华夏幸福(600340) - 2025 Q2 - 季度财报

Part I Definitions This section provides definitions for key terms used throughout the report, ensuring clarity and consistent understanding of the content Definitions of Common Terms This chapter defines common terms used in the report, including the company itself (CFLD), its controlling shareholder (CFLD Holdings), major shareholders (Ping An Asset Management, Ping An Life), and key subsidiaries (Jingyu Real Estate, Jiutong Investment), providing a foundation for understanding the report's content - CFLD, the Company: Refers to China Fortune Land Development Co., Ltd[13] - CFLD Holdings: Refers to China Fortune Land Development Holdings Co., Ltd., the Company's controlling shareholder[13] - Ping An Life: China Ping An Life Insurance Co., Ltd., together with its concerted party Ping An Asset Management, is CFLD's largest shareholder[13] Part II Company Profile and Key Financial Indicators This section provides an overview of the company's basic information, contact details, historical changes, information disclosure, stock summary, and key financial performance indicators I. Company Information This section outlines the basic information of China Fortune Land Development Co., Ltd., including its Chinese name, abbreviation, English name and abbreviation, and legal representative Wang Wenxue Company Basic Information | Indicator | Content | | :--- | :--- | | Company's Chinese Name | 华夏幸福基业股份有限公司 | | Company's Chinese Abbreviation | 华夏幸福 | | Company's English Name | CHINAFORTUNELANDDEVELOPMENTCO.,LTD. | | Company's English Abbreviation | CFLD | | Company's Legal Representative | 王文学 | II. Contact Person and Information This section provides the contact information for the Company's Board Secretary, Li Yushan, including address, phone, fax, and email, facilitating communication for investors and relevant parties Board Secretary Contact Information | Name | Li Yushan | | :--- | :--- | | Contact Address | 23rd Floor, Tower A, Gateway Plaza, No. 18 Xiaguangli, East Third Ring North Road, Chaoyang District, Beijing | | Phone | 010-59115198 | | Fax | 010-59115196 | | Email | IR@cfldcn.com | III. Overview of Changes in Basic Information This section introduces the historical changes in the company's registered address, which changed from Shangyu City, Zhejiang Province to Gu'an County, Hebei Province in August 2012, and lists the current registered address, office address, postal code, and company website - The company's registered address changed from "Zhongtang, Baiguan Town, Shangyu City, Zhejiang Province" to "No. 1, North of Third Road, West of Jingkai Road, Gu'an County, Hebei Province" in August 2012[17] - The company's office address is 23rd Floor, Tower A, Gateway Plaza, No. 18 Xiaguangli, East Third Ring North Road, Chaoyang District, Beijing, with postal code 100027[17] IV. Overview of Changes in Information Disclosure and Document Custody Locations This section specifies the company's designated newspapers for information disclosure, the website address for publishing semi-annual reports, and the location for document custody, noting no changes during the reporting period - The company's selected newspapers for information disclosure include China Securities Journal, Shanghai Securities News, Securities Daily, and Securities Times[18] - The website address for publishing semi-annual reports is www.sse.com.cn, and the company's semi-annual report is available at the company's Board of Directors Office[18] V. Company Stock Overview This section provides an overview of the company's A-share stock, including the listing exchange, stock abbreviation, stock code, and previous stock abbreviation Company Stock Summary | Stock Type | Listing Exchange | Stock Abbreviation | Stock Code | Previous Stock Abbreviation | | :--- | :--- | :--- | :--- | :--- | | A-share | Shanghai Stock Exchange | 华夏幸福 | 600340 | ST国祥 | VII. Key Accounting Data and Financial Indicators This section presents the company's key accounting data and financial indicators for the first half of 2025, showing a significant 50.90% year-on-year decrease in operating revenue, a negative and expanding net loss attributable to shareholders, and negative net assets, reflecting severe financial challenges for the company Key Accounting Data (January-June 2025) | Key Accounting Data | Current Period (Jan-Jun) | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 2,902,848,687.45 CNY | 5,911,893,136.71 CNY | -50.90 | | Total Profit | -8,179,459,971.72 CNY | -6,386,046,765.18 CNY | Not applicable | | Net Profit Attributable to Shareholders of Listed Company | -6,827,384,567.50 CNY | -4,849,241,467.27 CNY | Not applicable | | Net Profit Attributable to Shareholders of Listed Company After Non-recurring Gains and Losses | -7,705,307,740.49 CNY | -6,312,671,285.82 CNY | Not applicable | | Net Cash Flow from Operating Activities | -3,216,733,059.71 CNY | -148,014,639.92 CNY | Not applicable | | Net Assets Attributable to Shareholders of Listed Company | -1,819,911,576.06 CNY | 4,094,970,997.05 CNY | -144.44 | | Total Assets | 278,117,681,862.06 CNY | 304,389,031,558.94 CNY | -8.63 | Key Financial Indicators (January-June 2025) | Key Financial Indicators | Current Period (Jan-Jun) | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (CNY/share) | -1.75 | -1.25 | Not applicable | | Diluted Earnings Per Share (CNY/share) | -1.75 | -1.25 | Not applicable | | Basic EPS After Non-recurring Gains and Losses (CNY/share) | -1.98 | -1.62 | Not applicable | | Weighted Average Return on Net Assets (%) | -527.93 | -81.97 | Decrease by 445.96 percentage points | | Weighted Average Return on Net Assets After Non-recurring Gains and Losses (%) | -595.82 | -106.71 | Decrease by 489.11 percentage points | IX. Non-recurring Gains and Losses Items and Amounts This section details the company's non-recurring gains and losses items and their amounts for the first half of 2025, totaling CNY 878 million, with debt restructuring gains and losses contributing the most at CNY 1.481 billion Non-recurring Gains and Losses Items (January-June 2025) | Non-recurring Gains and Losses Item | Amount (CNY) | | :--- | :--- | | Gains and losses from disposal of non-current assets | 131,340,939.52 | | Government grants recognized in current profit or loss | 907,773.85 | | Gains and losses from entrusted investments or asset management | 27,222,503.00 | | Debt restructuring gains and losses | 1,480,917,383.88 | | Gains and losses from changes in fair value of investment properties measured using fair value model | -46,422,093.32 | | Other non-operating income and expenses apart from the above items | -349,940,129.21 | | Other items meeting the definition of non-recurring gains and losses (Gains and losses from disposal of long-term equity investments) | 5,026,944.48 | | Less: Income tax impact | 331,194,888.67 | | Minority interests impact (after tax) | 39,935,260.54 | | Total | 877,923,172.99 | Part III Management Discussion and Analysis This section provides management's discussion and analysis of the company's operations, strategic transformation, industry overview, core competencies, and other significant disclosures I. Company Operations and Comprehensive Transformation In the first half of 2025, while advancing "guaranteed delivery" and debt restructuring, the company actively implemented its "comprehensive transformation into an industrial new city service provider" strategy, optimizing business models and strengthening core capabilities, achieving significant progress in residential project delivery, steadily advancing debt restructuring, and vigorously developing operations, services, and park-derived businesses, exploring asset-light output and new models - The company's strategic positioning is an "industrial new city service provider," continuously strengthening its full-process industrial development service capabilities with investment promotion as the core[27] (I) Continued Advancement of 'Guaranteed Delivery' The company prioritizes "guaranteed delivery," and with government support and multi-channel fundraising, has completed the delivery of all residential projects, with 4 apartment projects / 12,000 units / 840,000 square meters remaining for delivery - From the end of 2020 to the report disclosure date, all residential projects have been delivered[28] - There are 4 apartment projects remaining for delivery, totaling 12,000 units and 840,000 square meters[28] (II) Continued Advancement of Debt Restructuring Adhering to the principle of "no evasion of debt, equal rights for equal debt," the company actively promotes financial debt restructuring, having achieved CNY 192.669 billion in financial debt restructuring through agreements as of the report disclosure date, and established "CFLD Select Platform" and "CFLD Premium Platform" for debt-for-equity swaps, cumulatively offsetting approximately CNY 23.628 billion in financial and operating debts - The "CFLD Debt Restructuring Plan" was announced on September 30, 2021, and approved by the Creditors Committee on December 9 of the same year[29] - As of the report disclosure date, the cumulative amount of CNY 192.669 billion in financial debt restructuring under the "Debt Restructuring Plan" (totaling CNY 219.2 billion) has been achieved through agreements and other means[29] - The company's "CFLD Select Platform" equity, established with shares of its subsidiaries, has offset approximately CNY 17.454 billion in financial debt, with relevant creditors obtaining an equity stake of approximately 43.00% in the "CFLD Select Platform"[30][31] - The company's "CFLD Select Platform" and "CFLD Premium Platform" equity, established with shares of its subsidiaries, have offset approximately CNY 6.174 billion in operating debt[31] - Trust plan beneficiary units have offset a total of no more than CNY 24.001 billion in "cash-for-equity-for-debt" financial claims, with CNY 22.348 billion in trust debt-for-equity transactions already completed[32] (III) Orderly Advancement of Business Operations While undergoing debt restructuring, the company actively developed development, operation, service, and park-derived businesses, fully transforming into an "industrial new city service provider," with CNY 13.66 billion in new signed investment for industrial new city development, 187,000 square meters in new investment promotion area for Beijing-Tianjin-Hebei industrial parks, over 120 million square meters in property management area, and a 25% year-on-year increase in real estate agency