China Railway Construction Corporation's revenue and profits hit new lows in 2025, with losses in real estate development expanding and debt risks becoming more prominent.

On the evening of March 30, China Railway Construction Corp. (601186) released its 2025 annual report. The financial report shows that in 2025, China Railway Construction Corp. achieved operating revenue of 10,297.84 billion yuan, marking the first time in the past three years that it fell below the 1.1 trillion yuan mark. The decline on the profit side was even more pronounced: net profit attributable to shareholders of listed companies was 18.363 billion yuan, down 17.34% year over year. Net profit after deducting non-recurring gains and losses fell by 24.98% year over year to 15.998 billion yuan, showing weak profitability from its main business. Overall, the company’s 2025 revenue and profit both hit their lowest levels in recent years.

In terms of quarterly data, although the company’s fourth-quarter revenue reached the highest level of the year at 301.381 billion yuan, its net profit attributable to shareholders of listed companies was only 3.551 billion yuan, the lowest for the year, reflecting a predicament of “growing revenue without growing profits.”

Real estate development business “holding it back,” and financial expenses surge

In addressing the performance decline, China Railway Construction Corp. did not avoid structural issues within its internal business segments in its annual report.

1. Real estate development business “turns from profit to loss,” becoming the biggest drag

Among all business segments, the real estate development business performed the most severely. During the reporting period, the segment achieved operating revenue of 66.564 billion yuan, down 7.41% year over year; however, its total profit dropped sharply from a profit of 1.264 billion yuan in the prior year to a loss of 3.413 billion yuan, with a year-over-year decline of as much as 370.11%.

The company explained that the losses in the real estate development business were mainly “due to fewer units being delivered by the affiliated entities, a decline in gross margin in real estate business, and an increase in impairment provisions.” As one of the 16 central state-owned enterprises under the State-owned Assets Supervision and Administration Commission of the State Council that has clearly defined real estate development as its main business, China Railway Construction Corp.’s real estate business could not manage to stay above the fray during the industry downturn cycle. The large-scale impairment provision directly eroded the company’s overall profits.

2. Planning, design, and consulting business: gross margin falls sharply

As a technology-intensive business, the planning, design, and consulting segment should be a high-gross-margin area, but in 2025 the gross margin of this segment fell significantly from 41.96% to 37.55%, down 4.41 percentage points. Although operating revenue declined by 6.15%, total profit dropped by 25.64% as well, indicating intensified industry competition and cost pressure brought by digital transformation.

3. Financial expenses surge, eroding profit margins

In 2025, the company’s financial expenses were 10.972 billion yuan, up significantly by 38.07% year over year. The company explained that the growth in financial expenses was mainly “due to the year-over-year increase in interest expense.” Against the backdrop of declining overall operating revenue, the rise in financing costs further compressed the company’s profit margins.

Leverage ratio rises; accounts receivable surge; cash flow under pressure

Besides the decline in profitability, China Railway Construction Corp.’s 2025 financial position also showed multiple risk signals:

1. Asset-liability ratio rises, increasing leverage

By the end of 2025, the company’s asset-liability ratio rose to 79.51%, up 2.2 percentage points from 77.31% at the beginning of the year. At the same time, the leverage ratio disclosed by the company (the ratio of net liabilities to net liabilities plus capital) increased from 71% to 75%, indicating that the company’s financial leverage level has risen and repayment pressure has increased.

2. Accounts receivable and contract assets surge, increasing collection pressure

By the end of 2025, the company’s balance of accounts receivable reached 241.024 billion yuan, up 17.71% from the beginning of the year; its balance of contract assets was 374.352 billion yuan, up 22.84% from the beginning of the year. The rapid expansion of accounts receivable and contract assets reflects a lengthening of the cash collection cycle for project payments, resulting in a significant occupation of working capital and a corresponding increase in the risk of credit impairment losses.

3. Operating cash flow turns positive, but net cash outflows from investing and financing activities expand

Although in 2025, the net cash flow from operating activities turned from negative to positive, reaching 2.957 billion yuan, the net cash flow from investing activities was -56.961 billion yuan, with net outflows increasing by 8.921 billion yuan year over year, mainly due to an increase in cash paid for investments. The net cash flow from financing activities was 59.830 billion yuan, but decreased by 36.86% year over year, mainly because cash paid to repay debts increased year over year. This pattern of “operating cash inflows recovering, investing cash bleeding, and financing cash providing support” reflects that the company is currently in a peak period of capital needs.

4. Large scale of assets restricted; repayment protection capacity draws attention

By the end of 2025, the total amount of assets whose ownership or usage rights are restricted for the company was as high as 249.644 billion yuan, up 14.33% from the beginning of the year. Among them, the amount of restricted intangible assets was as high as 135.069 billion yuan, mainly special operating rights pledged or mortgaged to obtain borrowings. The large scale of restricted assets, to a certain extent, weakens the company’s asset liquidity and flexibility in debt repayment.

【Source: Dazhong.com】