China Merchants Shekou Rushed Forward for a Year, Non-GAAP Net Profit Below 300 Million, How Will New Leader Zhu Wenkai Break the Deadlock?

Entering 2026, state-owned enterprise developers are busier than ever.

In just three months, Minmetals Land was delisted, Yuexiu Property fought fiercely for land in Guangzhou for 9 hours, China Overseas and China Resources Land underwent organizational restructuring, and China Merchants Shekou was adjusting personnel.

On March 3, China Merchants Shekou announced that Liu Ye resigned as Vice President due to work transfer and would be taking a position at China Nanshan Group. The next day, the company also stated that independent director Kong Ying would be leaving due to the expiration of his term.

In September 2025, the chairman and CEO of China Merchants Shekou were both replaced. With Zhu Wenkai as chairman and Nie Liming as general manager leading the new management team, the company’s 2025 sales finally ranked in the industry’s top 4.

In stark contrast, the company expects profits to plummet. In 2025, it is projected to achieve a net profit attributable to shareholders of 1.005 billion to 1.254 billion yuan, down 69%-75% year-over-year; after deducting non-recurring gains and losses, net profit (hereinafter “non-recurring net profit”) is estimated at 154 million to 231 million yuan, a sharp decline of 91%-94%.

During this deep adjustment period in real estate, even central state-owned enterprises are not immune to industry shocks. For Zhu Wenkai and Nie Liming, who have just taken over, the real test has already begun.

1

Projected non-recurring net profit

Less than 300 million,

Inventory impairment totaling 13.7 billion over 5 years

When it comes to China Merchants, most outsiders are more familiar with China Merchants Bank. In fact, China Merchants Shekou and China Merchants Bank are sibling companies, both under China Merchants Group.

As of the end of 2025, China Merchants Group’s total assets exceeded 15 trillion yuan, making it a true “giant” among central SOEs.

Backed by a strong parent, China Merchants Shekou naturally has advantageous resources, but it also bears the scale and return pressures that come with its SOE status. As the real estate industry shifts from “expansion at all costs” to “quality and profitability,” SOEs must also demonstrate their profitability to the outside world.

This, however, is China Merchants Shekou’s “shortcoming.”

On January 30, China Merchants Shekou released its 2025 performance forecast. It expects to achieve a net profit attributable to shareholders of 1.005 billion to 1.254 billion yuan, down 69%-75% year-over-year; non-recurring net profit of 154 million to 231 million yuan, a drop of 91%-94%.

This means that in 2025, after excluding non-recurring gains and losses, the profit from China Merchants Shekou’s core operations was less than 3 billion yuan.

Figure / China Merchants Shekou Announcement

Regarding the sharp decline in profits, China Merchants Shekou explained that the main reason was the impairment of some real estate development projects, as the company, based on market conditions and prudent principles, made corresponding impairment provisions.

Additionally, the reduction in the scale of project deliveries, a decrease in operating income year-over-year, and declines in investment income from joint ventures and gains from equity sales all contributed to the profit decline.

So, how did the inventory impairments come about?

On one hand, the real estate industry is in a deep adjustment, with housing prices falling; on the other hand, China Merchants Shekou once enthusiastically competed for “land kings” at high prices, and now has to “pay the price” for it.

For example, in February 2024, China Merchants Shekou acquired the Binke City BK202401 site in Hefei, with a total transaction price of 1.299 billion yuan, a premium rate of 54%, and a floor price of 25,000 yuan per square meter, setting a new record for Hefei’s highest land price.

In August 2024, the company bought a land parcel in Hangzhou Gongshu District’s Shangtang area for about 1.36 billion yuan, with a premium rate of 24.87%, and a floor price of approximately 41,600 yuan per square meter, becoming the “land king” of Shangtang.

As a central SOE developer, China Merchants Shekou has abundant financing channels to provide cash flow for replenishing reserves. However, during the industry’s deep adjustment, land bought at high prices faces difficulties in project sales and capital turnover.

