Summary of Key Points
Longfor Group released its interim results for 2026: In the first half of the year, the company achieved revenue of 39.8 billion yuan, with real estate development accounting for the majority and operations and services providing a supplementary income source, resulting in a profit of 1.96 billion yuan. Management believes that the real estate market is in a “bottoming-out phase but has not yet fully hit rock bottom,” showing a weak recovery with increasing differentiation among cities. Sales efforts are focused on first- and second-tier cities, and the cash collection rate exceeded 100%, indicating good capital management. The company was cautious with land acquisitions, acquiring only 4 projects. Longfor’s financial health is robust, with reduced debt and low financing costs. The industry has moved away from scale expansion and is now shifting towards “competitiveness in capabilities and management of existing assets.”
Detailed Analysis
1. Revenue Diversity and Stable Profitability
Longfor’s revenue for the first half of the year was 39.8 billion yuan, of which real estate development (housing sales) accounted for 26.1 billion yuan (about 65%), operations (such as shopping malls and long-term rental apartments) for 7.3 billion yuan, and services (property management) for 6.4 billion yuan. This shows that Longfor does not rely solely on housing sales; its operations and services have become important sources of revenue. Even when housing sales are sluggish, these other businesses can support the company’s performance. The profit of 1.96 billion yuan may be lower than in better times for the industry, but considering the current market downturn, it is still considered quite resilient. More importantly, the cash collection rate exceeded 100%, meaning that all proceeds from sales were received, and possibly even an early portion of the payment was collected, which is a significant sign of financial stability—having cash on hand ensures the company’s financial stability.
2. Current State of the Real Estate Market
Management indicates that the industry as a whole is in a bottoming-out phase, with some improvement in the second quarter. The Political Bureau meeting in April called for stabilizing the real estate market, and after the relaxation of purchase restrictions, sales and prices in core cities (such as Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, and Chengdu) showed a slight increase. However, the market cooled down again after May as the policy effects wore off, and consumers’ confidence in purchasing property had not fully recovered. To determine whether the market has truly bottomed out, four indicators need to be considered: transaction volumes for new and second-hand homes, prices, the time it takes to sell inventory (sales cycle), and market confidence. Currently, only some of these indicators have improved (for example, transaction volumes have decreased less sharply, but prices have not risen), and there is a significant difference between cities: first- and second-tier cities are performing better, while third- and fourth-tier cities may still be experiencing declines. Therefore, it is concluded that while there are signs of a bottoming-out, a full recovery will depend on further policy support and renewed consumer confidence.
3. Sales and Land Acquisition
Longfor’s sales revenue for the first half of the year was 16.55 billion yuan, with 89% coming from first- and second-tier cities, a wise strategy given these cities’ larger populations and relatively stable demand, reducing the risk of unfinished projects or unsold properties. The company was very cautious with land acquisitions, purchasing only 4 projects in cities like Qingdao and Dalian, covering a total area of 337,000 square meters (about the size of 48 football fields). Compared to the past when real estate companies were aggressively acquiring land, Longfor is now more selective, as the market is uncertain, and acquiring too much land could be risky. It is better to focus on improving existing projects.
4. Financial Stability
Longfor reduced its interest-bearing debt to 147.1 billion yuan, with 91% of the funding coming from bank loans, which are the most stable and cost-effective sources of capital (low interest rates and long terms, unlike higher-cost alternatives like trusts). The average financing cost was only 3.36%, which is very low compared to many other real estate companies (many with financing costs above 5%). This indicates that banks trust Longfor and are willing to provide them with favorable terms. More importantly, Longfor strictly adheres to three principles: no defaults, no extensions of loan terms, and no missed payments. In a context where many real estate companies are facing financial issues, this gives investors and homebuyers peace of mind regarding the company’s financial health.
5. Industry Trends
The industry has shifted from a focus on “who builds the most” to “who can survive the long term.” Longfor’s chairman stated that the industry has moved away from scale expansion and is now competing on capabilities and the effective management of existing assets. This includes aspects such as the quality of buildings, cost control, and customer service, as well as the efficient operation of existing properties (generating rental income and property management fees) rather than continuously building new properties. In other words, the focus has shifted from rapid expansion to sustainable, quality-oriented management.
Conclusion
Longfor’s interim results reflect the current cold market conditions (weak recovery) while also highlighting the stability of a well-managed real estate company. For individuals looking to buy property, companies with strong financial health, like Longfor, are a good choice. The industry’s future direction is also shifting from a focus on scale to quality, which is beneficial for both homebuyers and the long-term development of the industry as a whole.