Relying on divesting real estate development to turn a profit, Midea Real Estate's net profit attributable to the parent company was 559 million yuan last year.

In the first full fiscal year after the “spin-off,” Midea Real Estate (03990.HK) turned a loss into a profit.

On March 31, Midea Real Estate released its 2025 annual results. During the period, the company recorded revenue from continuing operations of approximately RMB 4.149 billion, up 11.4% year over year; net profit attributable to shareholders was RMB 559 million; while in the same period of the prior year, net loss attributable to shareholders exceeded RMB 2 billion, including a net loss attributable to shareholders of RMB 2.536 billion from non-continuing operations alone.

In terms of profitability, in 2025, Midea Real Estate’s gross profit from continuing operations was RMB 1.365 billion, up 2.5% from RMB 1.332 billion in 2024; gross margin was 32.9%, down 2.8 percentage points from 35.7% in 2024.

The most direct change brought by the “spin-off” is the repair in the income statement and the clear narrowing of risk exposure. The key to this shift lies in the asset restructuring launched in 2024.

On June 23 of that year, Midea Real Estate released a restructuring announcement, stating that it would restructure equity in its real estate development business into a private company—namely Midea Jianye—through a distribution-in-kind of shares to complete the separation.

At the time, the announcement showed that, as of the end of 2023, Midea Real Estate held 319 development projects with total land reserves of about 26.5 million square meters; in 2023, Midea Jianye contributed revenue of RMB 69.9 billion, accounting for 94.97% of total revenue of the listed company.

Image source: Tu Chuang Creative

One restructuring effectively pulled out most of the original entity’s volume, giving Midea Real Estate an opportunity to move forward with a lighter load.

After separating the property development business, Midea Real Estate shifted to focusing on four major segments: development services, property management, asset operation, and real estate technology. Its business structure logic switched from heavy-asset development to light-asset services.

Judging from its performance in 2025, this new structure has been operating smoothly so far.

As a newly added segment, the development services business, operating on a light-asset model, provides full-cycle services to the controlling shareholder’s existing real estate development resources. For the full year, it achieved revenue of RMB 958 million, up significantly by 227.1% year over year. The property management business continued to provide a relatively stable source of cash flow: contract area increased by 7.7% to 99.64 million square meters; area under management rose by 14.5% to 86.32 million square meters; and revenue grew by 3.5% year over year to RMB 1.904 billion.

At the same time, Midea Real Estate is also trying to validate the external expansion capability of its light-asset model.

Through brand output and entrusted management, during the year Midea Real Estate’s development services segment added four third-party residential projects in Guiyang, Wuxi, and Xuzhou. Among them, Wuxi Dongwang Mansion launched sales and achieved over 90% in take-up, showing that it has a certain level of competitiveness in product strength and development management.

However, the pain of transformation still remains.

In 2025, Midea Real Estate’s asset operation revenue fell 15.4% year over year to RMB 835 million. The real estate technology segment’s signed contract amount during the year declined 25.4% year over year to RMB 457 million. The company said that the decline was mainly due to reduced deliveries of some commercial property sales, as well as fewer construction projects during the year because of the downturn in real estate industry sales.

From a financial perspective, the effect of “moving forward with a lighter load” has already become apparent. By the end of 2025, Midea Real Estate had cash on hand of RMB 1.646 billion and interest-bearing liabilities of RMB 592 million. The asset-liability ratio dropped from 75.14% at the end of 2023 to 47.7%, significantly easing pressure from liabilities.

“Currently, the real estate industry is still in a transition phase, but the light at the end of the tunnel is getting closer and closer.” Midea Real Estate said the company will focus on its light-asset businesses, leveraging support from the controlling shareholder and its own professional capabilities to seize opportunities and deepen value in the industry’s transition.

(责任编辑：Guo Jiandong)

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