UOB Kay Hian
Report Date: Thursday, 28 August 2025
China Resources Land Delivers Resilient 1H25 Results, Eyes Positive 2H25 on Policy Tailwinds and REIT Expansion

Executive Summary

China Resources Land (CR Land, 1109 HK) reported core net profit for 1H25 that was largely in line with expectations, despite a challenging macro backdrop. The company’s strong performance in its mall segment and recurring income businesses was counterbalanced by pressures in office and hotel operations. With a clear strategy for regular REIT expansion and robust policy support, CR Land is positioned for a positive sales outlook in the second half of 2025. UOB Kay Hian maintains its BUY rating, raising the target price to HK$34.10, reflecting a 12.2% upside.

Company Overview

CR Land is a leading property developer and operator under the China Resources Group, with businesses spanning residential development, investment properties, urban redevelopment, and property management.

1H25 Financial Performance: Key Highlights

CR Land’s 1H25 core net profit fell 6.9% year-on-year to RMB 10.0 billion, closely matching UOB Kay Hian’s projection of a ~5% decline. The company’s revenue increased 20% year-on-year to RMB 94.92 billion, driven by solid growth in both development property and investment property segments.

Segmental Performance: Retail Malls Lead, Offices and Hotels Lag

• Retail: Retail rental income surged 9.9% year-on-year, fuelled by 20.2% growth in tenant sales and 9.4% same-store sales growth—outpacing the national retail sales growth of 4.8%. The occupancy cost ratio remained healthy at 12%. Gross profit margin for investment property improved to 72.9%.
• Offices and Hotels: Revenue from these segments fell by 14.2% and 16.3% year-on-year, respectively. Occupancy rates were 74.5% for offices (down 0.5ppt YoY) and 64.0% for hotels (flat YoY), highlighting ongoing pressures.

Development Property Business: Operational Metrics

Key takeaways for 1H25:

• CR Land acquired 18 land parcels for RMB 44.73 billion, equivalent to 41% of contracted sales.
• 52% of land investment was in Tier 1 cities, 48% in Tier 2.
• Faster land investment led to a higher net gearing ratio.

Positive Outlook for 2H25: Sales and REIT Expansion

• Sales Resources: Total saleable resources for 2H25 are estimated at RMB 389.4 billion, up 5.6% from 2H24.
• New Launches: Planned new launches will account for 43% of 2H25 resources, much higher than the 25% share in 2H24.
• Policy Support: Supportive government measures are expected to sustain sales rates, driving positive growth in 2H25 and stable full-year performance.

REIT Strategy: CR Land has announced a vision to promote regular REIT expansion, targeting an annual scale of RMB 5–10 billion. Listing investment properties through REITs will provide one-off disposal gains due to higher REIT valuations, though it will reduce consolidated rental income in subsequent years. Management believes that ongoing portfolio enhancements and membership system development will mitigate the long-term impact.

Key Financials and Valuation

Valuation, Risks, and Recommendation

• UOB Kay Hian upgrades its target price for CR Land by 3.8% to HK\$34.10 and maintains a BUY rating.
• The revised target price equates to a 4.1% dividend yield for 2025 and is based on a 2025F/26F blended PE, with targeted PE ratios for property development and recurring businesses at 5x and 13x, respectively.
• Key risks include potential for a sharper-than-expected deterioration in property sales or consumer spending.

Conclusion: Strategic Outlook and Catalysts

CR Land continues to distinguish itself as a sector consolidator and pioneer in China’s evolving property industry, backed by strategic land investments, regular REIT expansion plans, and a robust recurring income base. With policy supports in place and a strong pipeline for 2H25, the company is well positioned for steady growth and resilient performance.
Share Price Catalyst:

• Further supportive policies from the central government to bolster the real estate sector could provide additional upside.

Appendix: Key Balance Sheet and Cash Flow Metrics

China Resources Land stands out as a resilient and innovative leader among Chinese property developers, well-prepared for opportunities as the sector evolves. Investors seeking exposure to high-quality, recurring-income-focused property companies should keep this name on their radar.