Beijing SOEs on Financial Street Expected to See Losses of Up to 12 Billion in 2024.

The Financial Street Holdings Co., Ltd. (referred to as “Financial Street”), headquartered in the central business district of Beijing, released its performance forecast for the year 2024 on January 23. The company suffered its highest net loss of up to 12 billion RMB last year. Financial Street is a large state-owned holding company primarily engaged in commercial real estate development and operation.

The announcement revealed that Financial Street expects a net profit loss attributable to shareholders of the listed company for the full year 2024 to be between 9 billion and 12 billion RMB. This represents a further widening of the loss compared to the same period last year, which was 1.946 billion RMB. After deducting non-recurring gains and losses, the estimated net profit loss is expected to be between 7.8 billion and 10.8 billion RMB, with a loss of 2.072 billion RMB in the same period last year. The basic earnings per share are projected to be a loss of 3.01 RMB to 4.01 RMB, compared to a loss of 0.65 RMB per share in the same period last year.

The reasons for the performance changes include property development business sales contracts totaling around 19.5 billion RMB, a decline in gross profit margins, resulting in an estimated loss of about 2.8 billion to 3.8 billion RMB; accumulated sales/transfer amounts of approximately 2.6 billion RMB from existing projects/assets, leading to an expected loss of around 2.1 billion RMB; asset transactions, such as selling equity and debt of Changrong Company, which is expected to result in a loss of about 900 million RMB; inventory impairment provision estimated to incur a loss of about 2.2 billion to 3 billion RMB; bad debt provisions for joint venture loans expected to result in a loss of about 500 million to 1 billion RMB; fair value changes in investment properties projected to incur a loss of about 600 million to 1.3 billion RMB.

Public records indicate that Financial Street is a large state-owned holding company primarily engaged in commercial real estate development and operation. It was listed on the Shenzhen Stock Exchange in 2000 and is a subsidiary of Beijing Financial Street Investment (Group) Co., Ltd. Beijing Financial Street Investment (Group) Co., Ltd. is a large state-owned investment enterprise with business operations covering government key projects, finance, real estate development, property management, and other industries, spanning nearly 20 provinces and cities including Beijing.

Apart from Financial Street, several A-share real estate development companies have recently announced their performance forecasts for 2024.

China Communications Construction Real Estate announced that it expects a net profit loss of 5.3 billion RMB for 2024, further widening the losses from the previous year. The company is a state-owned holding real estate listed company under China Communications Construction Real Estate Group Co., Ltd.

On January 23, Hebei real estate company Rongsheng Development disclosed its performance forecast for 2024, estimating a net profit loss of 7.2 billion to 9.5 billion RMB attributable to the shareholders of the listed company.

Shanghai Dameng City Enterprise Co., Ltd.’s performance forecast is similarly not optimistic, with an expected net profit loss of approximately 1.96 billion to 2.35 billion RMB for 2024; Greenland Holdings expects a net profit loss of 1.25 billion to 1.78 billion RMB for 2024. Additionally, Evergrande and Huayuan Real Estate are still operating in a loss-making state in 2024.

Furthermore, many real estate companies are experiencing substantial declines in performance.

As a leading enterprise in the Chinese real estate industry, Poly Developments disclosed its performance report, indicating that it achieved operating income of 312.808 billion RMB in 2024, a year-on-year decrease of 9.83%, with a net profit attributable to the parent company of 5.016 billion RMB, a decrease of 58.43% year-on-year.

In response, “Fangyan Report” described the performance decline of this state-owned real estate company as “quite astonishing.” According to data released by the China Index Research Institute earlier this month, the sales volume of China’s top 100 real estate companies in 2024 decreased by 30.6% year-on-year. The demand in the Chinese real estate market continues to be sluggish, impeding the sales plans of many real estate companies and resulting in severe inventory backlog.