Longhu Group Releases 2025 Performance Guidance, Operating Business Solidifies Profit "Ballast"

On March 6, Longfor Group (00960.HK) released its full-year 2025 earnings forecast. The announcement shows that the company expects to achieve a net profit attributable to shareholders of about 1 billion yuan in 2025.

The sustained growth of its operational business is a key support for Longfor Group’s stable profits. Although development business faces challenges, the operational and service businesses that Longfor has been cultivating in recent years continue to contribute steady profits, effectively offsetting the cyclical fluctuations of the development sector.

Industry veterans analyze that, looking back over the past year, liquidity tightening and high inventory pressures remain key themes in the real estate industry. The market’s “slow recovery” has seen prices and transaction volumes decline simultaneously, putting ongoing pressure on development project settlements. This is a common challenge across the industry, and Longfor has not been immune. However, it is worth noting that amid industry headwinds, Longfor has maintained its operational safety bottom line by continuously strengthening the “ballast stone” role of its operational business and adhering to strict financial discipline, thereby securing critical space for future structural optimization and performance recovery.

The announcement indicates that in 2025, the company’s overall and all segments achieved positive operational cash flow including capital expenditures. Notably, Longfor has recorded positive operational cash flow with capital expenditures for three consecutive years. The company states that over the past three years, it has steadily and orderly reduced debt, continuously optimized its debt structure, and that future debt maturities are manageable.

With its strong operational cash flow, continuously growing operational businesses, and proactive transformation into new commercial models, Longfor has demonstrated certain resilience against economic cycles, attracting ongoing attention and positive evaluations from major institutions both domestically and abroad.

Citi Bank pointed out that due to continued sales declines in Q4, profit margins in the development sector may continue to decrease, but Longfor’s core competitiveness will continue to support its balanced development.

DBS Bank believes that steady growth in Longfor’s operational income will ease current profitability pressures in its development business. On one hand, Longfor is expected to open 8 new shopping malls in 2026, and the impact of renovations on existing malls is expected to diminish, supporting a 10% year-over-year increase in rental income and enhancing overall profitability stability. On the other hand, the settlement volume of real estate development projects will decrease, further reducing future profit pressures.

JPMorgan Chase emphasizes that, compared to the potentially declining development business, they are “more focused on Longfor’s steadily increasing recurring income,” and believe that amid current industry volatility, Longfor is almost the “only unshaken company” among major private developers. With its business transformation, significant performance improvements are expected in the coming years.

Longfor’s resilience is no accident but the result of years of steadfast strategic transformation. The company has transitioned from a traditional real estate developer to a comprehensive urban operation service provider covering development, operation, and services.

This strategic shift not only reshapes the company’s fundamentals but also provides new dimensions for market revaluation. Huatai Securities recently stated that Longfor’s valuation still appears undervalued, mainly due to “re-pricing potential in commercial real estate, growth in service businesses enabled by technology, and development recovery momentum amid market cleanup.”

This assessment is supported by the latest operational data. It is understood that in the first two months of this year, Longfor Group achieved approximately 4.4 billion yuan in operational revenue (about 4.7 billion yuan including tax); of which, operating income was about 2.44 billion yuan (about 2.62 billion yuan including tax), and service income was about 1.96 billion yuan (about 2.08 billion yuan including tax).

This also indirectly indicates that its operational and service businesses have become the core drivers of performance growth, with ongoing optimization of the business structure. The stable cash flow and profit contribution from operational properties (especially shopping malls) not only serve as “stabilizers” for performance but also enhance the company’s ability to withstand debt risks. UOB Dahua’s Xianxian pointed out that good operational cash flow and increased capacity to finance operational properties are key factors supporting Longfor’s debt repayment.

As the real estate industry enters a new phase of “淘汰淘汰” (market淘汰), Longfor Group responds to market concerns with sustained growth in operational profits, solid debt reduction capabilities, and clear transformation pathways. Its experience shows that during downturns, companies that maintain financial safety, adhere to long-term principles, and successfully shift their business models from “development” to “operation” can not only weather the winter but also position themselves more favorably after industry consolidation, securing a top-tier industry standing and achieving more sustainable growth.

(Edited by: He Chong)

【Disclaimer】This article reflects only the opinions of third parties and does not represent Hexun’s position. Investors operate at their own risk.