construction output value - Within the entrusted areas of industrial new city comprehensive development agreements, 18 new enterprises have entered the parks, with new signed investment totaling CNY 13.66 billion[33] - In the first half of 2025, Beijing-Tianjin-Hebei industrial parks added 65 new investment promotion projects, with a contracted area of approximately 187,000 square meters[34] - In the first half of 2025, CFLD Property's managed area for city services and industrial park services was approximately 65.69 million square meters, and for residential services, it was approximately 59.24 million square meters[34] - Beijing Xingfu Anji Construction Management Co., Ltd. achieved approximately CNY 22 million in new output value in the first half of the year, a 25% year-on-year increase[35] - Suzhou Torch Innovation and Entrepreneurship Incubation Management Co., Ltd., invested by the company, achieved operating revenue of CNY 142 million and operational cash collection of CNY 153 million[35] (IV) Deepening Comprehensive Transformation The company firmly adheres to the "industrial new city service provider" strategic direction, solidifying its transformation path and achieving business development through asset-light output, leveraging park resources, and exploring new real estate development models - The company is comprehensively transforming into an "industrial new city service provider," relying on its full-process industrial development capabilities centered on investment promotion and extensive industrial park resources[36] - Key transformation paths include asset-light output, continuous exploration and realization of park resources (such as new energy and digitalization), and exploring new real estate development models like agency construction and sales services[36] II. Industry and Main Business Overview During the Reporting Period This chapter elaborates on the macroeconomic situation in the first half of 2025, the development of the industries in which the company operates (industrial new cities, park and enterprise services, property management, residential development), and details the operating models of the company's main businesses, including the characteristics, operating mechanisms, and profit models of development, operation, service, and park-derived businesses (I) Macroeconomic Review In the first half of 2025, China's national economy showed steady improvement with GDP growing by 5.3% year-on-year, while the real estate sector underwent deep adjustments with narrowing sales declines and improved funding sources, and new quality productive forces accelerated cultivation, high-tech manufacturing and digital economy rapidly developed, and green development improved quality and efficiency - In the first half of 2025, China's Gross Domestic Product (GDP) was CNY 66.0536 trillion, a 5.3% year-on-year increase[37] - In the first half of the year, national new commercial housing sales area decreased by 3.5% year-on-year, and sales value decreased by 5.5% year-on-year, with both declines narrowing[38] - The added value of high-tech manufacturing above designated size grew by 9.5%, and new energy vehicle production increased by over 30% year-on-year[39] (II) Industry Review Industrial new city construction aligns with high-quality development requirements, with investment promotion being key to a modern industrial system, while REITs emerge as a crucial tool for revitalizing existing assets, and demand for park operations and enterprise services grows, necessitating high-quality development, with promising potential in urban property services and innovation in community property service models, and the real estate industry undergoes deep adjustments, highlighting the importance of agency construction as an asset-light model - Industrial new cities, as important carriers of new urbanization, drive local economic development through industrial agglomeration, technological innovation, and urban environmental optimization[40] - As of June 30, 2025, China's public REITs numbered 69, with a total market capitalization of CNY 205.475 billion[41] - It is estimated that by 2025, the total building area of national industrial parks will exceed 6.2 billion square meters, leading to increased demand for park operations and enterprise services[42] - In 2025, China's property service industry market size is expected to exceed CNY 2.2 trillion, with an annual compound growth rate maintained above 10%[44] - In the first half of 2025, national real estate development investment decreased by 11.2% year-on-year, and new housing starts decreased by 20.0%[47] - In the first half of 2025, the planned new construction area of real estate agency construction enterprises increased by 17.6% year-on-year, with agency construction placed in an important strategic position as an asset-light business[48] (III) Overview of Main Businesses and Operating Models The company's main businesses include industrial new city development, residential development, industrial park operations, innovation center operations, industrial development services (investment promotion, leasing, industry-city services), property management, real estate services (agency construction, sales), and park-derived businesses (sci-tech