YUEXIU PROPERTY bets on "certainty"

Author | Zhou Zhiyu

Editor | Zhang Xiaoling

The old era of Chinese real estate has come to an end. The model that leveraged scale and covered risks with speed is being replaced by a completely new set of rules: financial safety has become the primary principle, and strategic depth has replaced extensive expansion.

In this profound paradigm shift, the steady performance of a few enterprises has become the best window to observe the future of the industry. The mid-term results released by YUEXIU PROPERTY on August 26 provide such a sample. Just the day before, S&P awarded an investment-grade rating to this company, marking another rare vote of confidence from an international rating agency for Chinese real estate companies in 2025, following Fitch.

In the current arena characterized by prudence, almost everyone has tacitly accepted a posture of contraction and dormancy. However, the management of YUEXIU PROPERTY has clearly declared at this time that they are confident in achieving the annual sales target of 120.5 billion yuan.

YUEXIU's confidence is built on its sales data.

In the first half of 2025, while the average sales of the top 100 real estate companies declined by 11.8%, YUEXIU's contracted sales rose against the trend by 11%, reaching 61.5 billion yuan. Among the top ten giants in sales, only three achieved positive growth, with YUEXIU's growth rate ranking second.

This counter-trend performance does not rely on the traditional script of "exchanging price for volume." On the contrary, YUEXIU's average selling price soared from 29,500 yuan per square meter a year ago to 42,100 yuan, nearly 2.5 times the industry average.

The answer is actually quite simple: YUEXIU chooses to fight only in the strongest fortresses.

Data shows that 80.5% of the company's sales in the first half of the year came from first-tier cities. In Beijing, it became the local market champion with a sales increase of 255.1%; in the fiercely competitive Shanghai, it ranked among the top six; while its home base Guangzhou remains its undisputed mainstay.

In uncertain times, the greatest certainty comes from the purchasing power in core cities and prime locations that are most eager to improve living conditions. What YUEXIU does is precisely target all its ammunition at this still warm soil.

Behind the sales outperforming the market lies YUEXIU's almost obsessive investment discipline. An industry insider commented that YUEXIU's model turns "investment and development" into a precondition for "de-stocking," betting only on certainty at the table.

This discipline is reflected in its choice of cities. In the first half of 2025, 100% of YUEXIU's newly added land reserves of 1.48 million square meters were located in core first- and second-tier cities. If we extend the view, 94% of the value in its total grain reserve of 20.43 million square meters is concentrated in these high-energy cities.

Even more noteworthy is its approach. Chairman Lin Zhaoyuan revealed that the company has favored acquiring small plots in old urban areas in recent years. Such projects "being small in scale also means quick entry and exit, higher operational efficiency, and a higher degree of investment realization."

This creates a flywheel effect that many enterprises dream of: precise investment leads to efficient de-stocking, and strong sales cash flow prepares ample ammunition for the next round of precise investment. While most enterprises are still struggling with cash flow, YUEXIU achieved a net operating cash inflow of 4.1 billion yuan in the first half of the year If precise investment and sales strategies are the "accelerator" for Yuexiu, then its financial stability is the "ballast" that helps it navigate through cycles.

In this industry, money has never been as expensive and scarce as it is now. However, Yuexiu's financing costs are low enough to make many real estate companies envious. Its weighted average borrowing cost of 3.16% has decreased by 41 basis points year-on-year. Lin Zhaoyuan has calculated that just from financing costs alone, it can save hundreds of millions of yuan in a year, which can effectively offset the decline in profits.

This advantage comes partly from the credit endorsement of its state-owned enterprise status and partly from its strict financial discipline. Yuexiu consistently maintains a green status under the "three red lines": the asset-liability ratio excluding advance receipts is 64.6%; the net debt ratio is 53.2%; and the cash on hand covers short-term debt by as much as 1.7 times.

When liquidity becomes a lifeline, Yuexiu's solid financial moat becomes its greatest confidence for calmly laying out plans and expanding against the trend.

Of course, Yuexiu is not without worries. The industry-wide profit decline is also eroding its financial statements, with the company's gross profit margin dropping to 10.6% in the first half of the year. However, Lin Zhaoyuan's response to this is remarkably pragmatic: "At our peak, we had a gross profit margin of over 30%... Later, 20% was also good, and then 15% was also good. I believe that in the current environment, having a gross profit margin of over 10% is also good."

This clear-headed recognition may reveal more than a perfect profit statement. It uncovers a fact: the era of reckless growth relying on high leverage and high profits has completely ended.

For Yuexiu, it seems to have found the new rules of the game—abandoning the illusion of scale, returning to the essence of business: doing the most certain business with the healthiest finances in the safest places. This may be the real reason it dares to talk about growth during the industry's adjustment period