China Overseas supports the industry's "dignity"

Author | Zhou Zhiyu

Editor | Zhang Xiaoling

The local real estate industry is still struggling to find its bottom in the aftermath of the "rust belt era," with many former giants either quietly exiting the stage or desperately seeking survival. A financial report from a "counter-current" player reveals the profound changes taking place at the table.

On August 27, China Overseas Development (hereinafter referred to as "CO")—known for its "engineering background" and "profit king"—released its mid-term performance for 2025. Against the backdrop of the industry’s profits generally "returning to normal," and even leading real estate companies recording losses, CO's core net profit attributable to shareholders reached an astonishing RMB 8.78 billion.

This has made CO almost a solitary "ballast" for industry profits, supporting the "dignity" of the sector. Statistics show that CO's core net profit attributable to shareholders accounts for about 60% of the total profits disclosed by the top 10 real estate companies (excluding China Merchants Shekou); if excluding loss-making companies, the proportion is as high as one-third.

This is not a coincidence, but rather an inevitable manifestation of the repeatedly validated "CO rule" after traversing several cycles. "Not aggressive during industry peaks, not conservative during downturns"—this seemingly simple summary is key to understanding CO's resilience across cycles.

Looking back at history, even as the "net profit king," CO has faced the pain of returning to normalcy with declining profit growth and a drop in gross profit margin from a high of 30%. However, unlike other real estate companies, CO's financial discipline and strategic patience have allowed it to hold the most valuable "ammunition"—cash—during the industry's clearing winter.

As of mid-2025, CO held cash of RMB 108.96 billion, with a net debt ratio of only 28.4%, making it the only Chinese real estate company to receive an A- rating from both Fitch and S&P Global.

Its extremely stable financial position has allowed it to confidently position itself against the backdrop of rational land value returns.

Thus, when most companies paused land acquisitions, CO became the most active "predator" in the land market. From January to July 2025, CO's equity land acquisition amount reached RMB 55.01 billion, ranking first in the industry. Notably, this marks its third consecutive year leading the industry in equity land acquisition amounts.

This offensive is not blind expansion, but rather an extremely focused "precision strike." 86% of its new investments are located in first-tier and strong second-tier cities, from the record-high floor price in Haidian Shucun, Beijing, to acquiring residential land in Shanghai's core areas, CO has directed almost all its firepower at China's most valuable real estate bastions.

At the performance release conference, in the face of market concerns, CO's management conveyed not pessimism and contraction, but rather well-considered foresight and confidence.

Chairman Yan Jianguo provided a core judgment: although the market is still in a downward phase, the downward pressure has shown marginal improvement. He firmly believes that the "three driving forces" from policy, market, and the company's own high-quality development will jointly promote the stabilization of the real estate market.

From the central government's emphasis on "multiple measures to release improvement demand," to the national economy stabilizing and improving, and urban renewal bringing incremental demand, to the company's own financial health and strong resource aggregation capabilities, these three major forces are converging to form a stabilizing force for the market. Yan Jianguo emphasized: "We are confident in the steady progress of the Chinese economy and in the stabilization of the real estate market." Regarding the future landscape of the industry, CEO Zhang Zhichao believes that the market will be highly focused and concentrated, with future competition mainly among a few high-quality national real estate companies.

In such a scenario, what role will China Overseas play? The answer is to adhere to long-termism and firmly aim to become an "excellent international real estate development and operation group."

Zhang Zhichao elaborated on the three major industrial structures for the "14th Five-Year Plan": "Today, Tomorrow, and the Day After Tomorrow."

"Today," as the cornerstone, is the sales-oriented business, which must firmly occupy the top tier of the market, focusing on core cities, and continuously maintaining industry leadership in scale and quality.

"Tomorrow" is to strengthen and optimize the holding-type business, including commercial offices, shopping centers, and long-term rental apartments, treating them as the "ballast" to smooth out cycles, and through public REITs and other capital operations, to enhance full-cycle asset management capabilities.

"The Day After Tomorrow" is to build an ecological business with a full industrial chain and all business formats, nurturing light asset businesses such as construction agency, architectural design, and digital technology into new growth points, while empowering the main business and exploring new business models.

This multi-dimensional strategy means that China Overseas' goals go far beyond mere survival; they aim to become the definers and leaders of the rules under the new industry paradigm. With their comprehensive advantages across the entire industrial chain, their competitiveness will become increasingly prominent when acquiring large comprehensive projects in core urban areas.

Looking back over the past few years, the real estate industry has undergone a dramatic transformation from the "golden era" to the "black iron era." In the face of fierce competition, only those companies that adhere to financial discipline, respect market common sense, and believe in long-termism can ultimately navigate through the fog.

When asked about the outlook for the "14th Five-Year Plan," Yan Jianguo's keyword was "full of confidence." He believes that in the new five years, the resilience of the Chinese economy, the improving demand space in the real estate market, and China Overseas' own "defensive and offensive" posture will work together to enable the company to "move more steadily and go further."

As the signals for the market to stabilize become increasingly clear, China Overseas, armed with substantial funds, ample resources, and a clear strategy, undoubtedly stands at the best starting line for a new cycle. This "engineering student's" main stage performance has just begun