Fuli Properties to lose 16.6 billion yuan in 2025: Can debt restructuring turn the tide?

Cailianshe, April 1 (Li Jie) Guangzhou R&F Properties (02777.HK), once known as the “Top Five Tigers of South China” and ranked as the leader among them, released its 2025 annual results report. Based on the information it disclosed, the company’s operating situation remains severe.

According to the annual report, in 2025, Guangzhou R&F Properties recorded operating revenue of approximately RMB 10.94B, a sharp year-on-year decline of 38.2%. Full-year agreed sales totaled approximately RMB 14.21 billion, corresponding to a sellable area of about 1.8736 million square meters. Projects are distributed across 26 provinces in China and three countries overseas.

Despite weak performance on the revenue side, the company’s annual loss has shown signs of narrowing. The company’s 2025 annual loss was approximately RMB 16.6B, compared with the RMB 17.79B loss in 2024, narrowing by 6.7% year on year.

However, analysts pointed out that this does not mean the company’s profitability has been restored; rather, it is a slight improvement built on a high base of losses.

From the balance sheet perspective, Guangzhou R&F Properties’ liquidity crisis has not seen a clear improvement. As of the end of 2025, the company’s total cash was about RMB 3.06B, down further from RMB 3.86B at the end of 2024. At the same time, although the total borrowings dipped slightly to RMB 99.37B, short-term borrowings due within one year reached as much as RMB 93.39B, accounting for more than 94% of total borrowings.

This means that if calculated based solely on the company’s total cash on its books, it can cover only about 3.3% of its short-term debt, indicating a high risk of a funding chain strain.

This grim situation is also corroborated by the company’s debt default data. The company disclosed that as of December 31, 2025, among debts with interest in the scope of its consolidated financial statements, the principal balance of interest-bearing debts overdue by more than RMB 10 million totaled RMB 36.81 billion, covering four categories: credit bonds, bank loans, non-bank loans, and other interest-bearing debts.

Regarding the reasons for the overdue payments, Guangzhou R&F Properties stated that “there is short-term liquidity pressure and payment could not be made in a timely manner.”

With the heavy repayment pressure, Guangzhou R&F Properties’ debt restructuring work has become a key focus for the market.

In fact, Guangzhou R&F was one of the property developers that started offshore bond restructuring relatively early. As early as 2022, the company completed the restructuring of all ten tranches of priority notes through a consent solicitation process, creating room for subsequent asset disposal. However, as the industry continued to adjust, the company had to launch further debt-reduction measures.

Based on information disclosed in the annual report, in 2024 Guangzhou R&F initiated preparations for the second round of comprehensive restructuring of the remaining priority notes, consolidating the relevant notes into three instruments. The restructuring plan officially began in December 2024 and was revised in the second half of 2025 based on market feedback.

The new debt restructuring方案 provides noteholders with four options: a full-cash option, paying 5% of the face value; converting debt to equity; settling with new notes with a discount of 50% of the face value; and new notes with a term of 10 years. As of now, the plan has received support from more than 77% of creditors.

In the annual report, Guangzhou R&F’s management emphasized that advancing the plan is an important milestone for 2025, and it explicitly set 2026’s goal as “significantly strengthening the financial position and easing short-term liquidity pressure.” After the plan is completed, a substantial proportion of the priority notes will be canceled at a large discount. This will not only significantly reduce the total amount of debt, but more importantly, it will send a positive signal to the market.

In addition to financial figures, news related to the company’s management has further heightened the market’s concerns. According to reports from multiple media outlets, around the 2026 Spring Festival, Guangzhou R&F Properties’ chairman Li Silian was intercepted during an overseas trip and was told that he had been restricted from leaving the country by the Tianjin No. 3 Intermediate People’s Court.

In response, not long ago Guangzhou R&F told reporters that it has not yet received any relevant official notice, and the specific situation needs to be determined based on the company’s announcements or information from judicial authorities.

Citibank released a research report saying it lowered Guangzhou R&F Properties’ target price from HK$0.54 to HK$0.45, and maintained a “Sell (high risk)” rating. Citibank noted that if the sales and financing environment does not improve, the company’s cash flow pressure may further intensify, and the progress of asset disposals will become a key focus.

On the project reserve front, the annual report shows that Guangzhou R&F Properties’ land bank remains substantial. As of the end of 2025, the company’s total planned construction area was approximately 45.86M square meters, and its total saleable area was approximately 34.75M square meters. Industry insiders believe this provides a foundation for the company’s future asset disposal and potential cash recoveries.