Investment Rating - The report maintains a "Market Weight" rating for the real estate industry, indicating that the industry is expected to perform in line with the market index over the next six months [40]. Core Insights - The overall performance of listed real estate companies in 2024 is expected to be poor, with total revenue continuing to decline year-on-year, and the decline rate expanding, reaching levels close to those of 2018 [35][14]. - The industry has recorded losses for three consecutive years, with 2024 seeing a significant increase in absolute losses due to declining settlement volumes, gross profit margins, and impairment provisions [14][35]. - The first quarter of 2025 continues to show pressure on performance, with the industry recording losses for the first time in Q1, despite a narrowing decline in revenue compared to the previous year [15][35]. Summary by Sections 1. Performance Overview - In 2024, listed real estate companies achieved total revenue of CNY 1.98 trillion, a year-on-year decrease of 24.39%, with the decline rate expanding by approximately 20 percentage points compared to 2023 [13]. - The operating profit turned negative for the first time, recording a loss of CNY 115.86 billion, a decrease of 277.06% from 2023 [13][14]. - Net profit for 2024 was CNY -164.79 billion, an increase in losses of CNY 148.66 billion compared to 2023 [13]. 2. Profitability Metrics - The overall sales gross margin and net profit margin for the industry in 2024 were 14.6% and -8.31%, respectively, with gross margin declining by 2.38 percentage points and net margin declining by 7.69 percentage points compared to 2023 [19]. - In Q1 2025, the sales gross margin was 14.43%, and the net profit margin was -2.48%, reaching historical lows [19]. 3. Expense Trends - Total sales expenses for 2024 were CNY 54.92 billion, a decrease of 21.33% compared to 2023, reflecting ongoing cost-cutting measures by developers [23]. - Management expenses fell to CNY 58.15 billion, while financial expenses rose slightly by 2.5% to CNY 80.67 billion, indicating marginal improvements in financing channels [23]. 4. Inventory and Asset Management - The overall inventory of listed real estate companies decreased to CNY 4.45 trillion, a year-on-year decline of 18.4%, with inventory as a percentage of total assets dropping to 46.36% [26]. - The total asset turnover ratio was 0.2 times, showing a slight decline from the previous year [26]. 5. Debt and Cash Flow - The overall asset-liability ratio for listed real estate companies was 75.26% at the end of 2024, down 1.1 percentage points from 2023 [28]. - The net cash flow per share was -CNY 0.47, an improvement from -CNY 0.62 in 2023, although still negative [31]. 6. Investment Recommendations - The report suggests focusing on stable leading state-owned enterprises and regional leaders in first and second-tier cities, such as Poly Developments, China Merchants Shekou, and others [36].