Core Viewpoint - The equity change of the well-known ice and snow landmark project in Shenzhen has attracted widespread attention in the industry, particularly in the context of the ongoing ice and snow tourism season [1] Group 1: Project Background - The capital game surrounding Shenzhen Qianhai Ice and Snow World resurfaced with Sunac's notice of repurchase [2] - Sunac Cultural Tourism has chosen to exercise its repurchase rights for the Shenzhen Qianhai Ice and Snow World project but seeks to renegotiate core transaction terms [3] - The project was established through a partnership between Zhuhai Huafa and Sunac Cultural Tourism, with Huafa holding 49% and Sunac holding 51% of the project company, Ronghua Land [3] Group 2: Financial Developments - In January 2023, Sunac announced the sale of its 51% stake and debt in Ronghua Land to Zhuhai Huafa for approximately RMB 3.58 billion, resulting in Huafa gaining 100% control [4] - Following the acquisition, the project was renamed "Shenzhen Qianhai Huafa Ice and Snow World" [5] Group 3: Current Situation and Industry Implications - Sunac's notice to exercise its repurchase rights has sparked industry discussions, as it indicates a need to renegotiate the original terms due to changing circumstances [7] - The ongoing equity game reflects the strategic positioning of both companies and highlights the trend of asset value reassessment in the rapidly developing ice and snow economy [8] - Huafa is also under pressure to revitalize its existing assets, with plans to recover RMB 4.405 billion from the project, which may result in a loss exceeding 50% of its audited net profit for 2024 [9]

Core Insights - The Shenzhen Qianhai Huafa Snow World, set to open around National Day, is the largest indoor snow park globally, featuring a 10,000 square meter snow area, five professional competition snow tracks, and a vertical drop of 83 meters [1][3] - Despite the excitement surrounding the opening, there are reports of significant land withdrawal, with Huafa Group's subsidiary receiving a notice from the Shenzhen Land Reserve Center to reclaim seven commercial land parcels for 4.405 billion RMB [6][10] - The project has seen a surge in indoor ice and snow project investments across the country, with over 10 billion RMB in contracts signed in the last two months, indicating a strong market interest despite the challenges faced by Huafa [6][14] Group 1: Project Overview - The Qianhai Snow World covers approximately 430,000 square meters and includes the largest indoor ski resort at the lowest latitude globally, designed for year-round operation [1][3] - The facility is equipped with five competition-grade snow tracks, a four-person chairlift, and a magic carpet, with construction nearing completion [3] - The project aims to create a new sports community commercial landmark, integrating sports, entertainment, and social interaction [3][5] Group 2: Land Withdrawal and Financial Implications - On July 28, Huafa Group announced the government's plan to reclaim seven commercial land parcels, which will help the company recover over 4 billion RMB in liquidity [6][10] - This decision reflects Huafa's strategy to focus on the development of the ski resort and residential areas while divesting from commercial and office segments [10][11] - The move is seen as a response to the ongoing difficulties in the commercial real estate sector, with Huafa aiming to mitigate risks associated with prolonged development [10][14] Group 3: Historical Context and Future Prospects - The project was initially a collaboration between Huafa and Sunac, with a total investment of 18.29 billion RMB planned for various developments, including residential and commercial spaces [11][13] - Huafa's acquisition of full ownership of the project came after a series of transactions, with the company investing over 10 billion RMB to settle land payments and acquire full control [13] - Despite the challenges faced, the overall trend in the industry shows a growing interest in indoor ice and snow projects, with significant investments and increased bookings for such facilities across the country [14][21]

Core Viewpoint - Huafa Co., Ltd. is facing significant challenges in the real estate sector, leading to a strategic decision to dispose of undeveloped commercial land at a substantial loss to mitigate liquidity risks and optimize asset quality [2][11][12]. Group 1: Company Actions and Financial Impact - Huafa announced the disposal of seven undeveloped commercial land parcels in Shenzhen for 4.405 billion yuan, which is significantly lower than the book cost of 5.842 billion yuan, resulting in an estimated loss of approximately 1.4 billion yuan, representing a discount of 24.59% [2][14]. - The transaction is expected to exceed 50% of the company's audited net profit for 2024, indicating a severe impact on financial performance [2][14]. - The decision to sell the land was made to accelerate asset turnover and reduce liquidity risks amid ongoing market uncertainties [2][12]. Group 2: Market Context and Challenges - The commercial real estate market in Shenzhen is experiencing a downturn, with a significant drop in transaction volumes and rising inventory pressures, leading to a challenging environment for developers [7][9]. - In the first half of 2025, the commercial market saw a 74.2% year-on-year decrease in transactions, while the office market hit a ten-year low in transaction volume [7][9]. - The overall economic environment has led to slow absorption of commercial properties, increasing financial strain on developers [6][11]. Group 3: Strategic Implications - The disposal of land is viewed as a rational move to optimize land reserves and improve asset quality in a declining market [11][17]. - The case of Huafa's land disposal is seen as a potential model for other companies facing similar challenges, highlighting the importance of asset restructuring in the current market [17]. - Despite the strategic move to mitigate losses, Huafa's profitability remains under pressure, with a projected 86.7% decline in net profit for the first half of 2025 [17].

Core 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].