For the first time, Greentown's legacy inventory has dropped below 50%.

On August 25, Greentown China released its mid-term performance report for 2026. During the reporting period, Greentown recorded an operating revenue of 39.481 billion yuan, down 26% year on year; gross profit reached 4.388 billion yuan, down 38.7% year on year; net profit attributable to shareholders was 81.715 million yuan, plummeting 60.77% year on year. As early as August 10, the company had issued a profit warning to notify the market of the sharp decline in profit in advance.

In the first half of the year, Greentown's overall gross profit margin dropped to 11.1%, 2.3 percentage points lower than the same period in 2025, among which the gross profit margin of core property sales was only 9.7%.

At the performance meeting, Jiang Feng, Executive Director and Executive President of Greentown, stated that the core reason for the profit decline is the impact of continued industry adjustment, lower scale of property sales carried over for settlement, pressure on gross profit margin and asset impairment.

Performance Presentation

01 Pressure on the Income Statement

"In terms of profitability, affected by the continuous adjustment of the real estate market, the 2026 performance is still under pressure." Jiang Feng predicts that the gross profit margin for the whole year of 2026 will drop by 1-2 percentage points compared with last year. The total settlement volume for this whole year will also decline year on year. "Most of the projects whose revenue is carried over for settlement in 2026 were acquired in 2024. Projects acquired in 2024 deliver the best profit realization, but the total available land resources in 2024 were not abundant. In addition, land acquisition in 2024 was mainly concentrated in the second half of the year, which led to some projects needing to be carried over for settlement in 2027. Therefore, the carried-over settlement area in 2026 will decrease to a certain extent compared with 2025."

Another major reason for the continuous erosion of profits is the "old inventory". During the reporting period, Greentown accrued a net loss of 1.908 billion yuan from asset impairment and fair value changes, including 1.19 billion yuan of inventory impairment, 540 million yuan of credit impairment, and 180 million yuan of commercial impairment.

Li Jun, Executive Director and Vice President, revealed at the performance meeting that by the end of June, Greentown's remaining unsold property value was about 221.5 billion yuan, of which the value of old inventory from 2021 and before was 106 billion yuan, "the proportion fell below 50% for the first time".

Relevant Data

In the first half of this year, Greentown achieved total contracted sales of 94.7 billion yuan. Among them, the sales revenue of old inventory from 2021 and before reached 9.77 billion yuan, "the completion rate reached 54%, which means we have completed more than half of the task in the first half of the year", Li Jun said that among the old inventory, the value of undeveloped land is about 56 billion yuan.

In order to reduce the burden of old inventory as soon as possible, Greentown has upgraded the task priority of old inventory destocking to the group level. It is reported that Greentown has set up a series of resource tilting and assessment measures for old inventory destocking from the group to project level, including: separate assessment for destocking indicators of difficult inventory such as parking spaces and remaining unsold properties; the group directly tracks KPI indicators, which are strongly linked to the distribution of annual bonuses; implement the strategy of renovating old properties with customized solutions for each project; the group fully tilts resources and arranges full-time personnel for existing inventory destocking to coordinate marketing, operation, finance and other business lines.

According to public data from Greentown, from 2022 to the first half of 2026, Greentown's total accumulated impairment reached about 15.5 billion yuan. For the remaining 100 billion yuan level old inventory, how much impairment still needs to be accrued?

"We cannot give a very definite answer." Jiang Feng said that impairment is linked to many variables and factors, including the adjustment of Greentown's own marketing strategy, the smoothness of inventory destocking, and even whether surrounding competitors will launch price wars, all of which will affect the final accrued impairment amount.

The management of Greentown admitted that at present, the company "has very good safety performance, but the profit is indeed under great pressure."

By the end of June, Greentown's monetary funds on hand reached 61.9 billion yuan, interest-bearing liabilities fell to 130.7 billion yuan, the average financing cost was 3.2%, down 40 BP from last year; the net debt ratio continued to drop from 66.4% at the end of last year to 63.7%.

02 Maintain the Target of Land Acquisition with 100 Billion Yuan Property Value Unchanged

In the first half of the year, Greentown's operating revenue also dropped sharply. In the business structure, the most obvious decline came from the sales revenue of developed properties.

