Company Reports

Amid a prolonged property market downturn in China, Longfor Group Holdings, or Longfor, has renewed its strategic focus on developing residential projects and ramping up investment properties’ income in around 20 higher-tier cities. For property development, we expect Longfor to source over 90% of contracted sales and new land bank from wealthy regions, including the Yangtze River Delta and Chengdu-Chongqing Area. Moreover, ongoing home-buying policy tailwind should drive a meaningful rebound in Longfor’s housing sales, in our view. That said, structural economic slowdown, coupled with population decline, will likely moderate Longfor’s sales growth over time. Under China’s property market consolidation, we believe Longfor should outperform most non-state-owned peers thanks to superior asset quality, quicker inventory turnover, and better financial health.

Longfor posted a 33% and 60% year-on-year decline in revenue and recurring operating profit, respectively, in the first half of 2026. Results were in line with its profit warning, with earnings deterioration driven by weaker revenue recognition and lower selling prices in property development.

Major Chinese property developers, including state-owned China Overseas Land and Investment and China Resources Land, have had 15%-25% gains in share prices since April 28. That said, the sales value of the top 100 developers slid by 19% year on year in January-April 2026, per third-party data.

Amid prolonged property market downturn in China, Longfor Group Holdings, or Longfor, has renewed its strategic focus on developing residential projects and ramping up investment properties’ income in around 20 higher-tier cities. For property development, we expect Longfor to source over 90% of contracted sales and new landbank from wealthy regions, including the Yangtze River Delta and Chengdu-Chongqing Area. Moreover, ongoing homebuying policy tailwinds should drive a meaningful rebound in Longfor’s housing sales, in our view. That said, structural economic slowdown, coupled with population decline, will likely moderate Longfor’s sales growth over time. Under China’s property market consolidation, we believe Longfor should outperform most non-state-owned peers thanks to superior asset quality, quicker inventory turnover, and better financial health.

Longfor's 2025 revenue and recurring operating profit declined by 23% and 76% year on year, respectively, consistent with its profit warning. Property development gross margin slid to negative 6.9% in 2025 from 6.1% in 2024, due to higher inventory write-offs and subdued selling prices.

China Resources Land posted a 13% year-on-year growth in rental income from its investment property business in 2025, thanks to strong retail asset performance. Domestic peer Longfor also saw 5% expansion in operating revenue from investment properties in 2025.

Amid prolonged property market downturn in China, Longfor Group Holdings, or Longfor, has renewed its strategic focus on developing residential projects and ramping up investment properties’ income in around 20 higher-tier cities. For property development, we expect Longfor to source over 90% of contracted sales and new landbank from wealthy regions, including the Yangtze River Delta and Chengdu-Chongqing Area. Moreover, ongoing homebuying policy tailwinds should drive a meaningful rebound in Longfor’s housing sales, in our view. That said, structural economic slowdown, coupled with population decline, will likely moderate Longfor’s sales growth over time. Under China’s property market consolidation, we believe Longfor should outperform most non-state-owned peers thanks to superior asset quality, quicker inventory turnover, and better financial health.

According to the National Bureau of Statistics, China's new home sales value declined by 11% year on year in January-November 2025. At the recent Central Economic Work Conference, the government reiterated its commitment to stabilizing the property market and clearing excess housing inventory.

Amid prolonged property market downturn in China, Longfor Group Holdings, or Longfor, has renewed its strategic focus on developing residential projects and ramping up investment properties’ income in around 20 higher-tier cities. For property development, we expect Longfor to source over 90% of contracted sales and new landbank from wealthy regions, including the Yangtze River Delta and Chengdu-Chongqing Area. Moreover, ongoing homebuying policy tailwinds should drive a meaningful rebound in Longfor’s housing sales, in our view. That said, structural economic slowdown, coupled with population decline, will likely moderate Longfor’s sales growth over time. Under China’s property market consolidation, we believe Longfor should outperform most non-state-owned peers thanks to superior asset quality, quicker inventory turnover, and better financial health.

Longfor's core net profit declined by 70% year on year in the first half of 2025, consistent with its profit warning. While property development gross margin slumped to 0.2% from 7.4% for the year-ago period, nondevelopment segments maintained an over 50% gross margin.

Longfor issued a profit warning for the first half of 2025, with net profit and core net profit down by 45% and 70% year on year, respectively. This is largely due to a sharp decline in the gross margins of property sales booked, driven by the low average selling prices of presold projects.

