Relying on divesting real estate development to turn a profit, Midea Real Estate's net profit attributable to the parent company was 559 million yuan last year.

After the “handover of the property,” the first complete fiscal year following the move, Midea Real Estate (03990.HK) turned a loss into a profit.

On March 31, Midea Real Estate released its 2025 annual results. During the period, the company recorded revenue from continuing operations of approximately RMB 4.149 billion, up 11.4% year over year; net profit attributable to shareholders was RMB 559 million. By contrast, in the same period of the previous year, the net loss attributable to shareholders exceeded RMB 2.0 billion, including a net loss attributable to shareholders of RMB 2.536 billion arising from non-continuing operations alone.

In terms of profitability, in 2025 Midea Real Estate’s gross profit from continuing operations was RMB 1.365 billion, up 2.5% from RMB 1.332 billion in 2024; gross margin was 32.9%, down 2.8 percentage points from 35.7% in 2024.

The most direct change brought about by the “handover of the property” is the repair of the income statement and the clear narrowing of risk exposure. The key to this shift lies in the asset restructuring initiated in 2024.

On June 23 of that year, Midea Real Estate issued a restructuring announcement, stating it would restructure the equity of its real estate development business into a private company—i.e., Midea Jiaye—so as to complete the spin-off through a distribution-in-kind of shares.

At the time, the announcement showed that as of the end of 2023, Midea Real Estate held 319 development projects, with total land reserves of approximately 26.5 million square meters. In 2023, Midea Jiaye contributed revenue of RMB 69.9 billion, accounting for 94.97% of total revenue of the listed company.

Source: TuChong Creative

One restructuring effectively pulled out the vast majority of the original principal’s size, giving Midea Real Estate an opportunity to get “lightened” and move forward.

After the divestment of the property development business, Midea Real Estate shifted to focusing on four major segments: development services, property management, asset operations, and real estate technology. The business structure logic changed from heavy-asset property development to light-asset services.

Judging by its performance in 2025, this new structure has been operating successfully in its early stages.

As a newly added segment, the development services business, operating on a light-asset model, provides full-cycle services to its controlling shareholder’s existing real estate development resources. For the full year, revenue reached RMB 958 million, up sharply 227.1% year over year. The property management business continued to provide a relatively stable source of cash flow. Contracted area increased 7.7% to 99.64 million square meters, and area under management grew 14.5% to 86.32 million square meters. Revenue increased 3.5% year over year to RMB 1.904 billion.

At the same time, Midea Real Estate is also trying to validate its light-asset model’s ability to expand externally.

Through brand output and entrusted management, during the year Midea Real Estate’s development services segment added four third-party residential projects in Guiyang, Wuxi, and Xuzhou. Among them, Wuxi Dongwang Mansion launched and sold more than 90% in its initial phase, showing a certain degree of competitiveness in product strength and development management.

However, the pains of the transformation still exist.

In 2025, Midea Real Estate’s asset operations revenue decreased 15.4% year over year to RMB 835 million. The real estate technology segment’s signed contract amount decreased 25.4% year over year to RMB 457 million during the year. The company said the decline was mainly due to fewer deliveries from the commercial property sales portion and fewer construction projects being undertaken within the year as sales in the real estate industry fell.

From a financial perspective, the effect of getting “lightened” has already become apparent. As of the end of 2025, Midea Real Estate had cash on hand of RMB 1.646 billion and interest-bearing liabilities of RMB 592 million. The asset-liability ratio fell from 75.14% at the end of 2023 to 47.7%, with the burden from liabilities clearly eased.

“Currently, the real estate industry is still in the transformation stage, but the light at the end of the tunnel is getting closer.” Midea Real Estate said the company will focus on its light-asset business, leveraging support from its controlling shareholder and its own professional capabilities, to seize opportunities and deepen value in the industry transformation.