Seven Years of Xincheng Holdings, Wang Xiaosong's Difficulties

Ask AI · Why Wang Xiaosong, who has been at the helm for seven years at New City Holding, couldn’t turn around the company’s decline?

Multiple key indicators continued to slide, and New City Holding is no longer the dark horse that once dazzled investors. Recently, New City Holding released its 2025 annual performance report. Full-year operating revenue was 53.012 billion yuan, down 40.44% year over year. Net profit attributable to shareholders hit the lowest level in nearly five years. The company accrued impairment losses of 1.657 billion yuan for the period, further dragging down earnings.

Wang Xiaosong, who managed to steady the ship in the Wang Zhenhua case, did not use the time and space brought by “misfortune may turn to fortune” to stabilize the situation. Instead, after shifting assets around, the crisis facing New City Holding only kept getting worse. Within one year, interest-bearing debts due totaled 12.748 billion yuan; freely available funds were only 4.477 billion yuan, leaving a short-term funding gap of more than 8.271 billion yuan. Wang Xiaosong placed his last hope on Wuyue Plaza—asset securitization and pledged financing; he used every tool he could. But as of the end of 2025, more than 90% of the company’s investment properties had already been pledged, leaving him with few cards left to play.

From making 12.6 billion yuan a year to 680 million yuan

In 2025, New City Holding achieved operating revenue of 53.012 billion yuan, down 40.44% year over year. Of that, revenue from real estate development and sales was 39.004 billion yuan, down 48.71% year over year. The company’s explanation is simple: there was less property sales revenue.

Let’s rewind to 2019. In that year, New City Holding’s contracted sales value surged to 270.801 billion yuan, up 22.48%, which was the brightest moment in the company’s history. It was also in the second half of that year that founder Wang Zhenhua suddenly faced a personal crisis, and Wang Xiaosong took over as the leader. The first thing he did after taking office was not to continue chasing scale, but to halt land acquisitions.

According to public information, in 2022, New City Holding added only two land plots, spending 2.77 billion yuan on land. In 2023, it picked up only one Hangzhou land parcel, spending 2.537 billion yuan. At the time, market voices were asking: Are you going to keep buying land? The company’s response was intriguing: “We’ll just participate a bit, to understand the market’s water temperature.” After that, New City Holding never added any new land plots again.

The consequences of cutting off land reserves quickly showed up in sales. In 2025, New City Holding’s contracted sales value was only 19.27 billion yuan, down 92.88% from the peak of 2019; the sales area was 2.5358 million square meters, shrinking 89.57% compared with 2019.

Meanwhile, the gross margin of the property leasing and management business was also heading downhill. In 2025, the gross margin of this business was 69.77%, down 0.4 percentage points year over year, hitting the lowest level in nearly five years. And from 2021 to 2024, this figure was 72.64%, 72.6%, 69.9%, and 70.17% respectively—shaking down all the way, never turning back.

Yan Yuejin, deputy dean of the Shanghai E-House Real Estate Research Institute, analyzed that commercial real estate has entered an era of stock-operation, with a slow recovery in consumer markets. Competitors generally face rental pressure and rigid increases in operating costs, causing a structural decline in gross margins. Wuyue Plaza is mainly concentrated in tier-three and tier-four cities, where consumer purchasing power is hit more sharply. In addition, the quality of projects that opened during the rapid expansion phase was uneven, lowering overall operating efficiency and profitability, reflecting a phase mismatch between rapid scale expansion and fine-grained operations.

With the core business slipping across the board, net profit attributable to shareholders naturally could not look good. In 2025, this figure was only 680 million yuan, down another 9.61% year over year. A reporter from Beijing Business Today combed through past annual reports and found that in 2021 New City Holding’s net profit attributable to shareholders was still 12.598 billion yuan, but by 2025 it had fallen to 680 million yuan—a reduction of 94.6%. The money earned back then is now barely even a fraction.

The land grabbed back then became the pit today

After Wang Xiaosong took office, he kept shrinking the company’s footprint. But no matter how fast he shrank it, he couldn’t outpace the mess left behind by the expansion years. Those land parcels bought at high premiums are now turning into wounds that must be torn open on the financial statements every year.

In 2016, New City Holding, which started out in Changzhou, Jiangsu, called out its “trillion-yuan strategy plan” and formulated a “1+3” strategy: “Shanghai as the core, the Yangtze River Delta as the center, and expansion into the Pearl River Delta, the Bohai Rim, and the central and western regions.” The Pearl River Delta was the top priority. In just half a year, New City acquired eight projects in the Pearl River Delta, with Foshan as its first stop.

In December 2016, New City Holding won the Shishan land parcel in Nanhai, Foshan for 4.274 billion yuan, with a premium rate of 274%. The floor price was 9,854 yuan per square meter, setting a land-price record for Shishan at the time. Meanwhile, during the same period, the on-sale housing prices in the area were about 9,000 yuan per square meter—meaning the floor price was higher than the housing price.

According to public information, this land was later developed into New City Jingcheng, offering more than 3,000 units. The first phase opened in December 2017 with an average price of 15,000 to 16,000 yuan per square meter. Prices fluctuated but never managed to sell above 20,000 yuan per square meter. Later, the project price fell to around 11,000 yuan per square meter, selling almost at the level of the land price.