park operations, other derived businesses), with each business segment having distinct model characteristics, operating mechanisms, and profit models, aiming to achieve high-quality regional development and asset appreciation through specialized services and resource integration - Industrial new city development adopts a market-oriented operating mechanism of "government-led, enterprise-operated, win-win cooperation," providing planning and design, land consolidation, infrastructure construction, public supporting facilities construction, industrial development services, and urban operation services[55] - The profit model for industrial new city business includes planning and design and consulting service fees, land consolidation service fees, infrastructure and public facilities construction service fees, industrial development service fees (calculated at 45% of new landed investment), and urban operation and maintenance service fees[56][57] - Residential development, centered on the "Peacock City" brand, is committed to creating livable communities with a "beautiful life system"[60] - Industrial park operations focus on revitalizing existing assets, enhancing asset operating income through refined operations, and achieving full lifecycle management of "fundraising, investment, management, and exit"[62] - CFLD Investment Promotion provides full-process precise investment attraction services covering "research, planning, sourcing, negotiation, signing, and implementation," with service revenue collected as a certain percentage of the actual landed fixed asset investment total for each project[70][72] - CFLD Property is committed to becoming "China's leading urban service provider," with service content including urban services, community services, and park services, and a fee model adopting either a lump-sum or commission basis[86][88] - Real estate agency construction services, relying on Xingfu Anji, focus on first and second-tier cities, providing EPC+ general contracting, regional comprehensive development, commercial agency construction, industrial agency construction, and distressed project guaranteed delivery[92] - Sci-tech park operation business, represented by Suzhou Torch, adopts "lease-operation" and "entrusted-operation" models, providing space and specialized services for cultural and creative, and sci-tech enterprises[95][96] III. Discussion and Analysis of Operating Performance In the first half of 2025, the company achieved phased results in debt restructuring and strategic transformation, activating existing resources through refined operations and fostering new growth drivers, with the second half focusing on completing "guaranteed delivery," steadily advancing debt restructuring, building a park service ecosystem, and strengthening capability development to ensure stable and sustainable company growth - In the first half of the year, the company fully advanced restructuring agreements, asset transactions, debt-for-equity swaps, and trust plans under the "Debt Restructuring Plan" and "Debt-for-Equity Swap Plan," achieving phased results[99] - The second half operating plan includes: fully tackling the completion of "guaranteed delivery," steadily advancing debt restructuring, focusing on transformation implementation to build a park service ecosystem, and strengthening capability development with optimized mechanisms to ensure stable growth[100][101] IV. Analysis of Core Competencies During the Reporting Period The company's core competencies lie in focusing on industries, building full-process industrial development capabilities, leveraging parks to fully explore application scenarios, meticulously planning and rooting in metropolitan areas and core regions, and comprehensively coordinating strategic transformation and strengthening organizational assurance mechanisms - The company builds full-process, all-region industrial development capabilities with investment promotion as the core, focusing on national strategic emerging industries and developing new quality productive forces[103] - The company has cultivated industrial park construction, operation, and services for over two decades, forming a development pattern of "urban image, industrial scale, and population agglomeration," and deeply exploring diverse application scenarios for industrial parks[104] - The company adheres to a core metropolitan area focus strategy, continuously cultivating key regions such as Beijing-Tianjin-Hebei, Yangtze River Delta, and Greater Bay Area, committed to "serving real enterprises and developing county economies"[105] - The company continuously optimizes its organizational structure, strengthens its cadre team, strictly implements performance appraisals, innovates distribution mechanisms, stimulates team enthusiasm, and ensures strategic implementation[106] V. Key Operating Performance During the Reporting Period During the reporting period, the company steadily advanced its operations amidst debt restructuring and strategic transformation, achieving CNY 2.903 billion in operating revenue, a 50.90% year-on-year decrease, and a net loss attributable to parent company shareholders of CNY 6.827 billion, with specific progress across all business segments, including CNY 13.66 billion