The inventory impairments caused by high-priced projects have long been a “black hole” devouring profits. “Bullet Finance” found that from 2020 to 2024, China Merchants Shekou’s inventory impairment provisions totaled 2.53 billion, 1.719 billion, 3.641 billion, 2.276 billion, and 3.575 billion yuan, respectively, totaling 13.7 billion yuan.

Each year, the company explained that these impairments were due to “sales prices of some real estate projects not meeting expectations, and the realizable net value of land being lower than cost.”

In financial reports, this manifests as declining profits. From 2020 to 2024, China Merchants Shekou’s net profit attributable to shareholders decreased by -23.58%, -15.35%, -58.89%, 48.20%, and -36.09%, respectively. Only in 2023 did the net profit growth turn briefly positive.

Even if we use the highest projected net profit of 1.254 billion yuan for 2025, it is still nearly 150 billion yuan less than the peak of 16 billion yuan in 2019.

In any case, after fading from its former glory, China Merchants Shekou has once again reached a point where it must prove its strength.

2

Sales drop below 200 billion,

stock price falls 14% in one month

Objectively, China Merchants Shekou has had some “luck” on its side.

In 2021, when the housing market turned, China Merchants Shekou achieved a signing sales amount of 326.834 billion yuan, but on the CRIC list, its “Bi Heng Rong” was still among the industry leaders, ranking seventh.

Just two years later (2023), its signing sales fell below 300 billion yuan, but after the fall of Evergrande, Sunac, and Country Garden, the company still managed to enter the top five industry rankings, ranking fifth.

Figure / CRIC

At the 2023 earnings conference, then-CEO Jiang Tiefeng set a goal to be among the top five in industry sales. However, maintaining a position in the top five was not easy.

On one side, the companies ahead—Poly Developments, China Overseas, China Resources Land, and Vanke—each had their own strengths: Poly with the largest sales scale, China Overseas with cost control, China Resources Land with integrated operations, and Vanke as a steady “big brother.” In this environment, China Merchants Shekou’s characteristics are less distinctive, making further breakthroughs difficult.

On the other side, Greentown’s momentum was strong, and it was the industry’s top builder in construction management, also a fierce competitor for the top five.

It is evident that China Merchants Shekou accelerated land market expansion in 2025. According to CRIC data, in 2024, its land acquisition rights amounted to 28.5 billion yuan, ranking sixth in the industry. By 2025, this figure surged 108% year-over-year to 59.4 billion yuan, entering the top three.

Some projects were still acquired at high prices. In March 2025, China Merchants Shekou paid about 2.7 billion yuan for a site in Chengdu High-tech Zone’s Guixi Street, with a premium rate of 70.4% and a floor price of 31,700 yuan per square meter, setting a “land king” record in Chengdu.

In July of the same year, it bought a residential land parcel in Qianhai Guiwan, Shenzhen, for 2.155 billion yuan, with a premium rate of 86.1%, and a transaction floor price of about 84,200 yuan per square meter, becoming Shenzhen’s “single-price land king.”

Since high-priced projects have become “hot potatoes,” why does China Merchants Shekou still choose to acquire land at high prices? Is it for scale at the expense of profit? How to reverse the profit decline? “Bullet Finance” tried to get answers from China Merchants Shekou, but as of press time, no response has been received.

Nevertheless, sales continue to decline. In 2025, China Merchants Shekou’s signed sales amounted to 196.009 billion yuan, down 10.6% year-over-year, falling 40% from its peak in 2021.

Figure / China Merchants Shekou Announcement (Figure 1: 2025; Figure 2: 2024)

However, due to Vanke’s turmoil in 2025, with sales plunging sharply, CRIC data shows that China Merchants Shekou managed to “pick up” the industry’s fourth place in 2025. (Editor’s note: based on total sales including all channels)

Figure / CRIC

The capital market, however, is not “buying” it. For 12 consecutive months in 2025, the company’s stock closing price each trading day was below its latest audited book value per share.

