Huafa Properties(SH:600325) Di Yi Cai Jing Zi Xun·2025-07-29 11:27Core Viewpoint - Huafa Group is selling seven commercial land parcels in the Qianhai Ice and Snow World project at a significant loss, reflecting the challenges in the Shenzhen real estate market and the need for asset liquidation to mitigate risks [1][5]. Group 1: Transaction Details - Huafa Group's subsidiary, Ronghua Land, received a notice from the Shenzhen Land Reserve Center to recover seven commercial land parcels for 4.405 billion yuan, which is a 25% discount from the book cost of approximately 5.841 billion yuan [1]. - The total area of the seven parcels is about 70,500 square meters, with a planned construction area of approximately 460,000 square meters [1]. - The anticipated loss from this transaction is expected to exceed half of Huafa Group's audited net profit for 2024 [1]. Group 2: Project Background - The Qianhai Ice and Snow World project was initially acquired in November 2020 for 12.71 billion yuan, including various developments such as residential, commercial, and hotel spaces [2]. - Huafa Group took full control of Ronghua Land in early 2023, acquiring the remaining stake from Sunac [4]. - The project was initially part of Shenzhen's major project plans for 2021 and 2022 but faced delays due to Sunac's financial difficulties [2]. Group 3: Market Context and Implications - The decision to return the land parcels is influenced by the ongoing downturn in the Shenzhen commercial real estate market, particularly in the office sector [5]. - The asset evaluation report indicates a significant devaluation of the land, attributed to the high market conditions at the time of acquisition in 2020 [5]. - The recovery of these parcels is seen as a strategic move to avoid long-term asset stagnation and to free up capital for other business operations, such as residential development [5]. Group 4: Project Progress - Despite the land recovery, the overall construction of the Qianhai Ice and Snow World project is reportedly on track, with key construction phases nearing completion [6]. - The project is expected to open before the National Day holiday, with ongoing efforts in interior decoration and mechanical adjustments [6]. - The talent housing project associated with the development has nearly sold out, with the first phase already delivered [6].