Huge loss of 13.2 billion, public debt wiped out! How much "reserves" does Gemdale still have?

Recently, Gemdale Group released its 2025 annual report.

During the reporting period, the company achieved operating revenue of RMB 35.86B, down 52.41% year over year; net profit attributable to shareholders was -RMB 13.28B, setting the worst loss record in its history.

Despite the heavy pressure on performance, Gemdale has continued to repay its debts on schedule. On April 7, it completed the redemption of principal and interest for two corporate bonds, “21 Gemdale 03” and “21 Gemdale 04,” with a total redemption amount of approximately RMB 522 million. After the redemption of the above two bonds, Gemdale’s publicly traded market debt was fully cleared.

As one of the few real estate developers in the industry that has maintained “zero default” on its debts, Gemdale’s efforts to uphold market credit under the strain of massive losses are truly remarkable. Then, what are its real underlying “assets” and its long-term ability to withstand risks? In the future, what will the company rely on to get out of its operating predicament and achieve sustainable recovery?

Cumulative losses of nearly RMB 20 billion over two years

Through the financial statements, it is not hard to see that both revenue and net profit have declined, almost throughout the period of adjustments to Gemdale’s new management team.

Since Xu Jiajun took over as chairman in March 2024, Gemdale has seen revenue decline for two consecutive years and recorded losses.

Due to industry adjustments, the company’s sales scale has fallen, and the transferable area has decreased. From 2024 to 2025, operating revenue fell by 23.22% and 52.41% to RMB 75.34B and RMB 35.86B, respectively.

In 2024, Gemdale suffered its first-ever loss of RMB 6.12B; in 2025, its losses expanded to RMB 13.28B, with year-over-year loss growth of 117.19%. Over the two years combined, the total losses exceeded RMB 19.3 billion.

However, Gemdale Group also stated in its financial report that the huge losses are not simply due to deterioration in operations, but rather a centralized financial deleveraging during the industry downturn cycle. “At the same time that the gross profit margin from settlement in real estate development fell to 7.93%, the company, based on the principle of conservatism, accrued inventory write-down provisions and credit loss provisions.”

The financial statements show that in 2025, Gemdale’s total credit impairment losses and asset impairment losses amounted to RMB 9.05B.

Industry insiders say that this approach of making one-time risk provisions and repairing the balance sheet is a common “painful adjustment” style clearing in the industry, and also creates room for the company to move forward with a lighter load.

Traditional development running out of steam—breakthrough through build-for-others

Gemdale’s current performance pressure is mainly concentrated in its core business of real estate development. In 2025, Gemdale achieved signed amounts of RMB 30.02 billion, down 56.18% year over year, and has fallen out of the top 20 companies in the industry.

In 2025, full-year operating revenue from real estate development was RMB 23.89 billion, down 60.20% year over year; gross margin fell by 6.18 percentage points from the prior year to 7.93%. Net cash flow from operating activities was RMB 16.0775 million, down 99.88% year over year.

Against the backdrop of ongoing pressure on the traditional development business, Gemdale’s strategy at the investment end has also shown a prudent contraction. Only at the beginning of 2025 did it acquire two land parcels in Shanghai and Hangzhou, with a total investment of approximately RMB 1B.

Gemdale is also continuously expanding its light-asset layout. In 2025, in the build-for-others business, it added a total of 15.31 million square meters of signed service area, up 59% year over year. By the end of 2025, the build-for-others business had been deployed in more than 70 cities nationwide, with cumulative signed and managed area of 53.62 million square meters.

As a real estate developer that entered the build-for-others track relatively early in China, Gemdale started in this field in 2006, and now has formed a fairly mature model for management output and brand influence.

That said, competition in the build-for-others track is growing increasingly intense. Leading real estate developers, local state-owned enterprises, and specialized build-for-others platforms have all entered the market. Gemdale still needs to continuously build core competitiveness in terms of project acquisition, product strength, operating efficiency, and risk control.

Worth noting is that in 2025, Gemdale’s property management services, businesses related to holding-type property operations, and other segments remained generally stable, becoming an important buffer to performance.

As of the end of 2025, Gemdale Smart Service managed area of approximately 268 million square meters. During the period, property management realized operating revenue of RMB 8.06 billion, up 3.23% year over year.

Operating revenue from property leasing and other businesses was RMB 3.61B, down 15.69% year over year, but gross margin increased by 3.77 percentage points year over year to 58.09%, and profitability quality improved.

Public bond “clearing” still faces short-term pressure

Facing a continued weakening operating fundamentals, Gemdale still places maintaining credit in the public market at the top priority and has taken a key step through rigid redemption.

On April 7, Gemdale Group completed the redemption of principal and interest for two corporate bonds, “21 Gemdale 03” and “21 Gemdale 04,” with a total redemption amount of approximately RMB 522 million.

In recent years, Gemdale has maintained timely and full redemptions of publicly traded bonds upon maturity. Its interest-bearing liabilities have been reduced in an orderly manner, and the liability structure has been further optimized.

As of the end of 2025, the company’s balance of interest-bearing liabilities was approximately RMB 67 billion. Of this, 98.6% was bank borrowings. The weighted average cost of debt financing was 3.92%, down 13 basis points compared with the end of 2024.

Currently, the company’s debt ratio indicators remain stable. The asset-liability ratio is 64.25%; after deducting contract liabilities, the asset-liability ratio is 61.56%; and the net debt ratio is 65.21%.

While actively reducing liabilities, Gemdale is also facing significant liquidity challenges. Due to weak sales cash collection, combined with the impact of concentrated debt repayment expenditures, the company’s cash pressure is currently increasing.

According to data from Lianhe Stock/ Tonghuashun, as of the end of 2025, Gemdale’s short-term borrowings were RMB 415 million; non-current liabilities due within one year were RMB 30.65B; monetary funds were RMB 12.67B; the short-term capital gap was approximately RMB 18.39 billion. The company’s ability to cover short-term debt is clearly insufficient.

Overall, although Gemdale has held the safety baseline and also created room for future development through financial deleveraging, tight cash flow and insufficient coverage of short-term debt remain the real pressures in front of it.

Its long-term ability to withstand risks still needs to be continuously tested and verified. Whether it can truly get out of its operating predicament depends not only on the pace of overall industry recovery, but also, more importantly, on a substantive improvement in its sales cash collection. It also relies on sustained efforts in light-asset businesses such as build-for-others.

By Huang Ning