Insight Spotlight | China Merchants Shekou's Zhu Wenkai: Truly Transform from Traditional Developers (Transcript)

Guandian Network On March 17, China Merchants Shekou held its 2025 annual performance briefing, with newly appointed Chairman Zhu Wenkai accompanied by General Manager Nie Liming, Deputy General Manager Wu Bin, Deputy General Manager Lv Bin, Chief Financial Officer and Board Secretary Yu Zhiliang, among others.

During the session reporting the company’s strategic development, Zhu Wenkai first summarized the past development.

Zhu Wenkai stated, “The 14th Five-Year Plan represents a reshaping of the real estate industry, during which four fundamental changes have occurred: first, a significant change in the supply-demand relationship, with supply exceeding demand; second, a shift in the sales pattern, where previously new homes dominated, now second-hand homes take precedence; third, a change in the operating model, from high leverage and high turnover for developers to sales-driven investment and production; fourth, a change in the main entities operating in the entire real estate market.”

He pointed out that during the 14th Five-Year Plan period, China Merchants Shekou timely proposed a medium- to long-term transformation strategy in light of internal and external circumstances and executed it resolutely, which is why the company has navigated each step relatively steadily and with clarity, “because we know that when the direction is correct, effort becomes meaningful.”

Zhu Wenkai also indicated that the overall strategy for the upcoming 15th Five-Year Plan period is: to enhance development, strengthen operations, expand services, and improve risk management.

“We need to genuinely transform from a traditional developer into a ‘developer + operator + service provider’ and become a leading integrated development and operational service provider for real estate parks in China.”

Preparations for Action

According to annual report data, China Merchants Shekou achieved operating revenue of 154.728 billion yuan in 2025, with a net profit attributable to shareholders of 1.024 billion yuan.

Regarding the changes in performance, Chief Financial Officer Yu Zhiliang stated that they reflect the changes in the industry cycle and market environment, and he explained that there are three contributing factors: first, prudent asset impairment provisions; second, a cyclical reduction in settlement scale; third, a decrease in investment income and equity sale income from joint ventures and associates compared to the previous period.

In 2025, China Merchants Shekou achieved a cumulative contracted sales area of 7.1612 million square meters, with a cumulative contracted sales amount of 196.009 billion yuan, moving up one position in overall industry rankings to fourth place.

General Manager Nie Liming, when responding to questions from the audience, stated that in the deep adjustment of the industry over the past few years, everyone has been experiencing a test of declining volume and price. As a member of the industry, China Merchants Shekou has also experienced considerable fluctuations in its operations.

He pointed out that revenue in 2025 decreased by 24.2 billion yuan year-on-year, while investment income from joint ventures decreased by about 2.3 billion yuan year-on-year, “These figures reflect the universal impact on corporate profitability under the backdrop of industry decline.”

Meanwhile, China Merchants Shekou adhered to a prudent principle, with an impairment loss provision of 4.41 billion yuan for the year; in addition, according to the cost method of accounting, the company measured investment properties and recorded depreciation of 3.7 billion yuan.

Nie Liming indicated that although these accounting treatments had some impact on the company’s reported profits for the period, in the long run, they are also solidifying the company’s asset quality and preparing for future lightened conditions.

In his view, market confidence has somewhat recovered, and the industry is in a bottoming and repairing phase, “As the bottom is formed, the returns of the real estate industry and the company will gradually stabilize, slowly emerging from the trend of rapid decline and entering a bottoming phase.”

At the meeting, Nie Liming mentioned some positive signals: over the past two to three years, the company has focused on core areas and invested in some good projects, and profits will gradually be recognized.

Data shows that in 2025, China Merchants Shekou acquired a total of 43 plots of land (26 in 2024), with a total construction area of approximately 4.4 million square meters (2.25 million square meters in 2024), and a total land price of about 93.8 billion yuan (48.6 billion in 2024), requiring payment of a land price of approximately 54.3 billion yuan (33.5 billion in 2024), which is expected to generate an additional value of 125.7 billion yuan.