On February 6, 2026, China Merchants Shekou announced a valuation enhancement plan, proposing measures in business, cash flow, and dividends to boost the stock price.

The next trading day (February 9), the stock briefly rose to 11.10 yuan per share, the highest since 2025, but quickly turned downward. Wind data shows that as of March 13, the stock closed at 9.60 yuan per share, a cumulative decline of about 14% in one month.

How to reconcile the rising industry ranking with declining sales, profits, and stock price? Has the company identified the root cause of its low valuation? Are there ways to improve the stock price?

“Bullet Finance” attempted to contact China Merchants Shekou for answers, but as of press time, no reply has been received.

3

Top management “massive reshuffle,”

Zhu Wenkai faces heavy challenges

Amid continuous declines in profits and sales, China Merchants Shekou has begun intensive management restructuring.

In September 2025, the company announced that Jiang Tiefeng resigned from his positions as director, chairman, and member (and convener) of the Strategy and Sustainability Committee due to work transfer. This was only two years after he took the chairman role.

After Jiang Tiefeng’s departure, Zhu Wenkai was promoted from general manager to chairman. At the same time, Nie Liming was appointed general manager; both are veterans with long histories at China Merchants.

Interestingly, Jiang Tiefeng and Zhu Wenkai have significant overlap—when Jiang was promoted to chairman in September 2023, Zhu Wenkai was simultaneously promoted to general manager.

Figure / Visual China, based on VRF protocol

Looking further back, in 2017, Jiang Tiefeng, then assistant to the general manager and head of East China, set the tone at the “Centennial Magnificence: Shanghai Coexistence—China Merchants Shekou Shanghai Strategy” conference, aiming to “create another Shenzhen Shekou in Shanghai.” At that time, Zhu Wenkai, then executive vice president, had already outlined the goal of “trillion-yuan East China.”

By 2023, East China contributed 28.56% of China Merchants Shekou’s revenue, ranking first among regions. But in 2024, it was overtaken by Jiangnan (South of the Yangtze River). During this period, the general manager of East China changed from Qian Jianguo to Wen Enqi, who also served as Shanghai regional manager.

Despite this, China Merchants Shekou remains ambitious in Shanghai. For example, in September 2024, after 163 rounds of fierce bidding, China Merchants Shekou and Nantong Ruicheng jointly acquired a land parcel in Caojiadu, Jing’an District, Shanghai, for 5.66 billion yuan, with a premium rate of 31.2%, and a floor price of 114,000 yuan per square meter—second highest in the country.

By June 2025, China Merchants Shekou further restructured, abolishing five regional companies and directly managing subordinate city companies from the headquarters to achieve a flatter “group-city” management model.

Meanwhile, personnel changes continued. In November 2025, Peng Yiliang resigned as vice president due to work transfer; in December, Xu Xin was appointed non-independent director.

In March 2026, Liu Ye resigned as vice president due to work transfer. In April 2025, Liu Ye also stepped down from roles as chief legal officer and chief compliance officer, with Tang Jian taking over.

Thus, China Merchants Shekou formed a new management team centered on Zhu Wenkai and Nie Liming. Has China Merchants Group set any expectations for this new team? Zhu Wenkai is 59, approaching retirement age—if he retires soon, is there concern about frequent management changes hindering long-term strategy?

Figure / Visual China, based on VRF protocol

“Bullet Finance” attempted to get responses from China Merchants Shekou but has not received any as of press time.

Regardless, with the handover to Zhu Wenkai and Nie Liming, China Merchants Shekou’s industry position and resources remain, but the real estate logic has changed. How to rebuild profitability in a declining cycle is now an essential question.

However, given the projected decline of over 90% in non-recurring net profit in 2025, Zhu Wenkai and Nie Liming still seem to have no clear solution.

The main image in the article is from Visual China, based on VRF protocol.