Meikailong: "The No. 1 Stock in Home Furnishing Retail" Faces a Sudden Collapse! Massive Loss of 24 Billion Yuan, Selling Appliances, Cars, and Running Restaurants to Survive

Source: International Investment Bank Research Report

The real estate market, which still has not shown any clear improvement, is having a negative impact on downstream industries, and it appears to show signs of accelerating this year. The home furnishings industry directly tied to it may be affected the most.

On March 30, a major bombshell was revealed in the 2025 annual report of Meike Long (Red Star Macalline) (601828, SH; 01528, HK), a well-known home furnishings décor and furniture retail mall giant listed on both the A-share and H-share markets. Parent-attributable net profit suffered a huge loss of RMB 24 billion, not only marking the third consecutive year of losses, but also with the loss amount surging nearly six times compared with 2024!

However, perhaps because there were expectations earlier on, the share price had already fallen in advance. On March 31, the share prices of Meike Long on both the A-share and H-share markets were relatively steady: the A-share edged up slightly by 0.41%, with a year-to-date decline of around 10%; the H-share fell by 1.56%, and was even up more than 3% year-to-date.

In 2015, Meike Long was listed on the Main Board of the Hong Kong Stock Exchange as “China’s No. 1 home furnishings retail stock.” In 2018, it was listed on the Shanghai Stock Exchange Main Board, becoming the first A+H share in the home furnishings industry.

Business performance “collapses”

Meike Long’s 2025 annual report shows that revenue was RMB 6.5819 billion, down 15.8% from RMB 7.8213 billion in 2024.

The year-over-year decline in gross margin is relatively close at 15.2%, falling from RMB 4.987 billion in 2024 to RMB 4.2297 billion in 2025.

But things look a bit bleak in terms of parent-attributable net profit. The 2025 annual report indicates that the total annual loss attributable to owners of Meike Long was RMB 24.0937 billion, up 590% from the RMB 3.492 billion annual loss attributable to owners in 2024; the company’s core net loss attributable to owners was RMB 5.4922 billion, up 313.8% from RMB 1.3274 billion core net loss in 2024.

In terms of earnings per share, the loss per share in 2024 was RMB 0.80. In 2025, it jumped directly to a loss per share of RMB 5.53.

Combining the above three key financial indicators from previous periods, no matter how you look at it, 2025 is definitely a year of major “collapse” in Meike Long’s performance.

Data from Oriental Fortune’s Tong (通) statistics show that over the past nine years of financials, Meike Long’s performance peak in recent years occurred in 2019, when total revenue reached RMB 16.47 billion, followed by declines year after year.

The trends of gross profit margin and parent-attributable net profit are also very similar: both peaked in 2019, and then they “slid down on a slippery slide.”

However, the more important turning point in parent-attributable net profit occurred in 2023. That year, Meike Long first posted a loss, with a loss amount of RMB 2.4 billion. In 2024, it was still a loss, but compared with 2023, the increase in amount was not too large. By 2025, the cliff-like plunge into three-digit territory is simply hard to look at.

Main business contraction; rents drop significantly

For the decline in revenue and profit in 2025, Meike Long did not avoid the direct, massive impact caused by the industry contraction.

In its annual report, the company stated that, due to the sustained impact of the downturn in the real estate industry and the ongoing demand decline in the home furnishings and building materials industry, the demand in the home furnishing retail market weakened. The company continuously stabilized tenants by reducing or waiving rents and management fees, and at the same time attracted high-quality business formats and brands to enter with preferential commercial terms. In the early stage of expansion, the company provided rent and management fee incentives, so rental and management income was affected relatively significantly, and the rent level fell markedly compared with previous years.

It is worth noting that in 2025, Meike Long’s main business was carried out through three methods: self-operated malls (74, accounting for 74.2% of revenue), malls under entrusted management (218, accounting for 18.1% of revenue), and partner-operated malls (7).

However, even among these, the core businesses (self-operated malls and entrusted management malls) also shrank in terms of numbers.

The annual report shows that the total number of malls declined by 42 year over year: self-operated malls decreased by 3, and entrusted management malls decreased by 39. The total operating floor area of malls nationwide decreased by nearly 2 million square meters, covering 21 fewer cities.

Looking at the revenue side reflected in the company’s annual report, rental and related income from self-operated malls declined by 8.9%. The company said this was mainly due to fluctuations in the development of relevant industries, which impacted both the mall operations and the operations of tenants, leading to a period of decline in mall occupancy rates and rents.

Related income from entrusted management malls fell even more significantly, with a drop of 18.4%. The company said this was mainly due to the reduction in the number of entrusted management malls.

Entrusted management mall gross margin is the only highlight

In addition, it can be noted that although the related income from entrusted management malls declined significantly, the gross margin is more advantageous than that of self-operated malls, and it has also become one of the few highlights in the company’s annual report.

According to the data provided by the company, in 2025 the overall gross margin was 64.3%, up 0.5 percentage points from 63.8% in 2024. This was mainly due to the year-over-year increase in the gross margin of entrusted management malls.

Specifically, the gross margin of self-operated malls fell slightly year over year, while the gross margin of entrusted management malls rose by nearly two percentage points, pulling the overall gross margin up slightly.

It is worth noting that the gross margin of architectural decoration services dropped sharply, from 14.8% in 2024 directly to -43.6% in 2025. That means that for each architectural decoration service provided in that category, it results in a direct loss.

The revenue of architectural decoration services mainly comes from providing construction, design, and decoration services. In the company’s 2025 annual report, this category accounts for only 1.6% of total revenue. However, based on the negative gross margin, it can be roughly inferred that this service is basically a loss-making operation aimed at generating buzz for the malls rather than making money. But overall, it seems the effect is not that great.

Striving to build multi-format operations

Against the backdrop of the industry-wide downturn, Meike Long is also actively trying to respond, seeking to reposition itself and build a “second growth curve.”

In its annual report, the company said it upgraded its strategic positioning to “a new commercial operator for home living and a home furnishing industry ecosystem service provider,” focusing on upgrading its home furnishings core business while also expanding home furnishings industry ecosystem services to achieve a dual enhancement of scale and value.

The specific measures are to expand the scope of operations in the core business, introduce more business formats, and diversify revenue streams. There are mainly the following channels:

First, the high-end appliances (MEGA-E) strategy: it opens an appliance gallery within malls to sell appliances; second, it opens offline channels for new retail furniture, connecting with online brands to become the secondary category with the fastest growth rate; third, the M+ high-end home decoration design center to achieve “design-driven customer acquisition + mall conversion”; fourth, it involves the auto industry format, with the operating area doubling; fifth, it sets up dining supporting services to enhance the mall’s life-oriented functions; sixth, it seizes a new track for health and wellness home furnishings, building an “Aging-Friendly Life Aesthetics Museum” in Shanghai.

As can be seen, to reverse its operating decline, Meike Long is truly working hard. Hopefully it can produce good results in 2026.

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