By region, the investment in the core 10 cities (Beijing, Shanghai, Guangzhou, Shenzhen, Xi’an, Changsha, Hefei, Suzhou, Chengdu, Hangzhou) accounts for nearly 90% of the total, with investment in first-tier cities accounting for 63% of total investment, further increasing from the previous year.

China Merchants Shekou clearly continues to adopt a sales-driven investment strategy. In 2025, the five cities contributing the most to overall sales were Shanghai (over 50 billion), Beijing (19.3 billion), Hangzhou (16.9 billion), Shenzhen (over 15 billion), and Chengdu (over 10 billion), collectively accounting for more than 60% of total performance. During the year, the investment amounts in these five cities with sales exceeding 10 billion were 14.991 billion, 7.103 billion, 2.363 billion, 7.709 billion, and 5.001 billion, respectively, all ranking in the top six.

Regarding future investment intensity, Deputy General Manager Wu Bin stated it is difficult to set a clear ratio. In 2026, the overall focus will still be on core areas and key cities, adhering to sales-driven investment and selective investment principles to ensure effective resource allocation. New land projects will focus more on turnover speed and revenue realization, ensuring compliance with the “three red lines” while balancing scale and profit.

As of the end of 2025, China Merchants Shekou had approximately 22 million square meters of unsold land reserves, with resources in the core “6+10 cities” accounting for 47%, “30 strong cities” accounting for 76%, and resources in the Guangdong-Hong Kong-Macao Greater Bay Area accounting for 25%; regarding business type distribution, the residential proportion reached 64%.

According to Nie Liming, based on existing project arrangements, the company expects a total salable value of 340 billion yuan in 2026 (calculated on a full-caliber basis, excluding new projects). In terms of business type distribution, 83% is residential; from the perspective of city tier levels, the core “6+10” cities account for 81%, and “30 strong cities” account for 94%; regarding supply rhythm, it is mainly concentrated in the first half of the year, with new supply from this year’s newly acquired land expected to be supplemented in the second half.

In terms of its agency business, China Merchants Jin Guan added 80 new agency projects (including consulting) throughout the year, with new contracted area of 11.39 million square meters and new contract revenue exceeding 800 million yuan. The cumulative number of agency projects undertaken over the years has exceeded 620, with a scale surpassing 35 million square meters, covering exhibition centers, industrial offices, residential apartments, medical and health services, educational institutions, and municipal parks.

Future Competition

As early as the 2024 performance meeting, the management of China Merchants Shekou repeatedly mentioned that asset management is one of the main battlegrounds for the company’s transformation.

In 2025, China Merchants Shekou’s asset management business achieved operating revenue of 7.173 billion yuan, a slight increase of 0.32% year-on-year, accounting for 4.64% of total revenue, an increase of 0.65 percentage points from the previous year.

China Merchants Shekou’s asset management business includes the operation and asset management of held properties such as retail, industrial offices, and serviced apartments, as well as exhibition and cruise businesses.

During the year, the total income of held properties under management was 7.63 billion yuan, a year-on-year increase of 2.2%. During the reporting period, 29 new projects entered the market, with a total construction area of 1.77 million square meters, including 12 serviced apartments, 8 commercial properties, and 3 industrial parks; the total newly added light asset management area was approximately 828,000 square meters, located in core cities such as Shanghai, Hangzhou, Chengdu, and Shenzhen.

It is understood that China Merchants Shekou has established three REITs platforms: Shekou Industrial Park REIT, China Merchants Rental Housing REIT, and China Merchants Commercial REIT, corresponding to industrial parks, apartments, and commercial office assets.

Chairman Zhu Wenkai pointed out that during the 15th Five-Year Plan period, the company will continue to strengthen the coordinated development of REITs platforms and expand the capital raising for existing REITs platforms, increasing the asset scale and market influence of the platforms, further improving the layout of the company’s REITs platforms and optimizing the company’s asset structure, helping the company’s balance sheet to shift from heavy to light.

