Yuexiu Property Company Limited

Primary source: FY2025 Annual Report five-year summary (HKEX filing, 30 April 2026). Operating income, SG&A and interest come from StockAnalysis standardised statements based on company filings. Balance-sheet items come from the ET Net standardised balance sheet based on company filings. Derived ratios are computed by the analyst.

Income Statement

FY2021 EPS is pre-rights-issue (FY2021 results presentation). FY2024 and FY2025 EPS are derived from attributable profit and about 4.025 bn shares. FY2024 profit after tax is derived from FY2025's RMB 1.78 bn (+21.4%). Diluted EPS is not separately disclosed in the sources reviewed and is believed to equal basic EPS.

Revenue CAGR. FY2021 to FY2025: about 10.8% a year (derived). FY2023 to FY2025: about 3.8% a year.

Commentary. The five-year record shows a scissors pattern. Revenue grew every year, reaching seven consecutive years of growth by 1H2025, as the large 2020–2022 sales backlog was delivered. Gross margin, however, fell by 14 percentage points, because projects bought at peak land prices and sold into a falling market were recognised. The inflection came in FY2023, when gross profit fell for the first time. FY2024 and FY2025 added a second drag: a falling attributable share of recognised projects. Management attributed the FY2025 gap between profit after tax (RMB 1.78 bn, +21.4%) and attributable profit (RMB 55 M, -94.7%) to "temporary shifts in project equity percentages", meaning minority partners captured most of the recognised profit. SG&A was flat in absolute terms at about RMB 4.1–4.3 bn, so cost discipline did not offset the margin compression.

Interim trend

1H2026 gross profit is derived from revenue of RMB 36.65 bn less cost of sales of RMB 34.38 bn (2026 Interim Results). Other figures come from the respective interim announcements and press coverage.

Balance Sheet

FY2021 cash and borrowings: Jiemian (2022), citing the FY2021 results. FY2023 borrowings are derived from 1H2024 borrowings of RMB 110.24 bn (+5.6% vs end-2023). FY2024 total cash is derived from 1H2025 cash of RMB 44.64 bn (-10.8% vs end-2024). FY2025 cash comes from the company statement in the July 2026 profit-warning coverage. Goodwill is not separately disclosed in the sources reviewed.

FY2024 net gearing is derived from 1H2025 (53.2%, +1.5 percentage points). Remaining figures come from company results and Zhongtai and CSC notes on 1H2026.

Commentary. The balance sheet is de-risking through inventory liquidation. Inventories fell 23% from the FY2023 peak of RMB 238.9 bn to RMB 184.3 bn at FY2025, while cash rose. Net gearing peaked at 54.9% at end-2025, then fell to 49.2% by June 2026, helped by RMB 13.77 bn of operating cash inflow and the RMB 4.46 bn asset sale to the parent. Funding cost broke below 3% for the first time in 1H2026. All three "red lines" have remained green throughout. The rising investment in associates and JVs (RMB 33.4 bn) reflects heavy use of JV structures, which brings off-balance-sheet complexity and the profit leakage visible in FY2025.

Cash Flow

The company has made no material buybacks in the period; equity was raised via the 2023 rights issue. For a developer, land acquisition rather than capex is the relevant investment flow. FY2025 attributable land investment was RMB 24.4 bn, with 96.3% in the six core cities and an average premium of about 9.3% (Jiemian, April 2026).

Ratios

ROE on attributable equity, ROA, ROIC, current ratio, net debt/EBITDA, interest coverage, asset turnover and cash conversion cycle cannot be computed reliably from the verified dataset. Interest coverage on standardised operating income over P&L interest is about 3.5x for FY2025 (derived), but most interest is capitalised into inventory, so this flatters true coverage.

Management guidance.

• 2026 contracted sales target of RMB 100 bn, reaffirmed at the 28 August 2026 interim briefing.

• 2026 equity land investment of RMB 30 bn.

• A 40% payout of core net profit.

• Margin restoration through new core-city projects with gross margins above 15%.

Consensus expectations (Kaiyuan, the only verified forecast set).

Bull case

1. Earnings trough is behind the company. Recognised revenue will shift toward 2024–2026 core-city land carrying gross margins above 15%. The RMB 132.4 bn backlog provides about 1.5 years of revenue visibility.

2. Balance sheet is a competitive weapon. Funding at 2.91%, BBB- ratings and RMB 51.5 bn of cash allow counter-cyclical land buying while private peers are absent. Yuexiu took more than 75% of Guangzhou land value in 1H2026.

3. Deep value. At about 0.23x book, the market prices in severe impairments. A Guangzhou recovery (sales +31.8% in 1H2026) plus a Machang injection could re-rate the stock toward UOB's HKD 4.80 target.

Bear case

1. Margins have not bottomed. The 1H2026 ASP fell 29.5% and inventory clearance relies on discounting. Gross margin fell to 6.2%, and further impairments on the RMB 184 bn inventory are plausible.

2. Value accrues to minority partners and the parent. The FY2025 gap between profit after tax and attributable profit (RMB 1.78 bn versus RMB 55 M) and related-party transactions point to structural leakage away from public shareholders.

3. Income stock no longer. DPS fell 99% from the FY2021 level (HKD 0.654 to an HKD 0.009 interim). Without a dividend floor, the valuation support is weak.

Key catalysts and monitorables (next 12 months)

Analyst verdict

Yuexiu Property enters late 2026 as one of the most financially secure, yet least profitable, large developers in China. The contrast is stark. Operationally, it has never been more prominent: 8th nationally by sales, top-2 in both Guangzhou and Beijing, with positive operating cash flow of RMB 13.8 bn in a single half, and funding below 3%. Financially, attributable profit has fallen 98% in four years to RMB 90 M for 1H2026, and the dividend has effectively been suspended.

The root cause is timing. Yuexiu accelerated land acquisition in tier-1 cities just as the market peaked, and those cohorts are now being recognised at gross margins in the single digits. A second cause is structural: extensive use of JVs means a significant share of project profits goes to minority partners rather than shareholders. The May 2026 sale of assets to the parent group shows that SOE support is real. It also shows that value creation can occur at the group level, as with the Machang site, rather than inside the listed company.

The investment question therefore turns on timing more than solvency. Default risk is low. The thesis depends on whether 2024–2026 vintage land with gross margins above 15% replaces the legacy backlog quickly enough to rebuild earnings before further impairments erode book value. At about 0.23x P/B, the market is pricing substantial write-downs.

On balance, we view Yuexiu as a high-quality credit and a speculative equity. Equity holders are effectively paid in optionality, not income. A constructive stance requires three pieces of evidence: gross margin recovery above 10% in FY2027, delivery of the RMB 100 bn sales target in 2026, and transparent treatment of minority shareholders in any Machang injection. Until then, Hold/Neutral is the evidence-consistent stance, with an upside skew if Guangzhou's 2026 policy-led recovery proves durable.