Country Garden's debt restructuring turns losses into profits, with interest-bearing liabilities decreasing by over 100 billion yuan

Securities Times reporter Li Yingquan

Late on March 30, Country Garden (02007.HK)’s 2025 annual report was officially released. After undergoing deep industry adjustments, in 2025 Country Garden achieved operating revenue of RMB 154.89 billion and a net profit attributable to shareholders of RMB 3.26 billion, becoming one of the few private property developers that was among the first to complete systemic debt restructuring and achieve a profit on paper.

Looking at Country Garden’s financial statements over the past four years, 2025 was also its best-performing year. In 2022, Country Garden’s annual report recorded a loss for the first time since listing, with net profit attributable to shareholders dropping to a loss of RMB 6.05B; thereafter, in 2023 and 2024 it suffered losses of RMB 178.40 billion and RMB 170k, respectively. This turnaround to profitability is clearly a sign of improvement on the financial front.

Cutting interest-bearing liabilities by nearly RMB 2.15B

When tallying Country Garden’s 2025 financial report, “debt restructuring” is undoubtedly the most core keyword.

In its announcement, Country Garden also stated that the core reason for turning the performance from loss to profit this time is the non-cash gains recorded from the completion of its debt restructuring.

In 2025, Country Garden made efforts to advance debt restructuring both domestically and overseas. Of the overseas debts of approximately US$17.7 billion, the restructuring proposal was approved by the High Court of Hong Kong and formally took effect on December 30, 2025. Both new debt and equity instruments have been completed for issuance. The domestic restructuring was also smoothly implemented. It will initiate, in order, cash repurchases, stock options, and general creditor options. Currently, the company has launched a cash repurchase program with an upper limit of RMB 450 million, and the company expects to complete it in April this year.

Unlike the common practice of debt extensions, the core operation of Country Garden’s current debt restructuring is to exchange existing debts by issuing mandatory convertible bonds with a total amount of up to approximately US$13 billion and capitalized shares of up to 15.5 billion shares, which will significantly reduce the total debt amount.

As of the end of 2025, Country Garden’s total liabilities were RMB 767.9 billion, down significantly from RMB 984.6 billion at the end of 2024, a reduction of RMB 216.7 billion. Among them, the ending balance of interest-bearing liabilities at the end of 2025 was RMB 148.0 billion, down from RMB 253.5 billion at the end of 2024 by RMB 105.5 billion, representing a decline of 42%.

“This is a very positive signal.” Yan Yuejin, deputy director of Shanghai Yiju Real Estate Research Institute, said, “From the report, this data is closely related to the accounting effects brought about by the debt restructuring. The restructuring enables the company to turn losses on paper into profits on paper, which has positive effects on the capital market operations, daily operations, and the company’s image.”

However, if the effect of restructuring gains is excluded, Country Garden still recorded a loss in 2025. “This is mainly because of industry impacts. The company’s gross margin level in its development business is under pressure, and it has also further made provisions for impairment of certain assets and property projects.” Country Garden stated.

For inventories (land and projects under construction) corresponding to its existing projects, Country Garden’s full-year provision amount was approximately RMB 44.5 billion. At the same time, due to the combined impact of multiple unfavorable factors such as the macroeconomic environment, industry environment, and the negative financial conditions of counterparties, Country Garden also made provision for impairment losses of RMB 10.5 billion for financial assets and financial guarantees.

Three-year delivery volume nearly 1.15 million units

Delivering on-time remains an important task for Country Garden. In 2025, the company cumulatively completed delivery of about 170k housing units, with a cumulative delivery area of about 19.82 million square meters, involving 204 cities. From 2023 to 2025, the cumulative total delivered was nearly 1.15 million units, and the delivery volume has continued to rank at the top of the industry.

Over the past three years, Country Garden has essentially allocated nearly all resources to the “deliver homes” task, and the pace of promoting new projects’ stock has been affected to some extent. The annual report shows that in 2025, the amount of sales under equity contracts was approximately RMB 33.01 billion, and the equity sales area was approximately 4.02 million square meters.

Although the real estate industry as a whole is under pressure, Country Garden still has a relatively high influence in its home base Guangdong. Taking the Shaoguan market as an example, according to full-scope 2025 data, Country Garden ranked first among local property developers with sales revenue of RMB 231k.

Since 2026, the overall real estate market has also shown signs of stabilizing and recovering. According to data from CRIC, in the rankings of China property developers’ equity sales value and presales/promotion area for January–February 2026, Country Garden is listed among the top ten in both categories.

