China Merchants Shekou

China Merchants Shekou Industrial Zone Holdings Co., Ltd. (001979.SZ, “China Merchants Shekou”) is a real estate developer listed on the Shenzhen Stock Exchange and a subsidiary of China Merchants Group. The company operates three types of business: development, asset operation and property services. The development business mainly develops and sells for-sale commercial housing, chiefly residential, and agent construction is also included in this segment; asset operation covers exhibitions, cruises, and the operation and asset management of self-held properties such as centralised commercial, industrial office, and serviced apartment and hotel properties; property services consist of basic property management, platform value-added services and professional value-added services. Through specialised companies such as China Merchants Commercial Management, China Merchants Industrial Park, China Merchants Eden and China Merchants Cruise, the company carries out refined operation and management across the full life cycle, and has developed diversified ways of acquiring resources, including tender, auction and listing, mergers and acquisitions, urban redevelopment and asset-light models. Over decades of developing and building the Shekou Industrial Zone, the company has formed an integrated “port-park-city” area development model, and holds a large amount of high-quality land awaiting development, especially in areas such as Shekou, Prince Bay and Qianhai in Shenzhen, a core city of the Guangdong-Hong Kong-Macao Greater Bay Area.

Against the backdrop of distressed developers gradually exiting the competition and industry resources concentrating in state-owned enterprises, according to a 2023 report by Caixin, after a round of clearing among leading developers, the top five companies in the industry by scale were, apart from Vanke, all state-backed developers, namely Poly, COLI, China Resources and China Merchants Shekou; according to data from the CRIC Research Center, the developers that acquired relatively large volumes of land in the first ten months of 2023 included large nationwide, large-scale central state-owned enterprises such as COLI, China Resources Land Limited and China Merchants Shekou.

In 2022, China Merchants Shekou achieved operating revenue of about 183.003 billion yuan, up 13.92% year on year; net profit attributable to shareholders of the parent was about 4.264 billion yuan, a sharp fall of 58.89% year on year, the third consecutive annual decline and a drop much larger than in the previous two years. The steep fall in profit was closely related to asset impairment provisions. In the second half of 2021 and in 2022, China Merchants Shekou cut prices on projects in weaker second-tier and third-tier cities; Jiang Tiefeng, a member of the company’s management, disclosed at an earnings briefing that prices at some projects fell by more than 20% to 30%. Cutting prices to boost volume led to larger impairment provisions: total provisions of various kinds that year were 6.401 billion yuan, 2.029 billion yuan more than the previous year, reducing net profit attributable to shareholders of the parent by 4.558 billion yuan; of this, the provision for inventory write-downs was about 3.641 billion yuan, 43.91% more than the previous year. Provisions involved 29 projects in total, 2.07 times the number of the previous year, more than half of them located in weaker second-tier and stronger third-tier cities.

In 2025, affected by a year-on-year decline in the scale of development projects recognised and lower investment income, the company’s full-year operating revenue was 154.728 billion yuan, down 13.53% year on year; net profit attributable to shareholders of the parent was 1.024 billion yuan, down 74.65% year on year; and the weighted average return on equity was 0.73%, 2.63 percentage points lower than the previous year. Cash flow remained resilient, with net cash flow from operating activities of 9.693 billion yuan for the year and cash and cash equivalents of 86.127 billion yuan at the end of the period. On financing, during the year the company fully redeemed 12 billion yuan of outstanding perpetual bonds, secured 14.1 billion yuan of operating property loans, and raised 17.94 billion yuan of new financing in the public market, with coupon rates all at the lowest level among industry peers over the same period; its overall cost of funds at year-end was 2.74%, 25 BP lower than at the start of the year. On sales, the company achieved contracted sales area of 7.1612 million square metres and contracted sales of 196.009 billion yuan for the year, rising one place in the industry ranking to fourth. On investment, the company acquired 43 land parcels during the year, with a total plot-ratio floor area of about 4.4 million square metres and a total land price of about 93.8 billion yuan, of which the company’s share of the land price payable was about 54.3 billion yuan. In agent construction, China Merchants Construction Management added 80 new agent construction projects (including consulting) during the year, with newly contracted area of 11.39 million square metres and new contract revenue of more than 800 million yuan. In the property services segment, China Merchants Property Operation & Service had operating revenue of 19.273 billion yuan, up 12.23% year on year, and net profit attributable to shareholders of the parent of 655 million yuan, down 22.12% year on year, mainly because the disposal of its Hengyang AVIC project reduced attributable net profit by a one-off 256 million yuan; excluding this factor, attributable net profit rose 8.30% year on year.

The company has continued to deepen and refine its “133,341” strategic system, aiming to consolidate its position among the industry’s top five and become China’s leading integrated developer, operator and service provider for real estate and industrial parks. Through the three strategies of “full focus, driving both quality and efficiency, and win-win between asset-light and asset-heavy” and the four levers of “precise investment, product upgrading, operational value-add and revitalisation of assets”, it is shifting from a development-led model to one that gives equal weight to development and operation, from a predominantly asset-heavy model to a combination of asset-light and asset-heavy, and from homogeneous competition to differentiated development. In 2025, the Bosera Shekou Industrial Park REIT launched its second round of new infrastructure project acquisitions, and the company planned to inject Plot B of the China Merchants Guangming Science and Technology Park in Guangming District, Shenzhen, as well as the W6 and W7 warehouses and ancillary buildings of the Qianhai Yibao Park in Nanshan District, to expand the REIT. In terms of new quality productive forces, the company facilitated the establishment of the joint venture “Zhaoxin Low-Altitude”, led the planning and construction of the “Qianhai-Shekou Low-Altitude Economy Pilot Zone”, and built a low-altitude economy themed Value Factory park, bringing together industry chain companies such as Zero Gravity Aircraft Industry, Fengyi Technology and Yingwu Intelligent; it also joined China Merchants Exhibition to hold a low-altitude economy industry exhibition at the China Hi-Tech Fair. The company also attaches great importance to investing in the leading industries and industry chains of its parks; the industrial funds it has helped set up currently exceed 5 billion yuan in size, and innovative digital and intelligent technology companies such as Insta360 and MetaX were successfully listed during the reporting period.

On June 5, 2026, China Merchants Shekou, together with Poly Property, China Resources Land, COLI, C&D Real Estate and Yuexiu Property Company Limited, a total of six developers, took part in bidding for a residential land parcel in Yuehai Subdistrict, Nanshan, Shenzhen; after 291 rounds of bidding the parcel was won by Poly Property for 5.772 billion yuan. The company’s management believes that in 2026 China’s real estate market will begin a process of transition from the old model to the new under the keynote of “halting the decline and returning to stability”, but that the pace of stabilisation and recovery will still depend on continued improvement in macroeconomic fundamentals and the restoration of residents’ expectations for employment and income.