in new signed investment for industrial new cities, CNY 260 million in market-oriented expansion contracts for CFLD Property, and a 25% year-on-year increase in Xingfu Anji's output value, while the company's real estate land reserves totaled 4.1752 million square meters, and period-end unbooked area was 4.3262 million square meters Key Operating Data for H1 2025 | Indicator | Amount | | :--- | :--- | | Operating Revenue | 2.903 CNY billion | | YoY Change | Decrease by 50.90% | | Net Profit Attributable to Shareholders of Listed Company | -6.827 CNY billion | | Sales Amount | 2.849 CNY billion | | YoY Change | Decrease by 36.41% | (II) Review of Specific Progress in Company Business Segments All company business segments achieved specific progress during the reporting period, with industrial new city development focusing on core metropolitan areas, adding CNY 13.66 billion in new signed investment, and the Karawang Industrial New City in Indonesia forming a power battery industrial cluster, while operations business saw 187,000 square meters in new signed area for Beijing-Tianjin-Hebei industrial parks and stable innovation center occupancy rates, and service businesses included CFLD Investment Promotion introducing 10 market-oriented industrial projects, CFLD Blue Line Investment Promotion landing 143 projects, CFLD Property achieving CNY 260 million in market-oriented contracts, and Xingfu Anji's output value increasing by 25% year-on-year, and park-derived businesses saw Suzhou Torch achieve CNY 142 million in operating revenue, with "CFLD Select" and "CFLD Premium" platforms collectively implementing approximately CNY 23.628 billion in debt-for-equity swaps - Industrial new city development added CNY 13.66 billion in new signed investment, with Shanghai Biaoji Information Technology Co., Ltd. signing an investment of CNY 8.2 billion[110] - The Karawang Industrial New City in Indonesia has signed park entry investment agreements with 25 enterprises, initially forming a power battery industrial cluster, with CATL already settled in[110] - In the first half of 2025, Beijing-Tianjin-Hebei industrial parks added 65 new signed projects, with a contracted investment promotion area of 187,000 square meters[113] - CFLD Investment Promotion introduced 10 industrial projects for 5 market-oriented cooperation and entrusted regions, with fixed asset investment totaling CNY 3.733 billion[115][116] - CFLD Blue Line Investment Promotion landed 143 projects, a 21% year-on-year increase, with a total contracted area of 321,000 square meters, a 143% year-on-year increase[118] - In the first half of 2025, CFLD Property's operating revenue was approximately CNY 701 million, third-party business operating revenue was CNY 87 million, and it signed 44 market-oriented projects with a contract value of CNY 260 million[122][124] - Xingfu Anji achieved approximately CNY 22 million in new output value in the first half of the year, a 25% year-on-year increase[126] - Suzhou Torch has 26 projects in operation, with operating revenue of approximately CNY 142 million and operational cash collection of approximately CNY 153 million[129] - As of the report disclosure date, the company's financial and operating debts collectively implemented debt-for-equity swaps totaling approximately CNY 23.628 billion[133] 6. Analysis of Real Estate Industry Operating Information During the reporting period, the company's real estate business held 4.1752 million square meters of land awaiting development, 6.0881 million square meters of primary land consolidation area, and 7.2148 million square meters of planned gross floor area, achieving CNY 784 million in sales, 123,900 square meters in sales area, CNY 1.004 billion in recognized revenue, with 4.3262 million square meters remaining to be recognized at period-end Real Estate Reserve Status (Period-end) | Indicator | Area (square meters) | | :--- | :--- | | Area of land held for development | 4,175,163.65 | | Primary land consolidation area | 6,088,147.78 | | Planned gross floor area | 7,214,832.74 | | Land area involved in cooperative development projects | 1,434,156.33 | - During the reporting period, the company achieved total sales of CNY 783.7922 million and a sales area of 123,905.62 square meters[157] - Recognized revenue amounted to CNY 1.004171 billion, with a recognized area of 129,177.64 square meters[157] - At the end of the reporting period, the area awaiting revenue recognition was 4,326,244.08 square meters[157] (III) Analysis of Main Business Analysis of the company's main business shows a significant year-on-year decrease in both operating revenue and operating costs, primarily due to fewer real estate projects recognized, while sales and administrative expenses decreased, and financial expenses increased due to higher interest, with net cash flow from operating activities decreasing, net cash flow from investing activities decreasing, and changes in net cash flow from financing activities being not applicable Analysis of Changes in Financial Statement Items (January-June 2025) | Item | Current Period Amount | Prior Year Period Amount | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 2,902,848,687.45 CNY | 5,911,893,136.71 CNY | -50.90 | | Operating Cost | 