Country Garden’s president Cheng Guangyu said that March–April this year will be an important observation window. He requires that all staff must build and deploy their plans around the key milestones of the “Spring Thunder Action” in March–April and systematically advance sales work.

Meng Xinzeng, a senior analyst at the China Index Academy, believes that entering 2026, policy-level signals for a clear “stable expectation” have been released. Multiple specific measures have been implemented at the beginning of the year, including extending the home-exchange tax rebate policy, extending loan tenures for white-list projects and structural interest-rate cuts, and supporting urban renewal, aiming to coordinate efforts from both the demand side and the financing side to boost market confidence. Overall, real estate policies have entered a new stage with the goal of “stabilizing expectations and shortening the time needed for adjustments.”

Light-asset businesses show signs of recovery

Securities Times reporter noted that amid pressure on the real estate main business with heavy assets, Country Garden’s light-asset businesses represented by delegated management and commercial property management have shown a clear recovery trend.

In the “golden era” of the real estate industry, delegated management and development management, which had relatively low returns, was only a fairly marginal business. Nowadays, this business has instead become an important source of “blood-and-asset generation” for Country Garden.

“As of December 2025, Phoenix Zhituo has cumulatively contracted more than 200 delegated management and development management projects, with a cumulative managed area of nearly 20 million square meters. Currently, there are nearly 20 projects under management, with managed development area of nearly 3 million square meters, and the value of properties for sale is about RMB 30 billion, covering 20 cities across the country.” A relevant负责人 of Phoenix Zhituo said.

In addition to delegated management and development management, Country Garden’s other light-asset business—its commercial property management—has also made positive progress over the past year or so.

A person in charge of Country Garden’s commercial property management said that from 2024 to date, Country Garden’s commercial property management has added 231k square meters of managed area. Among them, the long-rent apartment brand “Country Garden E-Harmony Apartments” added more than 2,400 units of new inventory, and the managed scale is close to 30k units.

“From the perspective of long-rent apartments, currently almost all individual projects are in a profitable state. For the future, we will not focus on project quantity; instead, we will pay more attention to whether we can continuously do each project well, and steadily improve our systematized operating capabilities.” the person in charge said.

“Second entrepreneurship” is underway

In November 2025, after Country Garden’s debt restructuring was finalized, board chair Yang Huiyan first proposed the concept of “second entrepreneurship.” “Passing the restructuring is creditors’ recognition of the company’s future. It will create more room for the company to restore normal operations. Next is to systematically advance the transition. The transition is a transformation, and it is also Country Garden’s ‘second entrepreneurship.’” Yang Huiyan said.

In March this year, Country Garden held a monthly management meeting, and the term “transition” was mentioned again. Yang Huiyan said, “Since March 2025, we have gone out to explore new development models under industry changes through exchanges with peers and across industries in depth. And we will prepare for the key transition in 2026 by putting delivering on-time homes first, debt restructuring as the priority, and protecting the main body of the business as the foundation.”

In 2026, Yang Huiyan has defined it as the most critical year for Country Garden to transition from delivering on-time homes to normal operations. Yang Huiyan said plainly, “Only with solid implementation of all work in 2026 can we lay a foundation for high-quality development in the next 3–5 years and achieve Country Garden’s second growth.”

Recently, market rumors claimed that Country Garden “launched a large-scale recall of departed employees.” Earlier, Securities Times reporter learned from Country Garden that the “Administrative Measures for Rehiring Resigned Personnel” has existed within the company for a long time. Every year, it is revised according to the policy situation. The latest revision occurred in January this year, not a newly issued policy. In addition, the reporter also learned that Country Garden has not recently carried out large-scale recruiting, or recruiting concentrated in any single business segment; it mainly involves filling vacancies in normal positions.

Yan Yuejin pointed out that this move has indicator significance. “After undergoing deep adjustments, this action is a signal of a substantive shift in the company’s operating focus. The company is now working to replenish strength for its existing business and is gradually entering the reshaping stage of ‘operational recovery.’”

According to Country Garden’s 2025 annual report, as of the end of 2025, the company’s total number of employees was 14.1 thousand, down by about 3.8 thousand from 17.9 thousand at the 2025 interim period.

In addition, according to the adjustment results published by MSCI, Country Garden was officially included in the MSCI China Small Cap Index, and the inclusion took effect on February 27. On March 20, Country Garden’s inclusion in the FTSE Russell Global Equity Index Series took effect as well. As of March 21, the proportion of Country Garden held by mainland investors through the Stock Connect was 17.7%, up 2.4 percentage points from 15.3% at the end of 2025.

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责任编辑：王珂