At the same time, he also announced that in 2026, the company will actively promote the issuance of the fourth commercial REIT, creating an exit channel for domestic consumption infrastructure and community commercial projects, establishing a virtuous cycle system of “development - operation - capital exit - reinvestment” within the held properties segment.

In terms of operational management, there were also many major moves during the year.

On June 24, it was reported that China Merchants Shekou underwent an organizational restructuring, establishing a new asset management department at the headquarters level, splitting the risk management department/legal compliance department/audit and inspection into risk management department/legal compliance department and audit and inspection department.

Meanwhile, in the development business area, it reduced management layers, abolishing five regional companies: East China, South China, West China, North China, and Jiangnan, with the headquarters managing the subordinate city companies directly.

At this performance meeting, Zhu Wenkai proposed learning “agile management,” starting in 2026, categorizing management for all businesses and projects into classification management, flat management, elevation management, and penetrating management, continuously optimizing organizational management.

In terms of classification management, it will distinguish business forms, setting up separate operation management and asset management departments at the headquarters to manage development and non-development businesses differently. For development businesses, assessment plans will be categorized based on different city tiers and development stages, eliminating the previous profit scale assessment model.

In terms of flat management, the organizational structure must firmly implement flat management, reducing intermediate levels to enhance management efficiency. Following the complete abolition of regional companies in the development business in 2025, 2026 will also see the complete abolition of intermediate layers like “business units” in non-development businesses, with all projects managed directly by the headquarters.

As Zhu Wenkai stated, “Future competition will no longer be about who is bigger in scale, but rather who has better products, who offers superior services, and who has stronger operations. In fact, future competition is a contest of capabilities.”

Below is the Q&A transcript from China Merchants Shekou’s 2025 annual performance briefing and investor communication meeting:

On-site question: In the current deep adjustment of the industry and accelerated reshaping of the landscape, China Merchants Shekou has still maintained relatively stable development. What do you believe is the company’s core competitive advantage that can support it through cycles?

Zhu Wenkai: In fact, during the current deep adjustment in the industry, everyone is thinking about what allows us to go far. From the perspective of China Merchants Shekou, where does our core competitiveness and confidence come from? Today, I would like to take this opportunity to share with you.

We believe that the first core advantage comes from the strong background support of China Merchants Group and the synergy of resources. As we all know, China Merchants Group is a century-old state-owned enterprise with a history of 150 years, with a wide range of business areas spanning logistics, finance, real estate, and technological innovation. Last year, China Merchants Group’s operating revenue was 882 billion yuan, with a total profit of 228 billion yuan and a net profit of 187.9 billion yuan, and total assets of 15.6 trillion yuan, having received an A grade in operational performance assessments from the State-owned Assets Supervision and Administration Commission for 21 consecutive years.

In recent years, with the support and guidance of China Merchants Group, China Merchants Shekou has continuously adjusted our strategies, operating and developing firmly in accordance with the group’s strategy.

In fact, this year the group has also integrated internal resources and synergized production and finance, bringing us tangible advantages, including the significant strategic resources in Qianhai and Shekou, all of which benefit from the strategic support and interaction of the group.

We believe that as the group pushes forward with its new “15th Five-Year” plan, firmly aiming to become an internationally integrated world-class enterprise, the progress and landmark achievements of its third entrepreneurial phase will be the most important strategic support and backing for us in this industry with credit differentiation.

The second core advantage is a firm strategic determination and strong organizational execution capability. We realized early on that the industry could not always run wildly without direction. Under the guidance of the group, we proposed “three transformations” starting in 2021, continuously adjusting our tactics dynamically to match the current strategy. As we conclude the 14th Five-Year Plan year in 2025, we systematically summarize our execution over the past five years, considering changes in internal and external environments and the national “15th Five-Year” planning recommendations, and have made new adjustments to our strategic positioning.

First, our positioning is clearer; we will solidify our status as one of the top five in the industry and become a leading integrated development and operational service provider for real estate parks in China, and we will firmly pursue this path.

