Revenue declines and profit pressures: How can the "Old Eight-Stock" Yu Yuan Group break out of the performance "quagmire"?

Sourced from: China Business News

Zhongjing Reporter Fang Chao, Shi Yingjing, Shanghai Report

With revenue declining and profit under pressure, Yuyuan Co., Ltd. (600655.SH)—one of the “old eight listed shares”—has delivered the first-ever loss report in nearly 34 years since going public.

Yuyuan Co., Ltd.‘s recently released 2025 annual report shows that during the reporting period, the company achieved operating revenue of 36.37B yuan, down 22.49% year over year; the net profit attributable to shareholders was a loss of 4.9B yuan, down sharply by 4,009.26% year over year.

Regarding the reasons for the massive loss in 2025, Yuyuan Co., Ltd. explained that it was mainly due to a year-over-year decrease in investment gains arising from disposing of non-core asset projects during the reporting period, as well as a year-over-year increase in asset impairment provisions for some real estate projects.

In the future, how will Yuyuan Co., Ltd. reverse the situation of revenue declines in sectors such as industrial operations and comprehensive commercial operations? How will it escape the “quagmire” of a severe drop in net profit? In response, on April 1, relevant staff from Yuyuan Co., Ltd.‘s securities department told a reporter from China Business News: “First, it’s necessary to ‘take off the burden,’ then speed up destocking and achieve capital回流, and only then consider the question of ‘what to do next.’”

A near-49-billion-yuan loss in 2025

Yuyuan Co., Ltd. is known as the “No. 1 Chinese commercial listed company.” Its predecessor was the Yuyuan Mall. It is one of the “old eight listed shares.” It was approved in 1987 to become the first joint-stock enterprise in Shanghai’s commercial system. On September 2, 1992, it absorbed and merged 14 units and achieved A-share listing. In 2002, Fosun Group acquired a 20% stake in Yuyuan Co., Ltd., becoming the largest shareholder. In 2018, after completing a major asset restructuring, Yuyuan Co., Ltd. became the flagship platform for “Happy Industry” under Fosun Group.

“After completing mixed-ownership reform, Yuyuan Co., Ltd. gained new momentum for development again: first, the mechanisms became more flexible. After Fosun Group became the largest shareholder of Yuyuan Co., Ltd., it introduced flexible mechanisms and advanced concepts from the private economy, quickly helped Yuyuan Co., Ltd. improve its modern corporate governance framework, and effectively activated the motivation behind its operation and management,” a relevant executive of Yuyuan Co., Ltd. said previously.

However, in the past year of 2025, Yuyuan Co., Ltd. experienced its first loss in nearly 34 years since listing.

Financial data shows that in 2025, Yuyuan Co., Ltd. achieved operating revenue of 4.9B yuan, down 22.49% year over year; net profit attributable to shareholders was -36.37B yuan, down sharply by 4,009.26%; and profit after non-recurring items was -4.1B yuan, down 94.38% year over year.

Regarding the reasons for the near-49-billion-yuan loss, a relevant executive of Yuyuan Co., Ltd. said previously that the company conducted year-end impairment tests on relevant assets in accordance with accounting standards. After assessment and analysis, it recognized asset impairment provisions for some real estate projects, goodwill, and other items.

The company dynamically optimized its sales strategy, accelerated inventory reduction and capital回流, resulting in a decline in the profitability of the company’s compound-function real estate-related business.” The executive further stated, “Affected by pressure from the macroeconomy, adjustments in industry policies, and severe volatility in gold prices, structural changes in the consumer sector have created short-term pressure for the company’s related industrial business segments.”

In fact, as early as 2023, Yuyuan Co., Ltd.‘s net profit attributable to shareholders had already entered a downward channel.

Wind data shows that in 2023, Yuyuan Co., Ltd. achieved revenue of 4.9B yuan, up 15.83% year over year; but net profit attributable to shareholders was 58.15B yuan, down 45% year over year. Profit after non-recurring items was -4.51 billion yuan, down sharply by 378.96% year over year. In 2024, Yuyuan Co., Ltd.‘s profit after non-recurring items was -2.02B yuan, again down sharply by 367.43% year over year.

