Everbright Securities has released a research report adjusting its net profit forecasts for CHINA RES LAND. The report revises down the company's basic net profit attributable to shareholders projections for 2026 and 2027 to RMB 23.68 billion and RMB 23.07 billion, respectively, from previous estimates of RMB 25.27 billion and RMB 25.53 billion. A new forecast for 2028 sets the basic net profit at RMB 23.89 billion. Based on the current share price, the corresponding price-to-earnings (P/E) ratios for 2026 to 2028 are estimated at 8.2x, 8.4x, and 8.1x, respectively. Everbright Securities reaffirms its "Buy" rating on the stock, highlighting the company's strategic focus on core cities, its leading position in asset operation, and its significant credit advantages as a central state-owned enterprise.

Key points from the report are as follows:

The company released its unaudited operational data for the period up to March 31, 2026. In March 2026, contracted sales amounted to RMB 22.42 billion, representing a year-on-year decrease of 14.1%. The contracted sales area was 594,000 square meters, down 34.5% compared to the same period last year. For the first quarter of 2026 (January to March), total contracted sales reached RMB 44.12 billion, a decline of 13.8% year-on-year. The total contracted sales area was 1.249 million square meters, reflecting a 36.9% decrease.

CHINA RES LAND demonstrates leadership in asset operation, with its income-generating property business contributing increasingly stable cash flows. In 2025, this segment generated operating revenue of RMB 25.44 billion, a 9.2% increase year-on-year, and core net profit of RMB 9.87 billion, up 15.2%. As of the end of 2025, the portfolio included: 1) 98 operating shopping malls, with 82 ranking among the top three in their local markets by retail sales. The total gross floor area reached 12.42 million square meters, an increase of 8.4%, with total retail sales of RMB 239.2 billion, growing 22.4%. The overall operating profit margin hit a record high of 63.1%. 2) Office buildings with a total gross floor area of 1.46 million square meters, comprising 23 operating properties, achieved an average occupancy rate of 77.7%, up 2.8 percentage points. 3) Hotels covered a total area of 790,000 square meters, increasing 1.2%, with an average occupancy rate of 67.3%, up 3.1 percentage points. In the first quarter of 2026, cumulative rental income reached RMB 9.16 billion, a 14.0% increase year-on-year.

The company's average selling price has shown significant improvement, supported by an investment structure focused on core markets. In 2025, CHINA RES LAND maintained its position among the top three in the industry by sales volume, with total sales value of RMB 233.6 billion, though this was down 10.5% year-on-year. The sales area was 9.22 million square meters, decreasing 18.6%, while the average selling price rose 9.9% to RMB 25,300 per square meter. For the first quarter of 2026, the sales value was RMB 44.1 billion, down 13.8%, with a contracted sales area of 1.25 million square meters, down 36.9%. The average selling price, however, increased significantly by 36.5% to RMB 35,300 per square meter. The sales structure is concentrated in core cities, where the company ranks among the top three in market share in 18 cities. Regarding land acquisition, the company adheres to a principle of "spending within means," rationally pacing its investments and focusing on first- and second-tier cities. In 2025, it acquired 33 projects with equity investments totaling RMB 67.37 billion, with nearly 80% of investments concentrated in five key cities, including Beijing and Shanghai.

As a central state-owned enterprise, CHINA RES LAND possesses significant credit advantages, and its financing costs continue to optimize. The company consistently adheres to prudent financial principles, treating cash flow security as a lifeline for development. As of the end of 2025, it held cash reserves of RMB 117 billion. The net gearing ratio stood at 39.2%, and the weighted average financing cost decreased by 39 basis points from the end of 2024 to 2.72%, maintaining its position in the lowest tier within the industry.

The report concludes with risk warnings, including potential underperformance in sales and land acquisition, weaker-than-expected performance of operational businesses, and a more severe-than-anticipated industry downturn.