2,610,025,546.38 CNY | 4,111,928,229.45 CNY | -36.53 | | Selling Expenses | 103,783,100.78 CNY | 179,166,125.88 CNY | -42.07 | | Administrative Expenses | 1,092,122,331.70 CNY | 1,264,115,508.27 CNY | -13.61 | | Financial Expenses | 4,990,057,059.78 CNY | 4,248,185,887.11 CNY | 17.46 | | R&D Expenses | 5,170,725.32 CNY | 5,635,480.58 CNY | -8.25 | | Net Cash Flow from Operating Activities | -3,216,733,059.71 CNY | -148,014,639.92 CNY | Not applicable | | Net Cash Flow from Investing Activities | 1,151,966,186.96 CNY | 1,209,589,620.79 CNY | -4.76 | | Net Cash Flow from Financing Activities | -733,301,059.64 CNY | -1,086,412,116.37 CNY | Not applicable | - The change in operating revenue was primarily due to a decrease in real estate projects recognized in the current period[158] - The change in financial expenses was primarily due to an increase in interest in the current period[158] (V) Analysis of Assets and Liabilities The company's asset and liability structure underwent significant changes at the end of the reporting period, with a substantial decrease in monetary funds and accounts receivable, and a significant increase in prepayments, right-of-use assets, and lease liabilities, while overseas assets accounted for 1.66% of total assets Analysis of Changes in Assets and Liabilities | Item Name | Current Period-end Amount | Proportion of Total Assets at Current Period-end (%) | Prior Year-end Amount | Proportion of Total Assets at Prior Year-end (%) | Change in Amount from Prior Year-end (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 3,002,256,164.72 CNY | 1.08 | 5,806,769,845.56 CNY | 1.91 | -48.30 | Primarily due to a decrease in net cash flow from operating activities in the current period | | Accounts Receivable | 27,639,794,765.85 CNY | 9.94 | 49,377,787,768.35 CNY | 16.22 | -44.02 | Primarily due to the "replacement loan" transaction | | Prepayments | 1,236,654,763.49 CNY | 0.44 | 892,742,905.65 CNY | 0.29 | 38.52 | Primarily due to an increase in construction payments in the current period | | Right-of-Use Assets | 67,978,962.63 CNY | 0.02 | 11,806,874.71 CNY | - | 475.76 | Primarily due to new lease agreements in the current period | | Lease Liabilities | 59,512,458.65 CNY | 0.02 | 4,225,055.63 CNY | - | 1,308.56 | Primarily due to new lease agreements in the current period | | Long-term Payables | 370,557,657.85 CNY | 0.13 | 1,065,384,773.04 CNY | 0.35 | -65.22 | Primarily due to reclassification to non-current liabilities due within one year | - Overseas assets amounted to CNY 4.619 billion, accounting for 1.66% of total assets[160] (VI) Analysis of Investment Status During the reporting period, the company's total external equity investment amounted to CNY 3.69 billion, a 56.62% increase compared to the same period last year - During the reporting period, the company's equity investments, including establishing new companies, increasing capital in consolidated subsidiaries, and external mergers and acquisitions, totaled CNY 3.69 billion, a 56.62% increase compared to the same period last year[161] (VII) Significant Asset and Equity Disposals The company transferred 100% equity of the target company to Langfang Asset Management via the "replacement loan" scheme, with Langfang Asset Management assuming CNY 22.575 billion in debt and acquiring equivalent assets to mitigate debt risks - The company plans to transfer 100% equity of the target company to Langfang Asset Management, which will acquire 100% equity of the target company for CNY 2 and assume CNY 22.575 billion in debt[163] (IX) Information on Structured Entities Controlled by the Company Information on structured entities controlled by the company is detailed in Note X, 1. Interests in Subsidiaries, of the financial report - Information on structured entities controlled by the company can be found in Section VIII Financial Report, Note X, 1. Interests in Subsidiaries[164] VI. Other Disclosure Matters The company faces risks such as overdue debt, financing difficulties, frozen bank accounts, and lawsuits due to macroeconomic, industry, and credit environment impacts, with limited development in some industrial new city businesses and real estate market price fluctuations, and is actively responding through debt restructuring, advancing "guaranteed delivery," strengthening operational self-sufficiency, optimizing management, strategic transformation, and enhancing organizational development - The company faces risks such as some debts not being repaid on schedule, some financing channels being blocked, some bank accounts being frozen, and pending lawsuits[164] - The company will continue to advance debt restructuring, ensuring its implementation, protecting creditors' interests, and optimizing the company's debt structure[166] - The company firmly adheres to the strategic direction of "comprehensive transformation into an industrial new city service provider," strengthening its core capabilities in investment promotion and exploring new growth points[166] Part IV Corporate Governance, Environment, and Society This section details the company's corporate governance practices, including profit distribution plans, equity incentive schemes, and environmental information disclosure II. Profit Distribution or Capital