Core Viewpoint - Greentown China (03900.HK) reported a significant decline in net profit despite a substantial increase in revenue, highlighting a concerning trend in profitability relative to its historical performance [1][5]. Financial Performance - For the first half of 2025, Greentown China's revenue was RMB 533.68 billion, a decrease of 23% year-on-year, while gross profit fell by 21% to RMB 71.59 billion [2]. - The company's net profit attributable to shareholders was only RMB 2.1 billion, down nearly 90% from RMB 20.45 billion in the same period last year, marking the lowest mid-year net profit since its listing in 2006 [1][2]. - The decline in revenue and profit was attributed to uneven delivery schedules and a 22.7% decrease in area recognized for revenue during the first half of the year [2]. Asset Impairment and Costs - Greentown China recorded asset impairment losses of RMB 19.33 billion in the first half of 2025, which significantly impacted net profit [2]. - The company also reported a non-financial asset impairment loss of RMB 17.17 billion, reflecting a cautious approach to asset valuation amid market conditions [8]. Shareholder Profit Distribution - Non-controlling shareholders took away RMB 10.01 billion of the total profit, which accounted for 83% of the net profit, leaving only RMB 2.1 billion for the company's shareholders [9][10]. - This represents a significant increase in the share of profits taken by non-controlling shareholders compared to the previous year, where they accounted for 38% of the total profit [10]. Market Position and Sales - Despite the profit decline, Greentown China remains a strong player in the real estate market, achieving total contract sales of approximately RMB 1,222 billion in the first half of 2025, ranking second in the industry [3]. - The company maintained a high collection rate of 96% for its sales, supporting further project investments [3]. Financial Health - Greentown China's cash and bank deposits amounted to approximately RMB 667.95 billion, which is 2.9 times its short-term debt, indicating a strong liquidity position [3]. - The company's average cost of debt decreased to 3.6%, down 40 basis points from the previous year, reflecting improved financing conditions [3].

Investment Rating - The report indicates a focus on improving the M&A environment in Japan, suggesting a positive outlook for the market [6][29]. Core Insights - The report highlights the ongoing commitment of Japanese regulatory bodies to enhance the M&A landscape, with significant revisions to corporate governance expected in the coming months [6][29]. - The report emphasizes the importance of protecting minority shareholders during M&A transactions, which is seen as a critical factor for accelerating M&A activities in Japan [6][29]. - The report notes that the recent increase in share buybacks has led to a rise in total dividend payouts, indicating a positive trend in corporate capital return strategies [18][19]. Summary by Sections Market Overview - The TOPIX index is currently at 2,735.52, reflecting a slight decrease of 0.2%, while the NK225 index is at 37,160.47, down by 1.6% [1]. - Key sectors performing well include non-ferrous metals and pharmaceuticals, while insurance and glass & ceramics are lagging [1][20]. Corporate Actions - There has been a notable net purchase of TSE Prime cash stocks by foreign investors amounting to ¥597 billion, while individual and institutional investors have net sold ¥222 billion each [3]. - The report mentions that the total amount of share buybacks announced in the second quarter has already surpassed the total for the entire second quarter of the previous fiscal year [2][13]. Earnings and Forecasts - The report provides earnings per share (EPS) forecasts for FY24 and FY25, with expected growth rates of 10% and 2% respectively [25][30]. - The average exchange rate assumptions for the yen against the dollar are set at ¥145 for FY25, indicating a potential impact on export-oriented companies [11][29]. Sector Performance - The pharmaceutical sector has shown a 3% increase over the past week, while the defense sector has also performed well with a 3% rise [20]. - The report lists various sectors with their respective performance metrics over different time frames, highlighting the best and worst performers [21][66].