OCT A has posted losses for three consecutive years.

The loss-stricken OCT Group has welcomed a new leader at the helm.

On September 5, the State-owned Assets Supervision and Administration Commission disclosed personnel appointment and dismissal information for multiple state-owned enterprises. Wu Bingqi, who previously held positions at major state-owned enterprises including CHINA RES LAND and China State Construction Engineering Corporation, was appointed as Deputy Secretary of the Party Committee and Director of OCT Group Co., Ltd., and nominated as a candidate for General Manager of OCT Group Co., Ltd.

Wu Bingqi's appointment is viewed by the industry as a significant move to drive business breakthrough at OCT Group. Since 2022, OCT's revenue has entered a declining trajectory with three consecutive years of losses. The loss amount continued to expand in the first half of this year, presenting considerable challenges to the company's operations, while business transformation has yet to achieve effective progress. Whether Wu Bingqi's past experience can lead OCT through its current difficulties remains to be seen.

Over 30 Years in Real Estate

The 54-year-old Wu Bingqi graduated from Tongji University and holds an MBA from the University of South Australia. He joined China Resources Group in 1993, starting from entry-level positions and serving at companies including China Resources Property and China Resources Construction.

In 2007, Wu Bingqi joined CHINA RES LAND and advanced from regional manager to core management.

In October 2013, Wu Bingqi was appointed Senior Vice President of CHINA RES LAND, concurrently serving as Strategic Director and General Manager of Chengdu Region. In February 2019, he was appointed Executive Director of CHINA RES LAND. In January 2021, he was named Chief Human Resources Officer of CHINA RES LAND and Chairman (Non-Executive) of North China Region.

Wu Bingqi demonstrated remarkable business capabilities during this period. Between 2019-2020, CHINA RES LAND's West China Region achieved sales growth of 37.8% year-over-year, reaching 27.5 billion yuan.

After taking charge of the North China Region in 2021, Wu Bingqi drove the region's revenue to grow over 20% year-over-year to 40.9 billion yuan. In 2022, CHINA RES LAND achieved breakthroughs in the Beijing market, ranking third in Beijing real estate sales according to China Index Academy, with market share further increasing compared to the previous year, ranking second internally after only the East China Region.

Based on this track record, Wu Bingqi was promoted again in July 2022, appointed as President of CHINA RES LAND, leading this hundred-billion-yuan state-owned enterprise.

Subsequently, just 1 year and 2 months after his formal appointment as President of CHINA RES LAND, Wu Bingqi's career trajectory changed again. In September 2023, he became a Party Group member and Deputy General Manager of China State Construction Engineering Corporation Limited. One month later, China State Construction Engineering Corporation Limited announced Wu Bingqi's appointment as Deputy President and General Counsel of the company.

Significant Challenges

Despite his impressive past achievements, the OCT Group that Wu Bingqi now leads faces enormous challenges.

According to the official website of OCT Group Co., Ltd., this large state-owned enterprise established in 1985 has, after 40 years of development, formed a business structure centered on culture, tourism, and real estate as main businesses, with three listed subsidiaries domestically and internationally: OCT A, Yunnan Tourism, and OCT (Asia).

Among these, OCT A is the subsidiary with the largest asset scale. In 1989, it jointly invested with China Travel Service (Holdings) Hong Kong Limited to build China's first theme park "Splendid China," pioneering the "culture-tourism + real estate" development model.

Under this model, OCT's creations including Happy Valley and Window of the World have become benchmark works in China's theme park sector. Meanwhile, alongside the real estate industry's rapid growth, the listed company achieved impressive performance. From 2016-2020, its revenue increased from approximately 35.5 billion yuan to 81.8 billion yuan, with net profit attributable to shareholders growing from about 6.9 billion yuan to 12.7 billion yuan. During this period, its gross profit margin maintained a high level of 49.86%-60.35%.

However, this development model inevitably encountered bottlenecks. In 2021, OCT A's revenue broke the hundred-billion threshold, but profitability showed decline, with net profit of 7.1 billion yuan and net profit attributable to shareholders of 3.8 billion yuan, decreasing 55% and 70% year-over-year respectively, showing signs of performance fatigue.

In 2022, following the retirement of former Chairman Duan Xiannian and the appointment of Zhang Zhengao, former General Manager of Poly Group, OCT A embarked on a transformation journey, organizationally separating culture-tourism and real estate businesses to promote more independent and specialized development of tourism and real estate as two main businesses.

However, the real estate industry had entered a deep adjustment period by then. OCT A's sales continued declining, with weakening cash generation capabilities. Combined with pandemic impacts, the company's operating revenue for 2022-2024 was approximately 76.767 billion yuan, 55.744 billion yuan, and 54.407 billion yuan respectively, declining 25.17%, 27.39%, and 2.4% year-over-year.

Profitability fell into a quagmire, with net profit attributable to shareholders losing 10.9 billion yuan in 2022, marking OCT A's first loss since listing. The following two fiscal years remained in loss territory, with net profit attributable to shareholders losing 6.5 billion yuan and 8.662 billion yuan in 2023-2024 respectively.

The continued downturn in real estate, shrinking sales amounts and project settlement amounts year after year, along with price-for-volume sales strategies that lowered real estate segment gross margins, plus inventory impairment, collectively created OCT A's persistently poor operational performance.

Notably, OCT A's non-GAAP net profit attributable to shareholders also posted losses for three consecutive years, raising investor concerns about OCT A facing delisting warnings. OCT responded publicly that "as of now, the company's going concern capability faces no uncertainty, and the company does not meet conditions for delisting risk warning or other risk warnings."

However, challenges facing the company remain evident. Entering 2025, OCT A still faces considerable pressure. Financial reports show that in the first half of this year, OCT A achieved operating revenue of 11.317 billion yuan, still declining over 50% year-over-year. Net profit attributable to listed company shareholders was -2.868 billion yuan, declining another 171.52% year-over-year, with enlarged loss amounts.

Specifically, culture-tourism business, which OCT A has focused on transforming in recent years, achieved revenue of 8.165 billion yuan during the period, accounting for over 70% with significant increase from the beginning of the period. Real estate business revenue was 3.076 billion yuan, with share dropping to less than 30%. However, culture-tourism business clearly failed to offset the drag from real estate development business on operations. During the reporting period, real estate business revenue declined dramatically over 70% year-over-year, with gross margin further declining to 5.49%, showing continued weakening profitability.

Former Chairman Zhang Zhengao frankly stated in the 2024 annual report that "2024 was an extremely unusual year in OCT's development history, with OCT facing dual tests of transformation and upgrade alongside stable operations." Currently, OCT A's trials have not yet ended.