The top real estate company "took a big bath" in its performance, sacrificing profits to ensure a stable cash flow.

The real estate industry has been in a continuous downward trend, and even the top-tier players have faced immense pressure. After five consecutive years of decline from the peak of sales, even leading listed real estate developers have to choose between "protecting profits" and "protecting cash flow."

On the evening of April 17th, Poly Developments and Holdings Group Co., Ltd., which has ranked first in annual sales for three consecutive years, released its 2025 performance report:

• Annual sales reached 253 billion yuan, ranking first in the industry for three consecutive years;
• Operating income was 308.144 billion yuan, a slight year-on-year decrease of 1.13%;
• Net profit attributable to shareholders of the parent company plummeted by 79.31% to only 1.035 billion yuan;
• Net operating cash flow was 15.191 billion yuan, a year-on-year surge of 142.74%;
• Cash on hand was 122.9 billion yuan, with a cash-to-short-term debt ratio of 1.74 times;
• The comprehensive financing cost dropped to 2.72%, the lowest in history.

On one hand, the profits were "halved and halved again," while on the other hand, the cash flow was abundant and the financing cost hit a record low. Obviously, Poly took the initiative to "perform a major surgery" on itself, giving priority to protecting cash flow in its business strategy.

Data source: Poly Developments and Holdings Group Co., Ltd. 2025 Annual Report

01 Significant Decline in Net Profit

Poly's net profit attributable to shareholders of the parent company in 2024 was 5.001 billion yuan, but suddenly dropped to 1.035 billion yuan in 2025. The non-recurring net profit attributable to shareholders of the parent company even decreased by 84.52% year-on-year to 659 million yuan, becoming the most notable focus in the annual report.

Poly explained that during the reporting period, affected by industry and market fluctuations, the gross profit margin of the company's real estate project transfers decreased year-on-year. The company's revenue in the real estate sales industry decreased by 1.19% year-on-year, and the gross profit margin also decreased by 0.99 percentage points.

Although Poly's gross profit margin is lower than that of its peers such as China Overseas Land & Investment and China Merchants Shekou Industrial Zone Holdings Co., Ltd., it is still within a reasonable range against the backdrop of a significant decline in corporate profits across the industry.

The huge gap among different regions in China is also reflected in Poly's annual report. Among Poly's five major regions, only East China saw positive revenue growth, while North China had the largest decline, reaching 33.84%. In terms of gross profit margin, the East China, North China, and Central China regions increased compared with the previous year, while the South China and West China regions decreased by 4.66 and 5.63 percentage points respectively.

In addition, the deterioration of investment income from associated and jointly - controlled enterprises is also one of the main reasons for the decline in Poly's net profit margin. Affected by the under - performance of some cooperative projects, Poly's investment income from associated and jointly - controlled enterprises decreased from 1.22 billion yuan in 2024 to - 140 million yuan in 2025, a reduction of 1.36 billion yuan, further eroding the net profit attributable to shareholders of the parent company. At the same time, the proportion of minority shareholders' profit and loss increased significantly, rising from 48.7% in 2024 to 84.5% in 2025, further reducing the net profit attributable to shareholders of the parent company.

Data source: Poly Developments and Holdings Group Co., Ltd. 2025 Annual Report

In the past two years, listed real estate developers have significantly increased provisions for asset impairment, actively reduced net profit, cleared risks in advance, and reduced dividends, which has become a common way to cope with market pressure. This time, Poly also carried out the same "technical operation."

In 2025, Poly made provisions for asset impairment of 6.958 billion yuan at one go, directly swallowing 4.447 billion yuan of the net profit attributable to shareholders of the parent company, becoming the biggest factor dragging down profits. In terms of the composition of impairment, inventory impairment provisions accounted for the highest proportion, reaching 5.442 billion yuan, accounting for 78.2% of the total impairment amount, mainly involving projects with difficult sales and declining expected returns such as Foshan Poly CCCC Grand Metropolis, Wenzhou Binjiang Cloud Valley, and Changzhou Poly Tianhui; long - term equity investment impairment provisions were 1.015 billion yuan, accounting for 14.6%, mainly targeting cooperative enterprises such as Shanghai Huayuan Industry and Tianjin Ruifeng Real Estate; other accounts receivable impairment provisions were 501 million yuan, accounting for 7.2%, mainly due to impairment of accounts receivable from affiliated companies and partners.

Regarding this significant provision for impairment, BDO China Shu Lun Pan Certified Public Accountants issued a standard unqualified audit report for the company. Industry insiders believe that this is Poly's initiative to clean up historical burdens and prepare for a lighter future.

02 High Inventory Pressure Remains

Based on sales volume, Poly has ranked first in the industry for three consecutive years. In 2025, Poly achieved a contracted sales amount of 253 billion yuan, a year - on - year decrease of 21.67%, a larger decline than the industry average, and the decline has exceeded 20% for two consecutive years. This means that Poly has felt greater pressure from the decline in sales than its peers.

In order to slow down the decline in performance, Poly has been continuously increasing the proportion of land reserves in core cities. In 2025, the total land price for Poly's annual land acquisition was 79.1 billion yuan, of which the total land price for land acquisition in first - and second - tier cities accounted for more than 90%, and the proportion of land acquisition in core cities was 99%, with Beijing, Shanghai, and Guangzhou accounting for about 48%.

Betting on first - and second - tier cities is to offset the "old inventory" left over from the peak of the real estate market in third - and fourth - tier cities, which is difficult to digest.

From the perspective of inventory structure, Poly's unsold area is mainly concentrated in core cities, and the inventory turnover cycle is reasonable. However, Poly's inventory still faces structural pressure: First, the scale of completed properties has continued to grow, increasing by 7.2% from the beginning of the period to 213.77 billion yuan, and the proportion in the total inventory has increased to 28.1%, increasing the pressure on inventory turnover; Second, the proportion of existing projects is relatively high, especially the existing unsold projects acquired before 2022, and some high - priced land projects are difficult to sell; Third, there is still a large amount of inventory in third - and fourth - tier cities, and the pressure on inventory turnover is prominent.

In order to speed up inventory turnover, Poly has taken a series of measures:

• "Revitalize old projects": Optimize the regulations and upgrade the products of existing projects to give old projects a new look;
• "Produce based on sales": The newly started construction area decreased by 40% year - on - year to reduce new inventory;
• Flexible pricing: Promote sales through price cuts and group - buying discounts, sacrificing gross profit margin for sales speed.

What's the effect? In 2025, the existing projects of Poly contributed a contracted sales amount of 95.3 billion yuan, accounting for about 38% of the total contracted sales amount. The inventory turnover has achieved initial results, but there is still a long way to go.

After Poly released its financial report, Kaiyuan Securities analyzed and predicted that Poly's short - term profits will still be under pressure in 2026, the gross profit margin will bottom out in 2026 and recover in 2027, but the PE ratio will continue to decline in the next three years.

In the reshuffle period of the industry, only the fittest will survive. Poly Developments and Holdings Group Co., Ltd. is striving to maintain its cash flow with its advantages in bond issuance, financing cost, and sales operation, and win by "stability."