In the first half of 2026, Greentown's property sales revenue was 36.165 billion yuan, down 27.2% year on year; the carried-over settlement area was 1.7929 million square meters, down 12.4% year on year, and the average carried-over settlement sales price was 20,171 yuan per square meter, down 16.9% year on year.

The main reason for the revenue decline is that Greentown reduced land acquisition in 2024. In that year, Greentown acquired 42 plots of land with an equity amount of only 48.4 billion yuan, the lowest level since 2023, and the projects acquired that year correspond to the settlement revenue of this year.

After 2024, Greentown increased its land acquisition intensity. In 2026, Greentown set the land acquisition target of "100 billion yuan of property value".

In the first half of this year, Greentown added 22 new plots of land with a total salable area of 1.15 million square meters and a new property value of 45.9 billion yuan, ranking fourth in the industry. The equity land payment was 18.6 billion yuan, ranking fifth in the industry.

However, Greentown's sales revenue in the first half of the year also decreased simultaneously, with total contracted sales of about 94.7 billion yuan, 27.5 billion yuan less than the same period of last year, representing a year-on-year decline of 22.5%.

Li Jun explained, "The company originally planned to launch 50 billion yuan of property value from January to May, but actually only 36 billion yuan was launched, and the remaining projects will be launched later. This is one of the main reasons for the decline in our sales in the first half of the year."

It is expected that Greentown will increase the intensity of land acquisition in the second half of the year, but the management expressed concern about the rapid rise of land auction premium rate in key cities in the first half of the year.

"In the first half of this year, the land supply and transaction volume in major cities across the country decreased by about 25% year on year respectively. Even if some additional supply is added in the second half of the year, we expect that the full-year level will hardly reach that of last year." Li Jun said at the performance meeting, "The second feature is that the competition in land auctions is very fierce. The average land auction premium rate in the four first-tier cities plus Hangzhou reached 24% in the first half of this year, exceeding 19% of last year. Especially in some core locations, the competition intensity of land auctions is generally relatively high. Third, we believe that the entire real estate market is still in the bottoming stage. Although the sales market has rebounded after the Spring Festival, the sustainability remains to be observed. We believe that there is irrational competition in some popular plots. This kind of high-intensity competition in local areas has led to our relatively low land acquisition volume in the first half of the year."

In particular, first-tier cities and the Yangtze River Delta region are areas where high land auction premiums frequently occur. In the first half of the year, Greentown's land acquisition in first-tier and second-tier cities accounted for 83%, and the proportion in the Yangtze River Delta was close to 70%.

The good news is that after two years of high-intensity land acquisition in 2024 and 2025, Greentown currently has sufficient inventory. In the second half of the year, Greentown has 125.6 billion yuan of salable property value and a salable area of 4.39 million square meters. Among them, 75.9 billion yuan of existing properties are on sale, accounting for 60%, and 49.7 billion yuan of new properties are planned to be launched, accounting for 40%, of which 28 billion yuan are newly launched projects.

In addition, the semi-annual report data shows that Greentown's contract liabilities returned to the growth range in the first half of the year. By the end of June, the company's sold but not settled amount was 166.9 billion yuan, of which the equity part was 105.1 billion yuan; the contract liabilities reached 119.656 billion yuan, up 9.8% from the end of 2025, and this part of pre-sales resources will become the source of revenue in the next 1-2 years.

A month ago, Greentown completed the replacement of its new head. Zhao Hui, who has a background of "old CCCC", took over as Chairman of the Board and Chief Executive Officer. After taking office, Zhao Hui has taken vigorous reform measures including setting up a reform working group. At this performance meeting, Zhao Hui said that China Communications Construction Group positions Greentown as the main carrying platform for its urban and real estate business segments, and requires the company to focus on developing quality and brand. Greentown will continue to balance the relationship among scale, profit and safety, avoid blind pursuit of expansion, not ignore operating quality, not relax risk prevention and control, and continuously polish the collaborative model of diversified businesses including residential development, construction management and Greentown+ life services. With more pragmatic measures and more powerful implementation, Greentown will fulfill its annual operating commitments, and firmly ensure that the goals remain unchanged, responsibilities remain unchanged, and execution intensity does not decrease.