Second, we adjusted our approaches; previously we emphasized integrated development and large-scale growth, and now we emphasize precise investment, product upgrades, operational value enhancement, and asset revitalization. We have clear determination and strong organizational execution capabilities in implementing our strategies.

Third, we have robust financial control capabilities. In over 40 years of operational practice, the company has always regarded prudent and steady financial management as the cornerstone of sustainable development. We adhere to bottom-line thinking, constructing a risk prevention system covering all dimensions of investment and financing, cash flow, and debt structure. You can always see that our “three red lines” remain within reasonable limits, which is fundamentally based on long-term high respect for risks and the market.

Relying on the credit advantages of state-owned enterprises and quality credit conditions, we have a diverse, smooth, low-cost financing system, including REITs platforms, with financing costs generally being industry-leading. This excellent financial control not only provides strong assurance against fluctuations in the industry cycle but also injects continuous internal motivation for high-quality development.

Fourth, after years of development, China Merchants Shekou is no longer merely a developer. We possess comprehensive capabilities covering the entire chain of development, operation, and services, constructing a comprehensive development model that encompasses development businesses, asset management, and property services throughout the entire lifecycle of the industry.

These three aspects are not isolated; they constitute a complete closed loop from spatial creation to content operation and then to life services. Development business is always our seed and source. China Merchants Shekou continuously creates high-quality spatial carriers at the source based on its leading good housing system. The series, Xi series, and Lan Yue series we launched in the past will continue to iterate our product line in future market developments.

In terms of asset management, we will deeply cultivate all fields of our concentrated commercial, industrial parks, and apartments, utilizing mature REITs platforms to achieve capitalization in the future, providing continuous funding and liquidity for this system.

Property services act as the connector and ballast in our ecological closed loop. The delivery of houses is not the end but the starting point. Property services provide long-term stable business and also establish a stable customer base for asset management, so China Merchants Shekou possesses comprehensive capabilities to provide high-quality products from space + content + service, which is not something that can be achieved overnight or replicated by a single track.

On-site question: Recently, core cities have successively optimized policies on purchase restrictions and loan limits. How does the company view the impact of these policies on boosting market confidence? What signals does this round of policies release? In light of the current market environment, what is the company’s strategy?

Nie Liming: This question is currently the most concerning issue in the market. Investors are asking, buyers and sellers are asking, and it is also the main factor considered by the company when formulating the “15th Five-Year” plan and the 2026 company plan.

As we all know, from 2021 to now, the industry has undergone more than four years of deep adjustment. However, recently the state and various localities have introduced many optimization policies on purchase restrictions and loan limits to stabilize the market and housing prices. This indeed brings more confidence to the market at present and plays a role in boosting confidence.

For example, looking at the new policy released in Shanghai on February 25 this year, it has stimulated a seasonal recovery in visitor and contract volumes in core areas after the Spring Festival. It should be said that the visitor and transaction volumes during the Spring Festival and March have been quite good, and as of yesterday, halfway through March, it can be said that sales are showing signs of recovery.

At the same time, we must also clearly see that the current market is still in a bottoming repair period, and we maintain a cautiously optimistic attitude. In the short term, it is about boosting confidence, while in the medium to long term, it is still a gradual process of bottoming and repairing. The bottom of the policy has already been clarified, but confirming the market bottom still requires time.

From a series of policies, we feel there are two very obvious signals. The first signal is the firm determination of the state to implement differentiated policies for different cities and regions to stabilize housing prices and stabilize the market. Moreover, we also see that this round of policies is not a one-size-fits-all relaxation, but rather differential adjustments based on specific situations in different cities and regions, emphasizing policy coordination and the importance of taking decisive action.

We must support reasonable housing demand while safeguarding the risk bottom line, allowing the market mechanism to function while preventing extreme fluctuations. This is one signal.

The second signal is the new model for promoting high-quality development in the real estate industry, starting from top-level design to institutional implementation. Firmly stabilizing the real estate market is stabilizing the overall economy, while preventing real estate risks is preventing systemic risks. This is not only support for reasonable residential consumption but also a systemic lift for the long-term healthy development of the industry.