Reserve Conversion Plan During the current reporting period, the company's board of directors resolved "no" to a semi-annual profit distribution plan or capital reserve conversion to share capital plan, meaning there is no such plan - There is no semi-annual profit distribution plan or capital reserve conversion to share capital plan during the current reporting period[170] III. Company Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures and Their Impact The company previously approved resolutions in 2020, 2021, and 2022 to cancel some stock options and repurchase and cancel some restricted shares, but as of now, the relevant cancellation and repurchase procedures have not yet been completed - In December 2020, the company agreed to cancel 1.1232 million stock options held by 5 departed incentive recipients and repurchase and cancel 483,600 restricted shares held by them[171] - In April 2021, the company agreed to repurchase and cancel 19,881,680 restricted shares that did not meet unlocking conditions and cancel 20,511,530 stock options that did not meet exercise conditions[171] - In April 2022, the company agreed to cancel 16,312,530 stock options unexercised during the second exercise period of the initial grant and cancel 4,199,000 stock options unexercised during the first exercise period of the reserved grant[171][172] - As of now, the company has not yet completed the cancellation of a total of 42,146,260 stock options and the repurchase and cancellation of 20,365,280 restricted shares mentioned above[172] IV. Environmental Information of Listed Companies and Their Major Subsidiaries Included in the List of Enterprises Required to Disclose Environmental Information by Law The company has 5 subsidiaries included in the list of enterprises required to disclose environmental information by law, and provides corresponding inquiry indexes for their environmental information disclosure reports - The number of enterprises included in the company's list of enterprises required to disclose environmental information by law is 5[173] - These include Huailai Dingxing Investment Development Co., Ltd. Huailai Emerging Industrial Demonstration Zone Industrial Park Wastewater Treatment, Dachang Hui Autonomous County Dinghong Investment Development Co., Ltd. (South Heating Plant/North Heating Plant), Gu'an Jiutong Jiyuan Public Utilities Co., Ltd., and Gu'an Lvyuan Urban Wastewater Treatment Co., Ltd[173] Part V Significant Matters This section addresses significant matters including the fulfillment of commitments, changes in non-standard audit opinions, major litigation, integrity status, related party transactions, and the performance of significant contracts I. Fulfillment of Commitments The company's controlling shareholder, CFLD Holdings, failed to timely fulfill its profit forecast and compensation commitments, primarily due to industry and credit environment impacts, with no compensation consensus yet reached between the parties, while other commitments such as resolving horizontal competition, related party transactions, and share lock-ups have been timely fulfilled - The controlling shareholder, CFLD Holdings, failed to timely fulfill its profit forecast and compensation commitments, primarily due to multiple factors including industry and credit environment impacts, and after the company experienced liquidity strain, both parties have not yet reached a consensus on the compensation amount[176] - The controlling shareholder, CFLD Holdings, and the actual controller, Wang Wenxue, committed to resolving horizontal competition, which is long-term effective and has been timely fulfilled[176][178][179][180] - The controlling shareholder, CFLD Holdings, and the actual controller, Wang Wenxue, committed to resolving related party transactions, which is long-term effective and has been timely fulfilled[176][181][182][183] - The controlling shareholder, CFLD Holdings, and its concerted parties, the actual controller Wang Wenxue, company directors, supervisors, and senior management committed to share lock-ups, which have been timely fulfilled[177][186] V. Changes and Handling of Matters Related to Non-Standard Audit Opinions in Prior Year's Annual Report The company's 2024 annual financial report received an unqualified audit opinion with an emphasis of matter paragraph, highlighting the company's continuous losses, debt risks, and frozen accounts, while in the first half of 2025, the company continued to advance "guaranteed delivery" and debt restructuring, comprehensively transforming into an "industrial new city service provider," completing the delivery of all residential projects, orderly advancing business operations, and enhancing its self-sufficiency - Zhongxingcai Guanghua Certified Public Accountants issued an unqualified audit report with an emphasis of matter paragraph on the company's 2024 annual financial report[189] - The emphasis of matter included the company's continuous losses for four consecutive years after deducting non-recurring gains and losses, and the existence of some debts not repaid on schedule, some frozen bank accounts, and pending lawsuits[189] - In the first half of 2025, all of the company's residential projects have been delivered, with 4 apartment projects / 