Powerlong Real Estate: Expected Losses to Expand in 2025 Due to Severe Real Estate Operating Environment Leading to Property Impairment Provisions

On March 23, Powerlong Realty (01238.HK) issued a profit warning, expecting the group’s loss for 2025 to be between 6.6 billion and 7 billion yuan, compared to a loss of 5.498 billion yuan in the same period last year; the core loss attributable to the company’s owners is expected to be between 3.4 billion and 3.8 billion yuan, compared to a loss of 3.084 billion yuan last year.

Regarding the reasons for the increased loss, Powerlong Realty explained that it is mainly due to the ongoing severe operating environment in the real estate industry, leading to impairment provisions for property projects; fair value impairment of investment properties; and declines in performance of jointly controlled entities and associates.

For Powerlong Realty, debt restructuring is one of its current key priorities. On January 26, Powerlong Realty announced that the restructuring plan for six domestic bonds and asset-backed securities issued by its subsidiary, Shanghai Powerlong Industrial Development (Group) Co., Ltd., has been approved by bondholders’ meetings. The total scale of these six bonds is approximately 4.336 billion yuan.

Regarding offshore debt, on December 22 of last year, Powerlong Realty announced that its offshore debt restructuring plan had received support from over 85% of relevant creditors. The company also announced that a hearing for the plan is scheduled to be held at the High Court of Hong Kong at 10:00 a.m. on March 19, 2026. The main purpose of this hearing is to seek a court order to formally convene a meeting of the plan’s creditors, to review and approve the restructuring plan.

The third generation of the controlling family has become involved in the family business. On January 27, Powerlong Realty announced that it plans to sell a 25% stake in Powerlong Commercial (09909.HK) to an affiliated party for HKD 361 million, to improve the group’s liquidity and support restructuring and daily operations.

The announcement shows that the buyer, Prime Capital Investment Limited, has an ownership structure where Xu Zhanhao holds 51% of its issued shares, and Xu Hualin holds 49%. Xu Zhanhao is the son of Powerlong Realty Executive Director Xu Huafang and grandson of Executive Director Xu Jiankang; Xu Hualin is the cousin of Xu Huafang and non-executive director Xu Huafen.

After the transaction, Powerlong Commercial will remain a non-wholly owned subsidiary of Powerlong Realty, and its financial performance, assets, and liabilities will continue to be consolidated into the company’s results. The company estimates that this sale will reduce other reserves by approximately 522 million yuan.