Kaisa Group expects profits of no less than 50 billion yuan in 2025! After accelerated debt restructuring, these distressed real estate companies are focusing on "turning losses into profits."

On March 25, the Hong Kong-listed real estate company Kaisa Group (HK01638, stock price HKD 0.098, market capitalization HKD 942 million) experienced a long-awaited strong performance, with the stock price rising by more than 60% at one point during the session, and closing with an increase of 27.27%.

On the evening of March 24, Kaisa announced that the company expects to record a profit attributable to equity holders of no less than 50 billion yuan in 2025, achieving a turnaround from a loss in the same period in 2024 (which was a loss of 28.5 billion yuan).

It is noteworthy that recently, CIFI Holdings, China Orient Group, and Country Garden have successively released their profit forecasts for 2025, announcing a turnaround through debt restructuring. According to a整理 by the reporter from the Daily Economic News (hereinafter referred to as “the reporter”), the total profit range disclosed by Kaisa, CIFI Holdings, China Orient Group, and Country Garden has reached between 74 billion and 78.7 billion yuan.

Four distressed real estate companies focus on “turning losses into profits”

Kaisa’s profit forecast of no less than 50 billion yuan has opened the curtain on the “restructuring turnaround wave” of distressed real estate companies.

The reporter’s整理 of the data from the four companies that have disclosed their turnaround forecasts reveals that this performance turnaround among distressed real estate companies has exhibited distinct characteristics of “large scale, concentrated timing, and consistent paths.” The restructuring of these four companies has brought about a total profit of over 74 billion yuan, making it the biggest highlight of the 2025 real estate industry annual reports.

The reporter reviewed Kaisa’s announcement and learned that the scale of Kaisa’s offshore debt restructuring is approximately 13.372 billion USD, achieving a debt reduction of about 8.6 billion USD through the issuance of new notes and mandatory convertible bonds, with an average extension of the debt term by 5 years, and no rigid repayment pressure before the end of 2027. The interest rate on the new notes was reduced to 5% to 6.25%. This restructuring has generated significant non-cash gains, supporting Kaisa’s profit scale of no less than 50 billion yuan in 2025.

In fact, Kaisa is not the first real estate company this year to achieve a turnaround through debt restructuring. The reporter noted that in the profit forecasts released by real estate companies for 2025, CIFI Holdings, China Orient Group, and Country Garden have also joined the turnaround ranks.

On the evening of March 23, Country Garden released its profit forecast, expecting a net profit of 1 billion to 2.2 billion yuan for 2025, primarily due to non-cash gains from debt restructuring; on the evening of March 20, China Orient Group announced its 2025 annual performance forecast, expecting a profit attributable to equity holders of 6 billion to 7.5 billion yuan, mainly from non-cash gains from domestic and foreign debt restructuring; on the evening of March 16, CIFI Holdings announced that it expects a net profit attributable to shareholders of 17 billion to 19 billion yuan for 2025, with the primary reason for the turnaround being the completion of the offshore debt restructuring at the end of 2024, bringing about a one-time gain of approximately 40 billion yuan.

It is worth mentioning that the debt restructurings of these four companies are mostly concentrated in the second half of 2025.整理 of the debt situation of these distressed companies for 2025 shows that Kaisa’s offshore debt restructuring agreement was approved in September 2025; CIFI and Country Garden’s restructurings will take effect from December 29 to 30, 2025; China Orient Group’s offshore debt restructuring will take effect on March 27, 2025, while the key plan for domestic debt restructuring was approved on November 26, 2025.

Industry insiders: Currently, it is only “book profit”

Some industry insiders have pointed out that this kind of “turnaround” is more of an improvement at the financial statement level and does not mean that the fundamental operations of the companies have substantively improved.

“This turnaround through debt restructuring mainly reflects financial adjustments rather than operational improvements. This kind of turnaround in financial statements can alleviate delisting pressure and boost market sentiment in the short term, but after excluding restructuring gains, the main businesses of the four companies are still in the red, indicating that their core real estate development, sales, and cash flow generation capabilities have not yet recovered,” analyzed Fu Yifu, a special researcher at Suzhou Bank, on March 25.

Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, also spoke to the reporter about the “accounting logic” behind this “collective turnaround”: “According to accounting standards, when a real estate company reaches a debt restructuring agreement with creditors, the difference between the reduced principal, interest, or the present value of deferred payments and the book value must be recognized as profit or loss in the current period. Taking Kaisa as an example, its 50 billion yuan profit comes almost entirely from debt reduction, rather than from sales returns or asset appreciation.”

According to the “Enterprise Accounting Standard No. 12 - Debt Restructuring,” debt restructuring refers to a transaction where, without changing the counterparty, a new agreement is reached regarding the repayment timing, amount, or method of the debt with creditors and debtors, either through mutual agreement or court ruling. When restructuring the debt by modifying other terms, the debtor should recognize new financial liabilities according to the modified terms, and the difference between the book value of the restructured debt and the fair value of the new liabilities is accounted for as investment income/other income, reflected in the net profit for the current period.

Bai Wenxi pointed out that this “paper wealth” has obvious non-cash characteristics and is unsustainable. It is a one-time gain that will not exist in the following year. If too much attention is paid to this “collective turnaround,” it may mislead the market into believing that the industry has fully recovered. In reality, the core operational indicators of these companies, such as gross margin, cash flow, and land reserve quality, still need to be evaluated separately.

“Relying solely on financial restructuring cannot solve the problem; companies need to achieve substantial improvements in operations, management, and strategy,” said Fu Yifu, emphasizing that real estate companies must achieve a recovery in sales to realize positive cash flow cycles, dispose of inefficient assets to optimize their structure, establish a healthy financial system that controls debt scale, and complete business transformations that adapt to new development models.

Bai Wenxi stated that currently, distressed real estate companies generally face a trust crisis among homebuyers, with project liquidation speeds lagging behind healthy companies. Only when financing channels are substantively restored, and gross margins rise above 15% with positive return on equity (ROE) can it be considered that they have escaped operational difficulties. This usually requires a recovery period of 2 to 3 years.