From "Zero Defaults" to Financing Breakthrough: The Adversity Survival Model Behind China Urban Development Holdings' Annual Report

Against the backdrop of a deep industry readjustment, New Town Holdings has once again delivered an annual report with benchmarking significance.

On March 27, New Town Holdings (601155.SH) officially released its 2025 annual report. In the current environment, New Town Holdings not only continued to stay profitable, but also achieved positive operating cash flow for 8 consecutive years.

More importantly, its publicly traded market debt has remained “zero defaults.” At a time when industry confidence has not fully recovered, such performance is not just “stable,” but a case study of how real estate companies can weather the cycle.

Known for its “real estate + commercial” dual-engine model, this developer is winning back market trust by delivering steadier cash flow, stronger commercial capabilities, and continually improving financing performance. From “zero defaults” to progress in financing, from commercial operations as a stabilizing force to asset securitization innovation, New Town Holdings outlines a practical path for real estate companies to break through.

Earnings resilience stands out: the commercial segment continues to deliver steady profits

In 2025, when the real estate industry continued to clear out the market, the income statement has become an important yardstick for testing a company’s true operating capability.

Based on the annual report data, New Town Holdings achieved operating revenue of RMB 53.01B, net profit attributable to shareholders of listed companies of RMB 680 million, and net profit attributable after deducting non-recurring items of RMB 614 million. Against the backdrop that many private real estate developers are still in losses or near break-even, this result is particularly scarce.

Even more valuable is the improvement in earnings quality. In 2025, the company’s overall gross margin reached 27.42%, up 7.62 percentage points year over year, indicating a clear rebound in profitability. Meanwhile, the average financing cost fell to 5.44%, down 0.48 percentage points year over year, reflecting the financial improvement effect brought by an optimized financing structure.

From an industry perspective, the real estate market is still in a deep adjustment phase, with ongoing dual pressure on both the sales side and the financing side. In such an environment, the ability to maintain stable profitability directly validates the company’s operating quality and risk control capabilities. New Town Holdings completed an “active switch” in its earnings structure by proactively shrinking low-gross-margin development businesses and strengthening high-gross-margin commercial operations.

This is especially evident in its business mix. The commercial operations segment continues to contribute stable cash flow and profits, becoming the core support on the profit side. In 2025, New Town Holdings’ total commercial operations revenue reached RMB 14.09 billion, up 10% year over year, and its share of total revenue increased to 25%. Gross profit from its property leasing and management business reached RMB 9.1B, raising its share of total gross profit from 48% to 63%, with a gross margin as high as 70%.

It can be seen that New Town Holdings has gradually reduced its reliance on development and sales, forming an “endogenous earnings system” with commercial operations at the core. This shift not only enhances the company’s ability to withstand the cycle, but also lays the foundation for reshaping its future valuation framework.

No reduction in “cash-generating ability”: double fulfillment of “zero defaults + high delivery”

If profitability is a company’s “fitness,” then its credit record is its “lifeline” in the capital market. Over the past few years, the real estate industry’s credit system has experienced major turbulence, while New Town Holdings has been one of the few private real estate developers that has consistently maintained “zero defaults” in the public market.

According to the annual report, in 2025 New Town Holdings repaid, as scheduled, RMB 5.86B worth of publicly traded market bonds both in China and overseas, continuing to maintain its “zero defaults” record.

This achievement is not accidental; it is built on sustained cash flow management and optimized debt structure. As of the end of the reporting period, New Town Holdings held cash balances of RMB 6.8 billion, with a net gearing ratio of 56.97%, staying within a relatively safe range. At the same time, net operating cash flow was RMB 1.43B, and it has been positive for 8 consecutive years.

The metric of “positive operating cash flow for 8 consecutive years” means the company is not relying on financing “infusions,” but has self-sustaining cash-generating ability—this is the fundamental reason it can continuously fulfill its debt commitments.

At the same time, New Town Holdings has also demonstrated strong execution capacity in “ensuring delivery of properties.” In 2025, New Town Holdings delivered more than 38k units of properties in full-year delivery. Over the past three years, its cumulative delivery volume has exceeded 278k units.

Although the sales side has contracted due to industry impact, its collections performance remains steady. In 2025, New Town Holdings achieved contract sales of RMB 19.27 billion and a sales area of approximately 2.5358 million square meters. It achieved collection of RMB 38k, with a collection rate of 110.41%. A higher collection rate indicates faster project capital turnover efficiency, providing an important safeguard for the company’s cash flow security.

In other words, the double fulfillment of “zero defaults + high delivery” has formed a distinctive credit label for New Town Holdings in the current industry. This not only enhances trust from financial institutions and investors, but also creates room for its subsequent financing.

Financing breakthroughs and evolution: building full-cycle capabilities for “invest, finance, raise funds, build, manage, exit”

In the real estate industry, the recovery of financing ability is often seen as a key signal that a company is emerging from difficulties. In 2025, New Town Holdings repeatedly achieved breakthroughs in capital markets both at home and abroad, sending clear signals of repair.

