.67% in 2025, marking two consecutive years of decline. This “low-margin, high-growth” versus “high-margin, shrinking” situation poses a structural challenge to the company’s overall profitability improvement.

Establishing the “Maintain Top Five, Strive for Top Three” goal, the path to high-quality development remains to be seen

In terms of financial quality, CMPS demonstrates strong risk management. By the end of 2025, the company’s debt was reduced from 833 million yuan at the start of the year to 517 million yuan, with an average financing cost of 2.24%, and financial expenses down 61.79%. Net cash flow from operating activities was 1.641 billion yuan, and accounts receivable turnover days fell to 43.27 days, a recent low. The company’s total financing cash inflow decreased 38.02% to 846 million yuan, indicating reliance on operating cash flow for funding.

This achievement is attributed to meticulous management. Jiang Xia, CFO of CMPS, said at the earnings conference that in 2025, the company implemented detailed receivables management, establishing dynamic control over project balances and tackling difficult projects. Despite the industry’s declining average collection rate for property fees, the company’s overall collection rate resisted potential downward pressure.

However, the annual report also highlights potential risks. As of the end of 2025, the company held 5.458 billion yuan in investment properties, accounting for 27.19% of total assets. During the deep real estate market adjustment, subsequent disposal remains uncertain.

Looking ahead to the “14th Five-Year Plan,” CMPS has set a mid- to long-term goal of “maintaining top five, striving for top three,” aiming to rank among the top five in the industry and challenge the top three. Chairman Lü Bin stated at the earnings conference that the industry has shifted from “rough scale growth” to “refined quality development,” and the company will focus on “professional and refined services” to build core competitiveness.

Notably, the day before the earnings conference, its controlling shareholder China Merchants Shekou Holdings Chairman Zhu Wenkai explicitly emphasized that CMPS should become a key pillar of transformation and development, and demanded that it “firmly implement the doubling plan.” Whether CMPS can effectively address gross margin pressures, optimize its business structure, and successfully incubate new tracks will be key market focus areas.

Reporting by: Sun Yang, Southern Metropolis·Wancai Society