Based on these judgments, how should China Merchants Shekou respond? As I briefly mentioned when introducing the company’s 2026 operational strategy, we will continue to focus on core areas, sales-driven investment, and selective investment.

Looking at several aspects, first, investment will focus on core areas, with sales-driven investment and selective investment, concentrating resources on the core segments of first-tier cities and strong second-tier cities.

As I just mentioned, in 2025, our investment in the “30 strong cities” reached 100%, and investment in the core “10 cities” accounted for nearly 90%, with first-tier cities accounting for 63%, and we will continue to strictly implement this in 2026.

Internally, we have a “six good” investment system, which means we need good cities, good teams, good segments, good turnover, good products, and good operations, while controlling the bottom line on profitability.

At the same time, we have also taken revitalization measures for some existing projects, using multiple methods to promote revitalization and find the optimal balance between scale and profit.

In terms of operations, we will continue to optimize our good housing and good services to achieve better returns for the company by creating better value for customers. At the same time, we will always place risk prevention in a prominent position.

For asset management, we will accelerate three upgrades: first, upgrade business operation models; second, focus on enhancing returns from held properties; third, fully leverage the advantages of multiple REITs platforms.

As Chairman Zhu mentioned, relying on the established REITs platforms, we can better realize the value of quality assets.

In property services, the first aspect is to increase market expansion efforts; the second aspect is to continue to improve service quality; and the third aspect is to implement refined management and strengthen operations.

Overall, under the context of weak recovery in the industry and a deeply differentiated new landscape, China Merchants Shekou is confident that with the synergy of its three major businesses, it will keenly seize policy opportunities, continuously consolidate and enhance its market position, and create sustainable value returns for shareholders.

On-site question: The supply-demand relationship in the industry has undergone significant changes in the past two years, but the performance in 2025 reflects past operational results. Do you believe that the profitability of the real estate development business has reached an inflection point in the current market situation? What guidance and orientation does China Merchants Shekou have for performance during the 15th Five-Year Plan period?

Nie Liming: This question is indeed of great concern to investors, and it is undeniable that the performance of China Merchants Shekou in 2025 has declined, which is a fact, and it reflects the current situation of the entire industry.

In terms of numbers, three main factors are at play: first, the real estate market has undergone a deep adjustment over the past four years, with profits declining, and this decline has been accompanied by a drop in both volume and price. In 2021, the national sales of new commercial housing reached 18 trillion yuan, while last year it was around 8 trillion yuan, a decrease of more than half, and the drop in volume was accompanied by a decrease in prices. In the past few years, the industry has been undergoing this deep adjustment, and everyone has been experiencing a test.

As a member of the industry, China Merchants Shekou has also experienced considerable fluctuations in operations, with revenue in 2025 amounting to 154.7 billion yuan, a year-on-year decrease of 24.2 billion yuan, gross profit decreasing by 4.8 billion yuan year-on-year, and investment income from joint ventures decreasing by 2.3 billion yuan. These changes in numbers reflect the universal impact on corporate profitability under the backdrop of industry decline.

The second factor is the impairment provision. China Merchants Shekou has consistently adhered to a prudent principle, with an impairment loss provision of 4.41 billion yuan in 2025.

The third factor is depreciation. China Merchants Shekou measures investment properties according to the cost method of accounting, recording depreciation of 3.7 billion yuan in 2025.

These accounting treatments have some impact on the company’s reported profits for the period; however, in the long run, they are also solidifying the company’s asset quality and preparing for future lightened conditions.

Currently, market confidence has somewhat recovered, and the industry is in a bottoming and repairing phase. We believe that as the bottom is formed, the returns of the real estate industry and the company will gradually stabilize, slowly emerging from the trend of rapid decline and entering a bottoming phase.

On one hand, we still have to bear the low returns or even losses from old projects, which have to be gradually digested and revitalized, impacting future profits.

