On March 30, COUNTRY GARDEN (02007.HK) released its 2025 financial results, showing a return to book profit after three consecutive years of losses, primarily driven by successful debt restructuring. The company and its joint ventures reported total revenue of approximately 154.9 billion yuan, with a net profit of 1.6 billion yuan. However, this turnaround was not due to operational improvements but resulted from systemic financial repairs following the implementation of debt restructuring plans.
COUNTRY GARDEN's offshore restructuring officially took effect on December 30, 2025, with new debt and equity instruments fully issued. The onshore restructuring plan has also been approved, initiating cash repurchases, equity swaps, and general debt options in sequence. A cash repurchase program of up to 450 million yuan is currently underway and is expected to conclude in April. The completion of both domestic and offshore restructuring reduced the company’s debt by nearly 100 billion yuan, positively impacting its current profits. Excluding gains from debt restructuring, COUNTRY GARDEN would still report an operational loss, largely due to significant asset impairments linked to the broader real estate market downturn.
According to the report, COUNTRY GARDEN recorded impairment losses of approximately 44.5 billion yuan in 2025 related to inventories, including land and projects under construction. Additionally, the company recognized impairment losses of 10.5 billion yuan on financial assets and financial guarantees, influenced by macroeconomic conditions, industry challenges, and adverse financial conditions of partners.
Debt restructuring represented the most critical step in COUNTRY GARDEN’s financial overhaul in 2025. The process led to improvements in debt size, maturity, and cost, marking a transition from risk mitigation to structural upgrade. By the end of 2025, the company’s interest-bearing liabilities stood at 148 billion yuan, down 105.5 billion yuan, or 42%, from 253.5 billion yuan at the end of 2024. Post-restructuring, offshore debt maturities were extended to up to 11 years, with financing costs for most new instruments falling to between 1% and 2.5%. These adjustments established a low-interest, long-term debt structure, providing a critical window for the company to operate with reduced financial pressure over the next five years.
As of December 2025, COUNTRY GARDEN’s total assets amounted to approximately 812.1 billion yuan, with net assets of about 44.3 billion yuan. During the reporting period, the company delivered 170,000 housing units, bringing the total deliveries from 2023 to 2025 to nearly 1.15 million units, largely fulfilling its commitment to ensuring project completion.
2026 marks the first year following COUNTRY GARDEN’s successful debt restructuring. While the return to profitability sends a positive signal, market attention remains focused on whether the company can sustain recovery after shedding part of its debt burden.
In response to recent reports of "large-scale rehiring of former employees," COUNTRY GARDEN clarified that there is no specialized plan for mass rehiring. Re-employment is conducted as a routine measure to fill specific key positions and is limited to a small number of roles. The company updated its internal "Re-employment Management Measures for Former Employees" in January, stating that this was a routine policy review rather than a new initiative. COUNTRY GARDEN emphasized that media interpretations were partial and exaggerated, noting that its talent strategy remains aligned with business needs as it steadily advances operational recovery and project delivery.
Internally, restoring normal operations is as critical as ensuring project completion. During a management meeting on March 6, Chairperson Yang Huiyan described 2026 as the most crucial year for COUNTRY GARDEN’s transition from project delivery to normalized operations. Real estate development will continue to be a key business focus. Over the next three to five years, the company’s strategy will center on building core competitiveness, emphasizing customer-oriented products and services, such as the rollout of fourth-generation residences, while leveraging its integrated industrial chain to enhance design and property services.
As early as February 2025, Yang Huiyan highlighted the dual focus on project delivery and corporate stability in the second half of the year, preparing for a return to normal operations in 2026. In a November internal meeting, she introduced the concept of "starting a second entrepreneurship." The prerequisite for operational recovery—debt restructuring—has now largely been met.
By the end of 2025, restructuring plans for nine onshore bonds with a total balance of 13.77 billion yuan had been approved by creditors. If all options are fully subscribed, COUNTRY GARDEN expects to reduce principal debt by over 50%, extend maturities to up to 10 years, eliminate repayment pressure for five years, lower bond interest rates to 1%, and adopt a "principal before interest" payment structure.
For offshore debt, the restructuring of approximately $17.7 billion became effective on December 30, 2025. In the first week following effectiveness, the company paid about $398 million in cash consideration to participating creditors, representing around 2% of the total principal. Besides cash payments, the restructuring offered a combination of new notes, convertible bonds, and mandatory exchangeable bonds to accommodate different creditor risk preferences. Since January, COUNTRY GARDEN has completed multiple conversions of convertible bonds. By February 16, the total number of shares issued reached 41.655 billion, with approximately 13.727 billion new shares issued post-restructuring. As of March 5, newly issued shares totaled about 14.233 billion, close to 51% of the pre-restructuring share count. On March 9, the company announced further progress, issuing 135.6 million shares at HK$0.40 per share to GLASHK as coordination committee fees.
Is the construction industry entering a spring season? COUNTRY GARDEN’s profitability resembles a阶段性 financial health report—a surgical procedure that removed some ailments (debt burden) but did not restore the body’s core operational vitality. 2026 will be a critical transitional year as the company shifts from project delivery to normalized operations.
In contrast to the apparent recovery in developer accounts, the construction industry continues to experience a chill, undergoing profound structural adjustments. Macroeconomic pressures and market contraction are evident: in 2025, China’s construction industry output value fell by 5.43%, and infrastructure investment (excluding power) saw its first negative growth in five years. Newly signed contracts also declined by 6.57%, indicating reduced future projects.
The sector faces severe oversupply and intense competition, with a mismatch between insufficient high-end capacity and excess low-end capacity. Many small and medium-sized enterprises engage in fierce price wars, squeezing profit margins. Widespread practices like advance funding for construction, coupled with extended payment cycles amid local government debt resolutions, have led to widespread liquidity strain.
Despite these challenges, structural opportunities are emerging in new areas. The government’s emphasis on "quality housing" points the industry toward high-quality, green, and intelligent development. Urban renewal, including the renovation of old residential areas and urban villages, offers a substantial existing market. Overseas expansion has also become a key growth channel, with China’s overseas project contracting revenue rising by 7.74% in 2025, helping offset domestic slowdown.
Leading state-owned enterprises, often referred to as the "Big Eight," now account for nearly 50% of newly signed contracts, driving industry consolidation. Linking COUNTRY GARDEN’s profitability to the broader construction sector yields several insights: It signals a financial repair milestone rather than an industry-wide boom, indicating that systemic risks in real estate are nearing resolution. However, this may boost market confidence without directly translating into new construction orders.
The market is undergoing a fundamental shift: the old growth engine driven by real estate is irreversibly shrinking, while new momentum comes from infrastructure support and overseas expansion. Construction firms must quickly adapt to this new growth paradigm. Future competition will favor survivors with differentiated capabilities and high-end supply capacity. For the construction industry, COUNTRY GARDEN’s stabilization reduces a key bad debt risk in the supply chain, but the sector as a whole must pivot toward new growth drivers.
COUNTRY GARDEN’s return to profitability is like a ray of sunlight breaking through heavy clouds in winter—it dispels some gloom and offers hope. Yet, a true spring for the industry will only arrive when construction output returns to growth, new contract values consistently rise, and receivables issues for small and medium enterprises ease. Until then, the sector must continue building strength during this period of structural transition.
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