Ge Long Hui·2026-03-29 13:37Performance Review - Longfor Group's 2025 performance fell short of market expectations, with revenue declining 24% year-on-year to 97.3 billion yuan, and gross margin decreasing by 6.3 percentage points to 9.7% [1] - The company reported a core net loss attributable to shareholders of 1.7 billion yuan, primarily due to losses from project handovers [1] - Longfor declared a dividend of 0.07 yuan per share in the mid-year but will not pay a year-end dividend, resulting in a current dividend yield of 1% [1] - By the end of 2025, the company reduced interest-bearing debt by 23.5 billion yuan to 152.8 billion yuan, with debt repayments of approximately 22 billion yuan during the year [1] - The average financing cost decreased by 49 basis points year-on-year to 3.51%, with an average loan term extended to 12.12 years [1] Non-Property Business Performance - The company opened 13 new shopping centers in 2025, bringing the total to 99, with revenue increasing 15% year-on-year to 82.4 billion yuan [2] - Overall operational business revenue grew only 1.6% year-on-year to 14.2 billion yuan due to mall adjustments, while service revenue slightly declined by 1.3% to 12.7 billion yuan [2] - The operational and service segments are estimated to contribute a core net profit of approximately 7.92 billion yuan for the year [2] Development Trends - Longfor aims to continue reducing debt and developing non-property businesses, with expectations for improvement in development settlements by 2027 [2] - The company projects that interest-bearing debt will decrease to 120 billion yuan by the end of 2028, generating over 5 billion yuan in positive operating cash flow annually [2] Future Plans - For 2026, Longfor plans to open 9 new shopping centers, expecting overall rental income to grow by over 10% year-on-year [3] - By 2027-2028, the operational and service segments are anticipated to contribute core net profits of 10 billion yuan [3] - The company expects gradual improvement in settlement profits by 2027, with a projected supply of 100 billion yuan in 2026 [3] Profit Forecast and Valuation - Due to the pressure from development settlements, the profit forecasts for 2026 and 2027 have been revised down to -2 billion yuan and 1 billion yuan, respectively [3] - The company maintains an outperform rating and a target price of 11.5 HKD, corresponding to 0.4 times the 2026 P/B ratio, with a potential upside of 48% [3]