On the other hand, there are also positive signals. Over the past two or three years, we have focused on core areas, selected good projects, and profits will gradually be recognized. As Chairman Zhu mentioned, China Merchants Shekou still has its advantages in the market, and as the industry situation gradually repairs, the pressure on the company’s future profits will also gradually ease.

For us, the goals during the 15th Five-Year Plan period are also very clear. On one hand, we will digest existing burdens and gradually repair the profit statement; on the other hand, we will promote the company’s transformation and upgrading according to our established strategy, enhancing our returns to achieve a sustainable level of investment returns for investors.

We are confident that with the recovery of the situation and the formation of a bottom, we will return to a stable growth track.

On-site question: How does the management view the land market in 2026? What expectations do you have for the land market? What are your thoughts on investment intensity, land acquisition to sales ratio, investment standards, and key investment areas?

Wu Bin: Looking back at the land market in 2025, its characteristics were high at the beginning and low at the end, showing significant cooling. In 300 cities nationwide, the area of residential land transactions was only 620 million square meters, down 14% year-on-year, and the land transfer fees were 2.3 trillion yuan, down 11%.

Especially since the fourth quarter, due to continuous sales volume contraction and reduced supply of quality plots in core cities, real estate companies have generally maintained a prudent investment attitude. In December last year, the average premium rate for land in 300 cities was 2%, falling for five consecutive months, setting a new low for the year.

Overall, the strategy of real estate companies is to focus on core cities, with the top 20 cities accounting for 52% of land transfer fees nationwide.

In 2026, we believe the land market is expected to continue operating at overall low levels, with some localized slight heat. However, good cities, good locations, and good houses are still worth investing in.

As with previous years’ experiences, various local governments have frequently supplied land after the Spring Festival, clearly showing that local governments have become sensitive to the needs of real estate companies. The overall characteristics of land supply in the first few months of the year are fourfold: first, local governments are willing to offer core location land for sale; second, they proactively lower the starting floor price; third, they reduce the plot ratio; and fourth, they decrease the scale of single plots.

These four characteristics are conducive to quick turnover for companies, and naturally, land premium rates may rise.

In summary, China Merchants Shekou’s investment principles in 2026 will continue to focus on key areas and cities, adhering to sales-driven investment and selective investment principles. We will maintain endogenous development, with each investment target meeting the “six good” investment standards to ensure effective resource allocation.

Our new land acquisitions will focus more on project turnover speed and revenue realization, while we will leverage our self-developed competitive investment benchmarking system to know ourselves and our competitors, adjusting our investment and development strategies in real time according to market and corporate dynamics.

When it comes to investment intensity, we also find it difficult to set a specific ratio. Overall, it will still be sales-driven investment, and depending on the market and cash collection situation, we will need to meet the “three red lines” while balancing scale and profit.

We remain confident in the industry and policies for 2026, and we will decisively invest in good properties, good products, and good operations.

On-site question: As a leading enterprise, have you noticed any significant changes and characteristics in the overall regulatory and financing environment recently? Under the new model requirements for real estate, what will be the main focus of our cash flow management and financing approaches in the later stages?

Yu Zhiliang: We say real estate is fish, and money is water. The government work report in March clearly pointed out, including the central bank’s latest statement, that the overall monetary policy will maintain a moderately loose basic tone.

The financing environment facing the real estate industry is still relatively loose overall, and compared to the past, this phase should be seen as relatively favorable.

In line with the new model, the company will focus on three aspects in financing in the future: first, reducing costs; second, matching; and third, controlling risks.

To reduce costs, we will manage the right side of the balance sheet well, continuing to make corresponding arrangements from both existing and new aspects. We will make relevant plans and target our cost reduction plans in a systematic manner. In addition, Chairman Zhu just mentioned that we will also elevate management in the financial field, integrating frontline and headquarters to leverage synergistic advantages, and we will strictly control new incremental costs, hoping to reduce the average cost from the currently 2.74%.

