Longfor: Revenue of 97.31 billion in 2025, expected to lay the foundation for a new model in two years

On March 27, Longfor Group released its performance report for the year 2025. The report shows that Longfor Group’s operating income for 2025 is approximately 97.31 billion yuan.

Of this, the revenue from real estate development is 70.54 billion yuan; the revenue from operations and services is 26.77 billion yuan, accounting for 27.5% of the group’s total operating income, a historic high; the profit attributable to the company’s owners is 1.02 billion yuan; after excluding the impact of fair value changes in investment properties and other derivative financial instruments, the core loss attributable to the parent company is 1.7 billion yuan.

Since 2022, Longfor has actively adjusted its pace and reduced its liabilities, leading to a continuous decline in the proportion of its development business. By 2025, the development business has first recorded a loss, but the operations and services business achieved core profit close to 8 billion yuan, offsetting the negative impacts from the decline in the development business.

Longfor’s Chairman and CEO Chen Xuping stated that by 2028 at the latest, the revenue from Longfor’s operations and services business will surpass that of real estate development, becoming the company’s primary source of income. At the same time, because the business structure of real estate companies is deeply integrated with the company’s income, liability structure, cash flow sources and rhythms, and credit systems, the interdependence of business structure and liability structure means that the adjusted income structure mainly based on operational service income also indicates that Longfor has completed the “foundation” construction of a new development model.

Longfor Performance Conference

01

Safely Navigating the Debt Repayment Peak

Debt safety is the lifeline for companies in the real estate industry during periods of tightening. During this time, Longfor has maintained a credit baseline of “no overdue payments, no extensions, no defaults.”

According to Longfor’s annual report data, by the end of 2025, its interest-bearing liabilities will be reduced to 152.8 billion yuan, with an average financing cost lowered to 3.51%, and the average loan term extended to over 12 years. Among the interest-bearing liabilities, bank financing accounts for nearly 90%, an increase of about 15 percentage points compared to the end of 2022, while the total amount and proportion of credit bonds continue to decrease.

Longfor’s Chief Financial Officer Zhao Yi stated that in 2025, the group will repay about 22 billion yuan in debt, including 13.5 billion yuan in domestic bonds and 9.2 billion Hong Kong dollars in overseas loans, with about 6 billion yuan of maturing debt remaining this year, of which about 2.5 billion yuan is credit bonds, indicating that it has safely and smoothly navigated the debt repayment peak.

While reducing the total liabilities, Longfor is also continuously adjusting its liability structure. By the end of last year, the proportion of Longfor’s domestic loans rose to 83%, while the proportion of overseas credit loans fell to 6%, with supply chain financing nearly zeroed out. The newly added operating property loans reached about 18 billion yuan in the year, bringing the total to over 100 billion yuan, with the proportion increasing to 66%.

Additionally, among Longfor’s interest-bearing liabilities, the balance of foreign currency liabilities has also continued to decrease to around 15 billion yuan, accounting for about 10% at the end of last year.

As of the end of 2025, Longfor’s asset-liability ratio, excluding advance receipts, has decreased to 55%, with the net debt ratio stabilizing around 52%. The cash-to-debt ratio, excluding presale regulatory funds, remains above one, indicating a relatively stable financial status.

2025 is the peak year for Longfor’s debt repayment, with due amounts of around 22 billion yuan, which will decrease to about 6 billion yuan and 6.9 billion yuan in 2026 and 2027, respectively. It will then drop significantly again in 2029 to around 4 billion yuan.

Zhao Yi revealed that Longfor’s future financing management strategy will strictly adhere to three principles:

• First, strictly uphold credit, ensuring no overdue payments for bank financing, no extensions, and no defaults on public market debts;
• Second, continuously enhance the NPI of operational assets, improve asset valuations, explore the potential for operating property loans, optimize financing structures, extend payment terms, and particularly control short-term debts and foreign currency debts;
• Third, strengthen financing and cash management mechanisms, solidify and establish an account-level control system, and proactively manage maturing debts.