12,000 units / 840,000 square meters remaining for delivery[190] - The company is comprehensively transforming into an "industrial new city service provider," developing operations, services, and park-derived businesses to enhance its operational self-sufficiency[190] VII. Major Litigation and Arbitration Matters Since the fourth quarter of 2020, the company has faced liquidity risks, leading to overdue financial debts and operating agreement payments, triggering multiple lawsuits and arbitration cases, with the company regularly disclosing relevant progress and actively advancing debt restructuring to mitigate risks - Affected by the macroeconomic environment, industry environment, credit environment, and other factors, the company has faced phased liquidity risks since the fourth quarter of 2020, leading to financial debts not being repaid on schedule and overdue payments for operating-related agreements, triggering relevant lawsuits and arbitration cases[191] - The company regularly discloses information regarding lawsuits and arbitration cases, with specific details available in the company's interim announcements[192] IX. Explanation of the Integrity Status of the Company, its Controlling Shareholder, and Actual Controller During the Reporting Period The company and its controlling shareholder experienced liquidity strain due to multiple factors, but firmly adhered to the principle of integrity in operations, actively advanced the "Debt Restructuring Plan" and "Debt-for-Equity Swap Plan," achieving CNY 192.669 billion in financial debt restructuring, and completing some asset disposals and trust debt-for-equity swaps to prudently mitigate debt risks and protect creditors' legitimate rights and interests - The company and its controlling shareholder experienced phased liquidity strain due to multiple factors including the macroeconomic environment, industry environment, and credit environment[193] - The "Debt Restructuring Plan" was announced on September 30, 2021, and approved by the Creditors Committee on December 9 of the same year, with "Debt-for-Equity Swap Plans" subsequently introduced[193] - As of the report disclosure date, the cumulative amount of CNY 192.669 billion in financial debt restructuring under the "Debt Restructuring Plan" (totaling CNY 219.2 billion) has been achieved through agreements and other means[194] - The company has completed asset transactions for Fengtai, some international real estate projects, etc., and the trust plan scheme has been approved by the general meeting of shareholders, with CNY 22.348 billion in trust debt-for-equity transactions already completed[194] - The company and its controlling shareholder will firmly adhere to the principle of integrity in operations, actively resolve current issues, prudently mitigate debt risks, and legally protect creditors' legitimate rights and interests[195] X. Significant Related Party Transactions The company's 18th meeting of the Eighth Board of Directors and the second extraordinary general meeting of shareholders in 2024 approved the report on significant asset disposal and related party transactions, and according to the debt restructuring agreement, CNY 22.348 billion in trust debt-for-equity transactions have been completed - The company's 18th meeting of the Eighth Board of Directors and the second extraordinary general meeting of shareholders in 2024 approved the "China Fortune Land Development Co., Ltd. Report on Significant Asset Disposal and Related Party Transactions (Draft) and its Summary" and other related proposals[197] - According to the latest progress announcement disclosed on August 9, 2025, the company has completed trust debt-for-equity transactions totaling CNY 22.348 billion in accordance with the "Debt Restructuring Agreement"[197] XI. Significant Contracts and Their Performance The company's total external guarantees amounted to CNY 121.825 billion, accounting for 852% of its net assets, with guarantees to subsidiaries totaling CNY 121.042 billion, and the company and its subsidiaries provided mortgage loan guarantees of CNY 39.784 billion for commercial housing purchasers, while at the end of the reporting period, the company had multiple overdue external guarantees Company External Guarantees (Excluding Guarantees to Subsidiaries) | Guarantor | Guaranteed Party | Guaranteed Amount (CNY 100 million) | Guarantee Start Date | Guarantee End Date | Guarantee Type | Guarantee Fulfilled | Guarantee Overdue | Overdue Guarantee Amount (CNY 100 million) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 华夏幸福 | Huailai Dingxing Investment Development Co., Ltd. | 4.45 | 2019-10-26 | 2030-3-31 | Joint and Several Liability Guarantee | No | Yes | 0.05 | | 华夏幸福 | Hexian Dingxing Park Construction Development Co., Ltd. | 0.10 | 2020-9-30 | 2033-5-29 | Joint and Several Liability Guarantee | No | No | - | | 华夏幸福 | Wuzhi Dingxing Park Construction Development Co., Ltd. | 0.73 | 2020-10-26 | 2024-6-30 | Joint and Several Liability Guarantee | No | Yes | 0.73 | | 华夏幸福及廊坊市京御幸福等 | Huailai Dingxing Investment Development Co., Ltd. | 1.23 | 2019-6-18 | 2029-3-15 | Joint and Several Liability Guarantee, Mortgage, Equity Pledge | No | No | - | | 华夏幸福 | Wuhan Yucan Real Estate Development Co., Ltd. | 1