In terms of matching, under the new model, the targeted matching of assets and liabilities is vital for us moving forward. Financing is not just simple financing; it must be targeted at assets. Among our more than 830 billion yuan in assets, there are over 360 billion yuan in inventory related to development business.

There are also 140 billion yuan in held properties. The cash flow from held properties involves heavy initial investments, followed by gradual rental income, and we now have new tools similar to REITs. Therefore, we need to unlock our asset side, ensure structural matching of assets and liabilities, as well as structural matching of financing tools. The core is to effectively balance cash flow characteristics, asset duration, and asset currency characteristics.

In terms of risk control, regarding the “three red lines,” although the regulatory side no longer requires regular reporting, financial stability has always been our principle and commitment. No matter the circumstances, the company will regard financial stability as a basic guideline for operations.

In practice, it is crucial to seize cash collection from all business segments, as sales and collections are the source of cash flow. At the same time, we will manage from top to bottom with a focus on revenue-driven expenditures and strictly control cash flow risks.

On-site question: The sales scale of the company increased from the fifth place to the fourth place in 2025. Is this closely related to the focus on core city layouts? From the current perspective, how do you view sales in 2026? Does the company have a general plan for sales in 2026?

Lv Bin: Sales have always been a key operational indicator that the market generally focuses on to assess a company’s operational capability. As General Manager Nie explained during the company’s performance briefing for 2025, the total sales of 196 billion yuan in 2025 have placed the company in the top four.

Indeed, this achievement is hard-won. Our company has ten cities, including Shanghai, Shenzhen, Chengdu, Xi’an, Changsha, Nanjing, and Zhengzhou, that have entered the top three in total sales, and another 15 cities that ranked in the top five among the 30 key cities nationwide.

In this sales structure, last year, the top five cities all exceeded 10 billion yuan in sales, with Shanghai leading with over 50 billion yuan in total sales, regaining the number one market position in Shanghai.

Following closely, Beijing achieved 19.3 billion yuan in total sales, also ranking fifth in the Beijing market for the first time; Hangzhou ranked third with 16.9 billion yuan, marking the first time our company entered the top four in its development history. Shenzhen exceeded 15 billion yuan in sales, maintaining its third position, while Chengdu surpassed 10 billion yuan, ranking fifth.

As I mentioned, these top five cities accounted for over 60% of the company’s overall performance last year, which basically confirms the foresight and correctness of the company’s strategy to focus on core cities. We are indeed supporting the company’s stable performance during the industry’s winter through cities with solid fundamentals and strong market resilience.

Regarding sales in 2026, Chairman Zhu mentioned earlier, combining the spirit of this year’s Two Sessions, the state still needs to control increment, reduce inventory, and optimize supply in the real estate market.

In this context, we believe that the overall market this year has the hope of stabilizing from a downward trend to a stable change; however, city differentiation may further continue.

Overall, the policy side will continue to remain loose, with regions continuing to focus on inventory reduction and stabilizing expectations. The implementation of existing policies and the intensification of incremental policies will work in coordination. Structurally, the industry has truly entered an era dominated by existing stock, and across regions, the scale of second-hand housing transactions will continue to surpass that of new homes.

Looking at the cities where Shekou focuses its efforts, first is the Shanghai market. Last year, the main focus was on relaxing prices in the core urban areas, and basically, last year, the Shanghai market reflected a situation where high-quality, high-priced homes were showcased in the main urban areas. Therefore, many luxury projects entered the market last year, driving structural price increases. However, Shanghai also had an active second-hand housing market, which essentially led to price fluctuations in the overall Shanghai market.

We also observed this year that following the introduction of the “Seven Policies” in Shanghai, our visitor numbers increased by 12% compared to January, and transaction volumes increased by 48% compared to January. Of course, the 48% increase compared to January is also due to the last-minute rush in December, and January’s overall market was relatively cold.

Moving forward, we need to continue to monitor how sustainable this is, but overall, we believe that the new policies in Shanghai will help national asset allocation customers invest in Shanghai, representing an optimal window period. We overall judge that the Shanghai property market will be more stable and sustainable this year.