In recent years, affected by deep industry adjustments and the structural impact of settlement projects, Longfor Group’s gross margin has been continuously declining. However, the company’s management expects that after two years of bottoming out in 2025 and 2026, with both the total liabilities and interest rates decreasing, the proportion of operating and service business income will continue to rise, and the gradual reduction of losses from the development business will lead to a recovery in the company’s gross margin.

02

Transition from Old to New Models Nearing Completion

From Longfor Group’s business income structure, it can be seen that the company is increasingly relying on its operations and services business.

Chen Xuping stated that in the coming years, Longfor’s real estate development business will still focus on liquidating existing stock and tackling hard-to-sell inventory, without deliberately emphasizing scale; the growth and stability of the company’s performance will mainly depend on its operational business.

From the data perspective, Longfor’s development business revenue fell below 100 billion yuan for the first time in 2025, while the revenue from operations and services reached a new high.

Longfor’s 2025 Revenue Structure

In 2025, Longfor’s land acquisition remained relatively “conservative.” The company secured 7 new projects throughout the year, with a total construction area of approximately 380,000 square meters, an equity construction area of about 260,000 square meters, and new value of about 8.2 billion yuan. Compared to the contract sales of 63.16 billion yuan, the land acquisition-to-sales ratio is only about 5.5%.

Longfor’s Executive Director and General Manager of Real Estate Development Zhang Xuzhong stated that Longfor’s strategy prioritizes financial safety, with the priority of ensuring repayment higher than that of new investments. Currently, Longfor still has about 22 million square meters of land reserves, with the total unsold value exceeding 200 billion yuan. The basic strategy is to determine spending based on sales and to activate existing stock, with the requirement for new projects being to secure one and successfully develop it.

In contrast to the “conservative” strategy for development business, the commercial and other segments are more proactively demonstrating growth. In 2025, Longfor opened 13 shopping centers, including 8 self-owned heavy asset projects and 5 light asset operation projects.

Rental income from shopping malls rose to 11.21 billion yuan in 2025, a year-on-year increase of 4%, with an overall occupancy rate of 96.8%.

By the end of the period, Longfor had 99 shopping malls in operation, with a total opened construction area of approximately 10.5 million square meters across 25 key cities, with total turnover exceeding 82 billion yuan. Excluding vehicle sales, overall turnover increased by 17%, with same-store growth of 6%. Daily foot traffic was approximately 3.8 million, an overall increase of 16%, with same-store growth of 7%.

It is reported that in 2026, Longfor will open approximately 9 more shopping centers. The operational goal set by the management team is to achieve over 5% year-on-year growth in same-store sales this year.

In other segments, Longfor’s service business achieved total revenue of 12.58 billion yuan in 2025, including 11.23 billion yuan from property services, with a managed area of 3.6 billion square meters; asset management revenue reached 2.98 billion yuan, with long-term rental apartment revenue around 2.48 billion yuan and an overall occupancy rate of 94.1%; Longzhizao generated 1.3 billion yuan in revenue.

Chen Xuping stated that the industry’s adjustment has lasted for 5 years, with construction starts dropping by 70%. The adjustment has been significant, but during this time, Longfor has maintained its core operational service assets without any sales or dilution amid downward market pressure while reducing liabilities, preserving the most critical assets of the company and providing the best conditions for future growth.

Chen Xuping emphasized that Longfor aims for a profit growth of about 10% in its operations and services business this year, quickly reaching a scale of 10 billion. While ensuring a stable profit base and driving growth with operational cash flow, it will use this as a foundation to replace the company’s short-term financing with operational property loans, continuing to reduce debt pressure.

Longfor’s management expects that in 2027, the company’s profits will bottom out and rebound, and by 2028, revenue from operations and services will surpass that of the development business, completely finishing this round of strategic transformation.

After enduring the peak year of liabilities, Longfor continues to adhere to its practices of reducing debt, ensuring safety, and scrutinizing investments, while reserving redundancy to respond to industry changes.

Recently, UBS published a report maintaining a “neutral” rating for Longfor Group. It pointed out that losses in the development business have led to asset reduction pressure, but assets such as shopping malls, which have higher valuation potential, provide fundamental improvement potential for Longfor.