Financial Report Observation Room | Accounting treatment of asset provisioning leads to losses, Meikailong anchors high-quality development

Ask AI · How can the empowerment from Jianfa Corporation enhance Meikailong’s operational resilience?

Recently, Meikailong released its 2025 annual report. During the reporting period, the company achieved revenue of 6.58B yuan. Influenced by the downward pressure in the real estate industry, Meikailong adopted a cautious approach and made significant fair value adjustments to its investment properties, which also resulted in a net loss of 23.72B yuan attributable to shareholders of the listed company this year.

After excluding non-operating factors, Meikailong’s core business demonstrated resilience and recovery flexibility. Especially under the guidance of the new five-year strategy and deep empowerment from Jianfa Corporation, the quality of operations has improved. The annual report shows that Meikailong’s net operating cash flow for the year reached 816 million yuan, a substantial increase of 277.34% from 216 million yuan in 2024; the gross profit margin of its core home furnishing commercial services segment increased by 2 percentage points to 61.9%.

Main Business Stabilized Under Jianfa Empowerment

From the annual report, under Jianfa Group’s empowerment, Meikailong’s main business has initially stabilized. As of December 31, 2025, the average occupancy rates of its 74 self-operated malls and 218 entrusted malls both improved compared to 2024. Among them, the average occupancy rate of self-operated malls increased by 2 percentage points to 85.0%.

In 2025, the average occupancy rate of Meikailong’s self-operated malls increased by 2 percentage points. Provided by interviewees

Meikailong stated that Jianfa Group’s mature state-owned asset management experience has helped the company reduce costs and increase efficiency. In 2025, Meikailong’s operating costs, sales expenses, and administrative expenses decreased by 18.95%, 18.59%, and 24.22%, respectively, with declines exceeding those of revenue, leading to substantial operational efficiency improvements. Additionally, the financing advantages brought by Jianfa shares have gradually become evident. Meikailong’s overall financing cost rate was optimized from 5.1% last year to 4.4%, driving interest expenses down from 2.53B yuan to 2.16 billion yuan. By the end of 2025, the total scale of notes payable and accounts payable decreased by 43.79% compared to the previous year, with historical debt steadily cleared.

During the reporting period, business collaboration between the two parties accelerated. Meikailong deepened cooperation with Jianfa Light Industry and Jianfa Automotive, continuously promoting the implementation of strategies such as 3+Star Ecosystem and People-Vehicle-Home. In 2025, Meikailong’s electrical appliance store operation area reached 1.41M square meters, increasing its proportion to 10.1%; automotive operation area doubled from 160k square meters to 320k square meters, covering 46 cities nationwide.

Jianfa Corporation also brought new customer acquisition channels to Meikailong. On one hand, Meikailong linked with international events like the Diamond League and Xiamen Marathon, elevating its brand image; on the other hand, through Jianfa/Lianfa’s real estate ecosystem, it extended marketing reach to 20 cities and 76 projects, with over 14k customer groups expanded, directly driving a transaction volume of about 150 million yuan, forming a “real estate + home furnishing” traffic loop.

The first deeply collaborative commercial project between the two, Chengdu Bayue City, opened on December 20, 2025. The project is positioned as “South City Vitality Family Joy Hub,” breaking traditional home furnishing commercial boundaries, introducing diverse high-frequency consumption formats such as sports outdoor, parent-child entertainment, and specialty dining, achieving a renewal upgrade of existing assets and efficient release of commercial value.

Driving Asset Valuation Back to Reasonable Commercial Value

Due to the deep adjustments in China’s real estate industry over the past few years, commercial real estate generally faces valuation adjustments. Out of caution regarding macroeconomic and industry trends, Meikailong conducted a comprehensive revaluation of its investment properties based on accounting standards. This move resulted in approximately 160k yuan of fair value loss on the books, which was a core reason for the significant loss in 2025. However, on the other hand, this valuation adjustment solidified the company’s asset quality, making the book value more aligned with current market realities.

Industry insiders point out that such accounting treatment does not involve the company’s cash flow and does not indicate a substantive deterioration of the company’s main business. Through sufficient value adjustments, Meikailong eliminated potential hidden risks of ongoing asset depreciation, laying a more solid financial foundation for the company’s future strategic layout.

While promoting asset valuation back to reasonable commercial value, Meikailong is also proactively acting at the operational level. Facing shrinking industry demand and difficulties faced by tenants, Meikailong has implemented measures such as rent reductions to stabilize tenants and support businesses, ensuring the survival space for tenants and maintaining stability in the home furnishing industry chain. “Although this puts some short-term pressure on revenue, it also consolidates the tenant base and lays a foundation for continued improvement in the future.”

Policy Favorable Factors and the Launch of the New Five-Year Strategy

Since 2025, the real estate industry has continued to receive policy support. In December 2025, the China Securities Regulatory Commission issued a notice on promoting high-quality development of the Real Estate Investment Trusts (REITs) market, including commercial real estate in pilot programs, helping the industry broaden diversified financing channels. Starting January 1, 2026, the interest rates on existing provident fund loans were fully lowered, with the five-year and above first-home loan rate reduced to 2.6%, and second-home loans to 3.075%, continuously easing residents’ home purchase pressure. In March 2026, Shanghai announced that the minimum down payment ratio for commercial property purchases was lowered to no less than 30%, reducing barriers to commercial real estate investment and ownership. Meanwhile, nationwide policies promoting old-for-new exchanges of consumer goods continued to strengthen, with smart home products included in subsidy programs, precisely stimulating home furnishing consumption demand.

Along with ongoing policy support and market self-clearing, the real estate sector is gradually emerging from the downward cycle. CICC research reports suggest that as supply contraction enters its sixth year, the deep adjustment of the real estate market is nearing its end. Ding Zuyu, Co-President of CRIC Group and Chairman of Pru Smart Technology, analyzed from six dimensions including dynamic supply and demand, inventory, and house price adjustments, that the real estate market is confirming a bottom, signaling stabilization and a halt to decline.

At this critical point of industry stabilization, Meikailong has launched its new five-year strategy, positioning itself as “a new commercial operator for home living and a service provider for the home furnishing industry ecosystem,” aiming for high-quality development. On one hand, Meikailong will focus on upgrading its core home furnishing business, continuously enhancing content and operational capabilities, deeply exploring the value of home furnishing commercial spaces, and consolidating its competitive edge; on the other hand, the company will expand its service boundaries, empowering upstream industry chains, including core entities like brand factories, to create a second growth curve.

Analysts believe that as investment properties return to current commercial value and operational fundamentals bottom out, in the context of a gradually warming real estate market and sustained release of home furnishing demand, Meikailong is expected to seize industry recovery opportunities, achieve continuous improvement in operational performance, and realize long-term value return.

Text by Zhang Jie

Edited by Wang Lin

Proofread by Zhao Lin