4.7 billion and 4.45 billion Longfor's operating income in February first surpassed sales revenue

Guandian.com Longfor Group executives once predicted that by 2028, operating income would surpass the real estate development business, making it the core focus of the company’s strategic transformation. Data released on March 6 suggests this goal may be achieved sooner than expected.

On March 6, Longfor Group announced its latest unaudited operational data: as of the end of February 2026, the group achieved a total contracted sales amount of 4.45 billion yuan, with a contracted sales area of 527,000 square meters. In February alone, contracted sales reached 2.0 billion yuan, covering 227,000 square meters; of which, attributable to the company’s shareholders, contracted sales amounted to 1.34 billion yuan, with a sales area of 167,000 square meters.

Meanwhile, in the first two months, Longfor Group achieved approximately 4.4 billion yuan in operating income (including tax, approximately 4.7 billion yuan); of which, operating revenue was about 2.44 billion yuan (including tax, approximately 2.62 billion yuan), and service revenue was about 1.96 billion yuan (including tax, approximately 2.08 billion yuan).

Calculations show that in February, Longfor Group achieved about 2.13 billion yuan in operating income for the month, and including tax, approximately 2.27 billion yuan, both exceeding the contracted sales of 2.0 billion yuan for the same month.

Additionally, from the January-February data, operating income of 4.4 billion yuan is very close to the contracted sales of 4.45 billion yuan, and when including tax, 4.7 billion yuan exceeds the contracted sales amount.

Although comparing contracted sales and operating income is not entirely rigorous, as they represent different concepts—contracted sales reflect expected revenue at the signing stage, while operating income refers to the actual economic benefits realized through core business activities (such as sales, leasing, and development)—this does not prevent the fact that operating income is gradually becoming the core profit source for Longfor Group. Because, based on the data from the first two months, while contracted sales declined over 55% year-over-year during the off-season, operating income continued to grow, with a year-over-year increase of 1.85% (including tax, 1.73%).

This trend of offsetting each other has been evident in past data, but the contrast is more pronounced this year.

2025 data shows that Longfor Group’s total contracted sales last year reached 63.16 billion yuan, down 37.5% year-over-year; contracted sales area was 5.186 million square meters, down 27.2%. Meanwhile, as of the end of December 2025, operating income was about 26.77 billion yuan (including tax, approximately 28.54 billion yuan), which not only did not decrease from the previous year’s 26.71 billion yuan (including tax, about 28.48 billion yuan) but slightly increased.

In fact, this trend is expected to continue intensifying. According to last year’s prediction by Zhao Yi, Executive Director and CFO of Longfor Group, “In the next 1-2 years, the development settlement volume will gradually decrease.” However, he also added that with the gradual destocking and the steady addition of new projects with healthy gross margins, the impact of development business on the group’s overall profit will gradually recover.

Moreover, senior executives of Longfor Group have clearly stated over the past two years that operating income will surpass the real estate development business and that this will be the core goal of the company’s strategic transformation.

For example, on August 23, 2024, Longfor Group Chairman and CEO Chen Xuping said at the mid-year results meeting: “By 2028, we expect operating income to account for more than half, achieving a second revenue curve surpassing the first, completing the transformation of new and old driving forces.”

At the same time, management further pointed out: “Low debt levels and high operating income are essential conditions for becoming a century-old real estate company that can withstand cycles.”

On March 28, 2025, during the earnings presentation, Chen Xuping reiterated: “Operating business has become an important source of revenue, profit, and cash flow for Longfor Group,” reaffirming the commitment to shift towards a “development + operation” dual-driven model.

Additionally, Longfor Group’s 2024 annual financial report shows that by the end of 2024, operating income reached 26.71 billion yuan, accounting for 21% of total revenue (127.47 billion yuan); net profit attributable to shareholders was 5.87 billion yuan, and core profit attributable to shareholders after excluding fair value changes was 4.75 billion yuan, with the profit contribution from operations and services continuously increasing, accounting for over 80%.

According to the company’s publicly available financial statements, operating income in 2024 had substantially overtaken development business as the core profit source, with gross margins over 50% and net profit margins over 25%. Subsequent data shows that in the first half of 2025, gross margins for Longfor’s operating and service businesses were 75% and 31.4%, respectively, maintaining high levels.

In contrast, Longfor’s development business gross margins in 2022-2024 were 17.9%, 11%, and 6.1%, respectively, dropping further to 0.2% in mid-2025. Considering ongoing market adjustments and the downward pressure on housing prices affecting project profitability, this figure may further decline.

Clearly, from Longfor Group’s perspective, surpassing development business with operating income is already a certainty; the only remaining task is to wait patiently for that moment to arrive.

Disclaimer: The content and data in this article are compiled based on publicly available information and opinions, and do not constitute investment advice. Please verify before use.