On the overseas financing front, in June 2025 New Town Development successfully issued a US$300 million senior unsecured bond, becoming the first private real estate developer to restart overseas financing in the past three years. In September, the company issued a US$160 million preferred secured note through its subsidiary. On the domestic financing front, the company issued medium-term notes multiple times during the year, with sizes of RMB 1.0 billion, RMB 0.9 billion, and RMB 1.75 billion. All of them received full guarantees from China Bond Credit Enhancement and double AAA ratings, with the coupon rate as low as 2.68%.

In the current industry financing environment, the ability to “raise money” itself has become an important signal. New Town Holdings’ financing breakthroughs across multiple channels and in multiple batches further strengthen market recognition of its credit recovery.

Even more strategically significant is New Town Holdings’ innovative breakthrough in asset securitization. In November 2025, New Town Holdings successfully issued “Wuyue Plaza inter-institutional REITs,” with an issuance size of RMB 616 million, and also supported it with RMB 410 million of debt-portion funding. This product is still the first consumption-type inter-institutional REITs nationwide, as well as the first similar product issued by an A-share private real estate developer, carrying notable industry demonstration significance.

This REITs is backed by high-quality commercial assets—Shanghai Qingpu Wuyue Plaza. Through asset securitization, it activates existing stock assets, replenishing the company’s cash flow and optimizing its asset-liability structure. This innovation also marks a further deepening of New Town Holdings’ transformation from a traditional developer into an “asset operator + asset manager.”

Aligned with this transformation, New Town Holdings is building full-cycle capabilities for “invest, finance, raise funds, build, manage, exit”: at the “invest” end, it selects high-quality commercial assets; at the “finance” end, it expands financing channels; at the “raise funds” end, it raises funds through ABS and future REITs; at the “build” and “manage” ends, it improves operational efficiency; and at the “exit” end, it enables value realization of assets and circular reinvestment.

The scale and quality of commercial assets provide a solid foundation for this model. By the end of 2025, New Town Holdings had laid out 207 integrated complex projects across 141 cities nationwide. The opening area of Wuyue Plaza reached 16.4907 million square meters, with an occupancy rate stable at a high level of 97.86%.

The capital market has also given positive feedback to this transformation by New Town Holdings.

In the fourth quarter of 2025, Morgan Stanley, an internationally renowned investment bank, announced an upgrade of New Town Holdings’ rating to “Overweight” and raised its target price. In its research report, it pointed out that New Town Holdings achieves rental growth above expectations by increasing market share and continues to show optimism about its asset securitization prospects. Based on this, Morgan Stanley raised its target price for New Town Holdings by 25% to RMB 19.7, and increased its earnings per share forecasts for 2026 to 2027 by 3-5%.

In its research report, Morgan Stanley noted that although the overall retail market performance was flat, New Town Holdings recorded a 11% revenue growth in the first nine months of 2025, and same-store sales continued to grow steadily. “We attribute this to the company’s strong position in laying out core city areas, and we expect it to gain more market share during resource integration. Combined with the government’s plan to boost consumption in the latest ‘15th Five-Year Plan,’ we predict that its rental income will grow at around an 8% compound annual growth rate, reaching RMB 15.2 billion by 2027” .

Besides the standout performance in the commercial sector, Morgan Stanley further noted in its research report that the drag of New Town Holdings’ real estate development business on the company’s overall performance has been diminishing. “Although due to limited saleable resources, the company’s contract sales in 2026 may further contract, we believe this is positive for earnings. As property reservations decline in the coming years, we expect the drag from development properties on earnings to significantly reduce, which may cause the company’s profits to rebound noticeably. We expect core profit in 2027 to recover to RMB 2.6 billion (45% CAGR from 2024-27)” .

Based on this, Morgan Stanley raised its forecast for New Town Holdings’ earnings per share for 2026 to 2027 by 3-5%, and increased its target price by 25% to RMB 19.70, to reflect stronger rental income, improved liquidity conditions, and the release of value from investment properties.

In fact, aside from Morgan Stanley, New Town Holdings has continued to earn recognition from the capital market. Over 20 brokerage firms collectively expressed optimism and actively recommended it, including Guotou Securities, Huatai Securities, Shenwan Hongyuan, CICC Construction, Huachuang Securities, Ping An Securities, Northeast Securities, Cathay Haitong, Kaiyuan Securities, Southwest Securities, Galaxy Securities, Xingye Securities, Yangtze Securities, and CICC Gongshi among others. Multiple securities institutions have given “Outperform” or “Buy” ratings.

In a recent research report, Yangtze Securities analyzed that industry policy expectations are gradually improving; coupled with the fact that the repayment peak for New Town Holdings has passed and its financing capability continues to recover, market risk appetite is expected to gradually rise. Also, its relatively abundant land bank still provides certain support for sales. Improved retention of commercial operations contributes to raising gross margin, becoming an important source of both the company’s profitability and financing. The company’s value is expected to be re-rated, and Yangtze Securities maintains a “Buy” rating.

From the recovery of profitability, to the坚守 of the credit system, and then to the rebuilding of financing channels and upgrading of its asset model, New Town Holdings demonstrated a clear main line of development in 2025: during a deep industry adjustment, it adheres to the “camel spirit” for steady operations through the cycle, and opens up long-term space through structural transformation. This also means that amid industry clearing, high-quality private real estate developers still have the capacity to survive and develop. The resilience and evolution path shown by New Town Holdings provides practical evidence for reshaping market confidence.

(This article comes from Yicai)