Country Garden Holdings 2025 Annual Report: Detailed Insights for Investors

Executive Summary

Country Garden Holdings Company Limited (“Country Garden” or “the Group”) has released its Annual Report for the year ended 31 December 2025, revealing significant developments in its financial position, operations, and strategic direction. The report details a challenging year marked by ongoing industry adjustment, substantial restructuring activities, and a return to profitability after two years of heavy losses.

Financial Performance: Recovery Amid Challenges

• Revenue: The Group’s revenue declined to RMB 154.9 billion in 2025, a sharp decrease from RMB 252.8 billion in 2024, continuing a multi-year downward trend.
• Profitability: After reporting massive losses in 2023 (RMB -200.96 billion) and 2024 (RMB -35.15 billion), Country Garden returned to profitability with a net profit of RMB 1.62 billion in 2025. Profit attributable to owners was RMB 3.26 billion, compared to a loss of RMB 32.8 billion in 2024.
• Earnings per Share: Basic earnings per share rebounded to RMB 0.12 (2024: RMB -1.19). Diluted EPS remained the same as basic due to anti-dilutive effects of outstanding instruments.
• Balance Sheet: Total assets fell to RMB 812.1 billion (2024: RMB 1,035.8 billion), while total liabilities decreased to RMB 767.9 billion (2024: RMB 984.6 billion). Total equity further declined to RMB 44.3 billion, down from RMB 51.3 billion in 2024, reflecting ongoing deleveraging and asset disposals.
• Liquidity and Gearing: The capital gearing ratio improved significantly from 81.4% in 2024 to 74.5% in 2025, aided by debt restructuring and asset sales.

Key Price-Sensitive Developments

1. Restructuring and Going Concern Uncertainties:
   • The Group undertook major onshore and offshore debt restructuring in 2025, including the issuance of new shares and convertible instruments to creditors and the controlling shareholder. Despite progress, the Group’s external auditor issued a Disclaimer of Opinion on the appropriateness of the going concern basis, citing material uncertainties related to the realization of sales proceeds, negotiations with creditors and suppliers, and the resolution of ongoing litigation cases.
   • If the Group fails to execute its mitigation plans, it may be unable to continue as a going concern, potentially leading to asset write-downs and reclassification of non-current assets and liabilities to current status.
2. Equity Dilution and Fund Raising:
   • The Group issued a total of 932,548,737 new shares on 30 December 2025 to settle fees and interest with creditors and advisors. Major equity-linked instruments were issued or equitized, including:
     • 135,591,359 shares to GLAS Agency (HK) Limited
     • 525,809,957 shares to the Ad Hoc Group of creditors (AHG)
     • 483,600,000 shares for work fees to AHG
     • Zero-coupon mandatory convertible bonds (USD 39.5 million principal) to Chong Hing Bank, convertible into 279,817,174 shares
     • 816,676,484 SCA Warrants to original lenders of the SCA Loan, exercisable into shares
     • Up to 15,519,049,697 shares to Concrete Win Limited (controlling shareholder) as part of loan equitization

     These substantial equity issuances and conversion features could lead to significant dilution for existing shareholders and may affect share price performance.

3. Dividend Policy and Suspension:
   • No final dividend was declared for 2025. The Board cited industry pressure on gross margins and the need to preserve cash for project delivery and working capital. There is no pre-set dividend payout ratio, and future dividends will depend on financial results, cash flows, business conditions, and capital needs.
4. Major Connected Transactions:
   • Loan Equitization and Disposal: In November 2025, Country Garden entered into agreements with its controlling shareholder, Concrete Win, to equitize USD 1.098 billion in shareholder loans and potentially dispose of certain subsidiaries. These transactions, approved by shareholders, are material related-party deals that align stakeholder interests but may impact corporate control and future performance.
5. Litigation Risks:
   • The Group is subject to a rising number of litigation cases, including a winding-up petition filed by Ever Credit Limited in February 2024. Ongoing legal disputes may negatively impact operations, cash flows, and the Group’s ability to implement restructuring plans.
6. Corporate Governance and Public Float:
   • The Group maintained a public float of 53.53% as at year-end 2025, above the minimum required threshold. However, the controlling shareholder, Concrete Win Limited, held 101.68% of issued shares after accounting for equitization and convertible instruments, indicating potential further dilution or changes in shareholding structure upon conversion.
   • The Board confirmed compliance with corporate governance standards and internal controls, with no significant weaknesses identified in 2025.
7. Strategic Direction and Outlook:
   • The Group is transitioning from a focus on “ensuring housing delivery” to normal operations, with strategic priorities on high-quality delivery, risk mitigation, debt restoration, and sustainable growth. It is also emphasizing new technologies and AI for management efficiency.
   • In 2025, nearly 170,000 housing units were delivered by the Group and its JVs/associates, with a three-year cumulative delivery of 1.15 million units, ranking first in the industry. This operational performance provides some support for future recovery.
8. Ongoing Risks and Uncertainties:
   • The Group’s business remains highly sensitive to the PRC real estate market, which is experiencing adjustment and policy shifts. Sales recovery and asset disposal are critical for liquidity, and management has developed alternative plans to mitigate adverse scenarios.
9. Change of Auditor:
   • In September 2024, PricewaterhouseCoopers resigned as auditor, and ZHONGHUI ANDA CPA Limited was appointed as the new auditor for 2025.

Investor Takeaways

• Return to Profitability: The Group’s return to profit in 2025 and lower gearing ratio are positive, but the recovery remains fragile and highly contingent on execution of restructuring plans and market recovery.
• Significant Dilution Risk: Large-scale issuance of new shares and convertible instruments poses significant dilution risk to existing shareholders. Investors should monitor the timing and extent of conversions.
• Ongoing Uncertainties: The auditor’s disclaimer of opinion on going concern, litigation risks, and dependence on PRC property market recovery are material uncertainties that may impact share value and should be closely watched.
• No Dividends: The continued suspension of dividends reflects management’s focus on liquidity preservation and risk management.
• Major Related-Party Transactions: The equitization of loans and potential asset disposals to the controlling shareholder can change future ownership and control dynamics.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should review the full annual report, consider their own circumstances, and consult with professional advisors before making investment decisions. The information presented is based on the 2025 Annual Report of Country Garden Holdings Company Limited and may be subject to change. Past performance is not indicative of future results.

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