“During the reporting period (2024), due to the impact of the macroeconomy and structural adjustments in the consumer industry, domestic consumer growth proved weak. Coupled with heightened volatility in international gold prices, this has affected relevant consumer-related enterprises.” The executive of Yuyuan Co., Ltd. told reporters previously.

It is worth noting that facing the downturn in 2024 performance, Yuyuan Co., Ltd. set performance targets for 2025 in its 2024 annual report: “Based on preliminary budgeting, in 2025 the company plans to achieve operating revenue of 50.5 billion yuan.”

Judging from the final performance results, Yuyuan Co., Ltd. did not achieve the above plan. Instead, it fell into the “quagmire” of performance losses.

What about the outlook for further expansion overseas?

Yuyuan Co., Ltd.‘s 2025 annual report shows that most of its businesses, including jewelry and fashion, catering, cosmetics, watches, and real estate, are mostly in a downward channel.

By industry, Yuyuan Co., Ltd.‘s principal businesses include industrial operations, comprehensive commercial operations and property comprehensive services, as well as property development and sales across several business segments. In 2025, all three of Yuyuan Co., Ltd.‘s major business segments saw revenue decline across the board, with decline rates of 23.41%, 20.79%, and 19.82%, respectively.

Among them, the industrial operations segment—including businesses such as jewelry and fashion and catering management and services—is Yuyuan Co., Ltd.‘s core segment. However, among the eight sub-segments listed in Yuyuan Co., Ltd.‘s 2025 annual report, only “pharmaceutical health and other businesses” recorded a year-over-year revenue increase of 7.53%, while the revenues of the other businesses all showed a sluggish downward trend. Of these, the jewelry and fashion business achieved operating revenue of about 22.73 billion yuan in 2025, down 24.2% year over year.

“In 2025, gold prices fluctuated sharply, which had a big impact on our brands, including Laomiao Gold. Consumers’ willingness to purchase isn’t that strong,” a relevant executive from Yuyuan Co., Ltd.‘s securities department told reporters.

As its core business, the jewelry and fashion segment of Yuyuan Co., Ltd. has two chain brands, “Laomiao Gold” and “Ya Yi Jewelry Store,” but the number of stores that closed increased significantly. Yuyuan Co., Ltd.‘s 2025 annual report shows that as of the end of 2025, the chain outlets of the “Laomiao Gold” and “Ya Yi Jewelry Store” brands totaled 3,952, a decrease of 663 compared with 2024.

Similar to this, Yuyuan Co., Ltd.‘s property development and sales business has also faced pressure. Related data shows that in 2025, revenue from Yuyuan Co., Ltd.‘s property development and sales business was 8.05 billion yuan, down 19.8% year over year.

In response, Yuyuan Co., Ltd. said that due to the overall contraction in market transaction volumes, continuous price declines, and increased destocking pressure, the company made asset impairment provisions for some real estate projects that showed impairment indicators. This further intensified the pressure on the segment’s performance. This segment became one of the primary areas affecting the company’s loss during the reporting period.

According to information, although Yuyuan Co., Ltd. is under pressure from revenue declines, it is still exploring new opportunities in the real estate segment. A relevant executive of Yuyuan Co., Ltd. said previously that the real estate business will use Fosun’s “Flywheel Model” to tap into the urban renewal market, and offset cycle fluctuations of a single industry through optimization of the track structure.

In addition, Yuyuan Co., Ltd. is also further increasing its efforts to expand overseas. At a recent earnings briefing, a relevant executive of Yuyuan Co., Ltd. said that in 2025, the company achieved an important “0-to-1 breakthrough” in global development, with overseas revenue reaching 940 million yuan, achieving significant growth, and overseas business becoming an important engine for future growth.”

However, Wind data shows that in 2025, by regional breakdown, Yuyuan Co., Ltd.‘s overseas revenue decreased 25.89% year over year. In 2024, its overseas revenue was 451M yuan, down 17.36% year over year.

“Against the backdrop of increasingly complex geopolitical conditions and rising uncertainty in global trade, the company has adopted a series of strategies to balance risk control and brand expansion overseas.” A relevant executive of Yuyuan Co., Ltd. said that the company leads with the cultural ecology of the Yuyuan Lantern Fair to drive brand enhancement, while also increasing the profitability space of overseas businesses.

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