Yuexiu Property places bets on six cities with GDP exceeding one trillion yuan, registering sales of 50.51 billion yuan in the first half of the year.

On August 28, Yuexiu Property released its first-half performance. In the first half of the year, Yuexiu Property recorded operating revenue of about 36.65 billion yuan, down 23% year on year; gross margin stood at about 6.2%, down 4.4 percentage points year on year; net profit attributable to owners of the parent was about 90 million yuan, down 93.6% year on year. Core net profit reached about 80 million yuan, down 94.6% year on year. The profit level of Yuexiu Property has dropped sharply, with profits hovering around the break-even line.

Core financial data for the first half of 2026

The decline in profitability mainly comes from the pressure of carryover structure. Most of the projects settled by Yuexiu in the first half of the year are high-land-cost stock acquired during the industry's upward cycle, with high rigid land costs. Coupled with the phased price discounts in the de-stocking process of core cities in the past two years, the gross profit of project settlement has been directly compressed. At the same time, the investment income from joint ventures and associated enterprises has shrunk year on year, further diluting the profitability.

At the performance meeting, Lin Zhaoyuan, Chairman and Executive Director of Yuexiu Property, said that ranked by sales volume, Yuexiu Property rose one position in the first half of the year and entered the top 8 of the industry. However, in terms of gross margin level, "it is still relatively low at present, and I am extremely dissatisfied with this gross margin from a personal perspective", which is something Yuexiu's management has to face.

Scene of Yuexiu Property's 2026 interim performance meeting

Stock-Driven Sales

In the first half of the year, Yuexiu Property achieved a 16.2% year-on-year growth in sales area, with contracted sales amount of 50.51 billion yuan, completing more than half of the annual 100-billion-yuan sales target. The contracted sales cash collection rate in the current period was 71%, up 10 percentage points year on year; net operating cash inflow reached 13.77 billion yuan.

In terms of structure, 80.7% of the contracted sales came from ongoing stock projects, compared with only 48% in the same period of 2025, and newly opened projects contributed less than 20%.

In terms of urban distribution, the six core cities of Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou and Chengdu contributed 84.5% of sales. The Guangdong-Hong Kong-Macao Greater Bay Area accounted for 42% of total sales, and the East China region accounted for 26%. By city, Guangzhou ranked first in local sales area, while Beijing and Hangzhou ranked top 10 in local sales amount.

To revitalize the stagnant inventory, Yuexiu Property has internally implemented the "one project, one policy, one apartment, one policy" mechanism to dynamically adjust supply and pricing for different projects, avoiding simple price-for-volume transactions. The company set up a special second-hand housing replacement team, which took over more than 460 second-hand housing units during the period, driving new home sales of nearly 2 billion yuan; at the same time, it seized the policy dividends of housing tickets across various regions, with housing ticket-related transactions exceeding 700 units, corresponding to a property value of nearly 2 billion yuan.

As of the end of June, the company's total available property value for the whole year was 215.7 billion yuan. Excluding the sales already realized in the first half of the year, the remaining property value to be launched in the second half of the year was 160 billion yuan.

Financing Cost Drops Below 3% for the First Time

Financial indicators are the most solid moat for Yuexiu Property in this cycle. As of the end of June 2026, the company maintained the green file for all three red lines, with the asset-liability ratio excluding advance receipts at 65.2%, net debt ratio at 49.2%, and cash-to-short-term-debt ratio at 2.1 times.

The total interest-bearing liabilities at the end of the period stood at 103.87 billion yuan, a slight decrease compared with the end of 2025. The financing cost hit a historic low, with the weighted average annual borrowing interest rate dropping to 2.91%, falling below 3% for the first time, down 25 basis points year on year.

In terms of debt structure, the debt maturity arrangement of Yuexiu Property is relatively balanced: 24% of debts mature within 1 year, 63% mature within 1-5 years, and 13% mature over 5 years; domestic and overseas financing account for 76% and 24% respectively. There is no centralized repayment pressure at present.

In terms of cash flow, the net operating cash inflow in the first half of the year was 13.77 billion yuan; the sales cash collection rate rose to 71%, 10 percentage points higher than the same period last year. The total cash and various deposits at the end of the period reached 51.5 billion yuan, up 10.1% from the beginning of the year. Among them, the disposal of Nanshan Industrial Park, Yungu Industrial Park, Bijie Hotel and health care-related business assets brought in a total of 4.46 billion yuan in recovered funds, optimizing the company's balance sheet.

Regarding the destination of the funds in hand, Lin Zhaoyuan made it clear that the funds will be prioritized for plots in core cities to support the annual equity investment target of 30 billion yuan; secondly, they will cover rigid expenditures such as project development and debt repayment, and continue to promote the steady and moderate decline of interest-bearing liabilities.

Betting on 6 Core Cities

"The industry has gone through the most difficult stage, and the trend of bottoming out and stabilizing is strengthening, but differentiation remains prominent, and core cities take the lead in recovery." The management of Yuexiu Property judges that the new home market is expected to see stable volume and rising prices in the second half of the year, and the second-hand home market will maintain high activity, but the recovery is mainly concentrated in high-tier cities, while the pressure in third- and fourth-tier cities is still not small.

Based on the above judgment, Yuexiu Property has concentrated its new investment on the four first-tier cities plus Hangzhou and Chengdu, a total of 6 cities. In the total sales of the first half of the year, the six core cities contributed nearly 85%.

The total GDP exceeding 1 trillion yuan is the main reason why Yuexiu Property focuses on the above six core cities. Yuexiu's management said that the land acquisition strategy in the second half of the year will still follow the "one city, one policy" principle, deeply cultivate the six core cities, and only make opportunistic judgments for cities with GDP above 1 trillion yuan, without blindly sinking into low-tier markets.

In the first half of the year, Yuexiu acquired a total of 6 plots with a construction area of 680,000 square meters and equity investment of 7 billion yuan, of which 96.8% of the equity investment was in the six core cities.

As of the end of June, Yuexiu Property's total land reserve was 16.57 million square meters, corresponding to a total unsold property value of about 290.5 billion yuan; 94% of the land reserves are concentrated in first- and second-tier cities, the property value of the six core cities accounts for 73%, and the property value of the Guangdong-Hong Kong-Macao Greater Bay Area accounts for 50%. The property value structure is highly bound to top-tier cities, which not only captures the dividends of structural recovery, but also means that the performance will highly follow the fluctuations of the property market in core cities.

Judging from the second-half strategy given by the management, Yuexiu will continue to implement the four guidelines of "de-stocking, refined investment, stable performance and risk prevention", and the market judgment is that "the industry is bottoming out and stabilizing, and core cities take the lead in recovery". Yuexiu Property has obtained the necessary capital safety card to go through the cycle, but two things need to be waited for next: first, the completion of the clearance of inefficient stock projects, and second, the gradual carryover of high-quality plots acquired at low prices in recent years, so as to achieve substantial recovery of gross margin and net profit.

At the performance meeting, the management frankly admitted that there is a 2-3 year cycle from land acquisition to carryover for new projects, and there is a time lag for profit recovery, which will not take effect immediately.