Amid prolonged property market downturn in China, Longfor Group Holdings, or Longfor, has renewed its strategic focus on developing residential projects and ramping up investment properties’ income in around 20 higher-tier cities. For property development, we expect Longfor to source over 90% of contracted sales and new landbank from wealthy regions, including the Yangtze River Delta and Chengdu-Chongqing Area. Moreover, ongoing homebuying policy tailwinds should drive a meaningful rebound in Longfor’s housing sales, in our view. That said, structural economic slowdown, coupled with population decline, will likely moderate Longfor’s sales growth over time. Under China’s property market consolidation, we believe Longfor should outperform most non-state-owned peers thanks to superior asset quality, quicker inventory turnover, and better financial health.

According to China Real Estate Information Corp, the top 100 real estate developers in China saw an 11% year-on-year contracted sales decline for the first half of 2025. However, their aggregate land premium paid grew by over 30% for the same period.

Longfor ended 2024 with weak numbers as revenue and operating profit declined by a respective 31% and 40% year on year, given soft bookings and lower property sales margins. Positively, the firm's net gearing ratio eased to 51.7% in 2024 from 55.9% in 2023, due to a CNY 16.3 billion debt reduction.

Amid prolonged property market downturn in China, Longfor Group Holdings, or Longfor, has renewed its strategic focus on developing residential projects and ramping up investment properties’ income in around 20 higher-tier cities. For property development, we expect Longfor to source over 90% of contracted sales and new landbank from wealthy regions, including the Yangtze River Delta and Chengdu-Chongqing Area. Moreover, ongoing homebuying policy tailwinds should drive a meaningful rebound in Longfor’s housing sales, in our view. That said, structural economic slowdown, coupled with population decline, will likely moderate Longfor’s sales growth over time. Under China’s property market consolidation, we believe Longfor should outperform most non-state-owned peers thanks to superior asset quality, quicker inventory turnover, and better financial health.

The 2024 Central Economic Work Conference, or CEWC, held on Dec. 11-12 reaffirmed benign measures to stabilize China's home market and mitigate the industry's financial risks. Other key themes include unleashing property demand potential and expediting inventory absorption.

China’s Ministry of Housing and Urban-Rural Development, along with the Ministry of Finance and other authorities, announced new measures on Oct. 17 to stabilize the property market. We think the most significant directive pertains to upsized credit support to stalled projects, as overall funding will increase to over CNY 4 trillion by the end of 2024 (CNY 2.2 trillion loans approved as of Oct. 17). We expect an acceleration in loan disbursement with distressed developers receiving more funds, which should prop up homebuyers’ confidence, in our view. However, the market may be disappointed by the lack of new incremental stimulus, except reiteration of local governments’ autonomy to relax buying curbs. Despite 5%-17% share price declines in property names following the conference, our longer-term thesis is unchanged: We expect new-home sale prices to bottom around mid-2025 with a mild rebound thereafter. This is supported by easing on borrowing costs, absorption of excess inventory, and further fiscal support on property buying.

We think the recent buying frenzy in China real estate names was induced by incremental policy easing and investors’ reignited sentiment, rather than a rebound in durable home demand. While policy relief has lifted home sales in select key cities, this may be short-lived as home price weakness will likely persist amid oversupply. We also believe that new directives will pose a limited impact on less wealthy cities, given their already loosened homebuying curbs. As such, we reiterate our view that nationwide new home sales value and prices should stabilize in mid-2025 as excess inventory is absorbed, and maintain our fair value estimates for our China property sector coverage.

We lower our fair value estimate for no-moat Longfor to HKD 11.00 per share from HKD 14.50 as the company printed underwhelming first-half 2024 results. A pronounced 32% year-on-year drop in the property development segment's bookings reflected Longfor’s presale decline in 2022-23, while lower home selling prices for that period also weighed on the segment’s gross margin. As Longfor’s contracted sales (mostly presale) continued to slump by 37% in first-half 2024, we expect a lingering headwind on its top-line through 2025 before a mild rebound thereafter. As such, we cut our revenue forecast by 14% and 21% for 2024 and 2025, respectively. We also reduce our midcycle operating margin assumption to 12.3% from 14.0% given more subdued profitability of property sales and elevated operating costs. Following these adjustments, we view Longfor’s shares as fairly priced.

Amid prolonged property market downturn in China, Longfor Group Holdings, or Longfor, has renewed its strategic focus on developing residential projects and ramping up investment properties’ income in around 20 higher-tier cities. For property development, we expect Longfor to source over 90% of contracted sales and new landbank from wealthy regions, including the Yangtze River Delta and Chengdu-Chongqing Area. Moreover, ongoing homebuying policy tailwinds should drive a meaningful rebound in Longfor’s housing sales, in our view. That said, structural economic slowdown, coupled with population decline, will likely moderate Longfor’s sales growth over time. Under China’s property market consolidation, we believe Longfor should outperform most non-state-owned peers thanks to superior asset quality, quicker inventory turnover, and better financial health.