This is not a one-off case. As the real estate market entered a period of deep adjustment, the asset values of those early projects bought at high premiums continued to erode. In 2025, New City Holding accrued impairment losses of about 1.657 billion yuan in total. Of this, bad debt provisions were 506 million yuan, and inventory price decline provisions were 1.151 billion yuan. These accruals directly reduced net profit attributable to shareholders by 1.557 billion yuan in that year.

Inventory price decline provisions are the biggest “profit killer.” A reporter from Beijing Business Today found that from 2021 to 2024, New City Holding accrued inventory price decline provisions of 4.851 billion yuan, 5.966 billion yuan, 5.563 billion yuan, and 1.635 billion yuan, respectively—totaling 18.015 billion yuan over four years. Adding the 1.151 billion yuan in 2025, the five-year total is nearly 20 billion yuan. Every year, these numbers remind everyone: the aggressive moves back then always end up being paid for by someone.

Yan Yuejin said that real estate developers should establish an investment discipline centered on cash-flow safety, abandon the model of using high leverage to chase scale, and shift toward focusing on deterministic opportunities in high-tier cities—achieving refined operations of “invest based on sales.” For high-cost land reserves already formed and facing impairment pressure, they need to decisively “slim down” by accelerating inventory clearance and asset transfers, while continuously “generating blood” through operating income such as commercial operations. Then, they should gradually absorb existing stock burdens during development, avoiding larger liquidity risks triggered by prolonged standoff.

There’s only 4.477 billion yuan of working cash left on the books—so how can there be 12.7 billion yuan of debt to repay?

More unsettling than the profit decline is the cash flow. As of the end of 2025, New City Holding’s interest-bearing debt stood at 50.974 billion yuan, down 2.676 billion yuan from 2024. But short-term repayment pressure is actually heavier—interest-bearing debts due within one year were 12.748 billion yuan, up 634 million yuan from 11.988 billion yuan in 2024.

At the end of 2025, New City Holding had cash and cash equivalents of 6.803 billion yuan on hand, down more than 30% from 10.296 billion yuan in 2024. Of this, restricted funds were 2.326 billion yuan, leaving only 4.477 billion yuan that could truly be freely allocated. Doing the math, the short-term debt gap was 8.271 billion yuan. This is a calculation Wang Xiaosong makes every day.

Regarding future debt repayment arrangements, a reporter from Beijing Business Today sent an interview letter to New City Holding. New City Holding responded that the company will make appropriate funding arrangements to ensure the normal settlement of each maturing debt. As for specific funding arrangements and the debt repayment plan, it said it is not convenient to disclose to the public.

At the same time, New City Holding’s own ability to “generate blood” is also weakening. In 2025, the net cash flow from operating activities was 1.425 billion yuan, down 5.79% year over year. With development business not moving, debt pressure is getting heavier day by day, so Wang Xiaosong can only put all his hopes on Wuyue Plaza.

Wuyue Plaza became the last “anchor stone.” On March 7, 2026, New City Holding announced that its commercial real estate REITs project had been accepted by the CSRC and the Shanghai Stock Exchange, and the underlying assets were Changzhou Tianning Wuyue Plaza and Nantong Qidong Wuyue Plaza. Previously, in November 2025, New City Holding had issued an ABS product backed by the underlying asset of Shanghai Qingpu Wuyue Plaza, raising 616 million yuan.

In addition, New City Holding continues to use Wuyue Plaza for pledged financing. In 2024, the scale of operating property loans and other financing pledged with Wuyue Plaza was about 20.5 billion yuan, with a weighted average interest rate of 4.97% and a pledge ratio of about 50%. In 2025, another roughly 12.5 billion yuan was added, with a weighted average interest rate of 4.93% and a pledge ratio also around 50%.

But the problem is that good assets can’t withstand such repeated pledges. As of the end of 2025, New City Holding’s investment properties had a book value of 121.069 billion yuan, of which 109.445 billion yuan were restricted due to financing and pledges. The unpledged portion was only 11.624 billion yuan. In other words, the company’s “net assets” that can be pulled out to raise money are nearly gone.

Xie Yifeng, president of the China City Real Estate Research Institute, said that at present, most developers’ high-quality assets available for commercial mortgage loans have basically been exhausted. A financing model that relies on monetizing existing commercial assets is not sustainable. After the interest and principal on mortgage loans come due, they must be repaid in order to carry out a new round of financing. If sales receipts are delayed, sales clearance falls short of expectations, or other financing channels can’t provide funds in a timely manner, companies can easily get trapped in excessive reliance on financing backed by monetization of commercial assets.

Xie Yifeng emphasized that operating property mortgage loans are only a phased tool launched by the PBOC. The policy implementation period ends on December 31, 2026, and whether it will be extended remains uncertain. He said that if the relevant policies are terminated in 2027, developers will not be able to add new stock commercial property loan business, while existing financing still needs to repay principal and interest on schedule, resulting in a situation of bidirectional squeeze on funds. Therefore, in terms of the sustainability of the model, this financing path is difficult to continue.

Back then, New City Holding carved out a way to survive in the industry by relying on a two-engine drive of “residential + commercial.” Now, the development business has stalled, and growth in the commercial segment has topped out. The risks buried by earlier aggressive expansion are exploding one after another. Profits are being consumed, cash flow is in crisis, and Wuyue Plaza—the ace card—also is running out of opportunities to be used.

After taking over New City Holding for seven years, Wang Xiaosong has used all the tactics that can be used, sold all that can be sold, and pledged all that can be pledged. In the end, that once industry dark horse still stands on the cliff where it is stuck between doing and not doing.

Beijing Business Today reporter Li Han