Longfor Group Holdings Annual Report 2025: Comprehensive Investor Update

Executive Summary

Longfor Group Holdings Limited (“Longfor” or “the Group”) has released its Annual Report for the year ended December 31, 2025. The company, a major player in China’s real estate sector, is navigating a challenging macro-environment with a clear focus on balance sheet optimization, risk management, and operational excellence. Below, we detail the most relevant insights for shareholders, including any information that may be price sensitive and impact the company’s share value.

Key Financial and Operational Highlights

• Interest-Bearing Debt: As of year-end 2025, Longfor’s interest-bearing debt was RMB 152.8 billion. The average contract borrowing period exceeded 12 years, and the average finance cost declined to 3.51%, with approximately 90% of debt sourced from banks. This demonstrates strong relationships with financial institutions and prudent capital management.
• Debt Structure Optimization: Longfor has made significant progress in deleveraging and restructuring its debt, contributing to lower finance costs and longer debt maturities, which enhances financial stability.
• Liquidity and Cash Flow: Emphasis on cash flow management and balance sheet optimization remains a cornerstone of the Group’s strategy, supporting its resilience during industry shakeouts.
• Investment Property Valuation: Investment properties are valued at RMB 224.1 billion, representing 38% of total assets. The change in fair value for 2025 was a gain of RMB 4.7 billion. All valuations were performed by independent professional valuers using robust methodologies.
• Revenue and Earnings: The Group posted earnings attributable to shareholders of RMB 1,021.9 million for 2025, significantly down from RMB 10.4 billion in 2024. This is a key area of concern for shareholders and may be price sensitive.
• Dividend Policy: Longfor aims for stable and sustainable shareholder returns. However, the Board resolved not to recommend a final dividend for 2025 (2024: RMB 688.8 million, or RMB 0.10 per share), which could have a negative impact on share price.
• Share Capital: The company’s issued and fully paid shares increased to 7,041,631,192 as at December 31, 2025, due to scrip dividend settlements.
• Restricted Share Award Scheme: The Group continues to use share-based incentives for talent retention, with details on vesting periods and fair value disclosed.

Risk Management and Corporate Governance

• Internal Control Systems: The Group maintains a robust internal audit function and conducts periodic reviews of control effectiveness, supported by external professional agents.
• Risk Management: The company employs a structured risk management process, including bottom-up and top-down risk identification, risk assessment, response planning, and annual risk reporting.
• Disclosure and Transparency: Longfor has established an Inside Information Disclosure Working Group to ensure timely communication of price-sensitive events and compliance with regulatory obligations.

Regulatory Compliance and Environmental, Social, and Governance (ESG)

• Legal and Regulatory Compliance: No material breaches or non-compliance with relevant laws and regulations were reported during the year.
• Environmental Policies: The company reaffirms its commitment to environmental compliance and sustainability, with further details in its 2025 Sustainability Report.

Financial Instruments and Market Risk

• Interest Rate Risk: The Group actively manages interest rate exposure, with a policy of keeping material borrowings at fixed rates, including the use of cross-currency interest rate swaps.
• Foreign Currency Sensitivity: The Group’s exposure to USD and HKD is monitored, with a 5% appreciation or depreciation in RMB having a measurable impact on post-tax profit.
• Equity Price Risk: A 10% change in equity prices would alter the investment revaluation reserve by approximately RMB 445 million.

Other Notable Updates

• Senior Notes: The company has several USD-denominated senior notes outstanding, all listed on the Singapore Exchange. These have early redemption options and change of control provisions.
• Share Buybacks and Issuance: The company did not repurchase or redeem any of its own securities, except for the purchase of shares under the Restricted Share Award Scheme.
• Auditor: Deloitte Touche Tohmatsu remains the Group’s auditor, with no change in the past three years.

Potentially Price Sensitive Information

• Sharp Drop in Net Earnings: The decline in attributable profit from RMB 10.4 billion (2024) to RMB 1.02 billion (2025) is significant and may negatively affect investor sentiment and share price.
• No Final Dividend for 2025: The Board’s decision not to recommend a final dividend for 2025 (compared to a healthy dividend in 2024) could further impact the valuation negatively.
• Stable Debt Profile and Lower Finance Costs: On the positive side, Longfor’s success in refinancing and lowering its average cost of debt to 3.51% with long tenors and bank support underlines its financial resilience, potentially limiting downside risk.
• Conservative Risk Management Approach: The company’s robust risk management practices and transparency in information disclosure help maintain market confidence during uncertain times.

Shareholder Actions and Rights

• Shareholders holding at least 10% of voting rights can requisition an Extraordinary General Meeting.
• Shareholders may propose resolutions at general meetings following prescribed procedures.

Conclusion

While Longfor Group Holdings demonstrates strengths in risk management, liquidity, and corporate governance, the significant drop in profitability and the suspension of the final dividend for 2025 are clear negative signals that may pressure the share price in the near term. Investors should monitor the company’s actions to restore earnings growth and sustain dividends in the context of a challenging real estate market.

Disclaimer: The above summary is prepared for informational purposes only and is not investment advice. Investors should review the full annual report and consult their financial advisors before making investment decisions. The company’s actual performance and future results may differ from those discussed due to market and macroeconomic risks.

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