In terms of the Beijing market, based on last year’s performance, it had the lowest year-on-year decline among the four first-tier cities. The core reason is that the overall increase in supply in Beijing has driven transactions, including quality housing and core area supplies, leading to price increases.

We also predict that the overall Beijing market will continue to undergo differentiated recovery in 2026, accompanied by a gradual increase in supply in the core areas within the Fourth Ring, with high-quality projects continuously increasing and the high-end improvement market share further rising.

As for the Shenzhen market, in 2025, the luxury market in core areas was also very hot, and the land market was fiercely competitive, leading to signs of hot sales for some luxury properties, but the peripheral areas are still in a continuous horizontal market.

Thus, the new housing market in Shenzhen in 2026, like what has been mentioned for Shanghai and Beijing, will also see multiple high-quality, high-priced projects entering the market, and we anticipate some areas will experience structural price increases. However, with the reduction in land supply ratio in Shenzhen, we foresee that the overall Shenzhen market will exhibit characteristics of reduced volume while improving quality.

Regarding the general sales plan for 2026, we will align it with the company’s current investment intensity, aiming for total sales to maintain levels comparable to last year, but the sales strategy will continue to adhere to the principles of sales-driven production and investment, exercising caution and not blindly pursuing scale, but rather pursuing quality and cash-returning sales growth.

The 2026 sales plan will also be adjusted according to the current competitive landscape in various cities, salable values, and new supply conditions throughout the year to ensure that each batch of launches aligns with market sales rhythms. Specific sales data will be available in the monthly sales announcements released by the company.

Overall, in 2026, we will continue to deepen our focus on core cities, winning customers with good housing and good services, and utilizing precise strategies to navigate through cycles, outperforming our peers during periods of stabilizing recovery.

On-site question: In which track will our asset management likely focus in the future? What is the current level in terms of scale, income, and area?

Nie Liming: The company has formed a business structure for asset management that includes concentrated commercial properties, apartments, industrial parks, office buildings, and hotels, with concentrated commercial properties, apartments, and industrial parks being the main business segments.

The total management income from major held properties in 2025 was 7.63 billion yuan, with commercial contributing 26%, apartments 18%, and industrial parks 17%. In terms of area, concentrated commercial properties have an operating area of 3.4 million square meters, while 1.85 million square meters are under construction. The operating area of apartments is 1.75 million square meters, with 630,000 square meters under construction; the operating area of industrial parks is 3.12 million square meters, with 610,000 square meters under construction.

The asset management business is an important part of the company’s balanced approach, forming a second growth curve. The company has always adhered to the principle of steady operations, categorizing assets to retain the excellent and continuously enhancing control capabilities over key aspects of the asset management process to improve efficiency. We will also orderly promote the capitalization of quality assets and the disposal of some non-core assets to continuously optimize the asset structure.

Specifically, in terms of business strategy, concentrated commercial properties will create differentiated commercial samples around three major product lines, establishing market differences with unique garden cities. The Sea World will create unique experiences, while the characteristic street in the garden will lead urban trends, focusing commercial efforts on “four strengths” (content strength, scene strength, marketing strength, service strength) to enhance capabilities and accurately insight customer needs and consumption habits.

The strategy requires new projects to become market hits, while existing projects must continuously upgrade and rejuvenate, achieving improved asset efficiency through lean operations.

The long-term apartment business adheres to a steady operational strategy, investing based on demand and promoting capital expansion in an orderly manner. At the same time, we will pay attention to opportunities for acquiring rental land in core cities, leveraging light assets to connect various resources and expand scale, maintaining the goal of becoming a top three player in the overall industry through quality.

In terms of the industrial park business, we aim to be a leading integrated operator of industrial parks in China, safeguarding operational bottom lines, delivering effective industry services, and enhancing industry formats to create professional and market-oriented competitiveness. The industrial park will focus resources, refine core assets, and create benchmark projects like Shekou Network Valley, Nanhai Yiku, and low-altitude economic demonstration parks, as well as Cell and Gene Valley.

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