Morningstar has released a research report maintaining its fair value estimate for CHINA RES LAND (01109) at HK$43, despite lacking an economic moat. Although the firm has lowered its operating profit forecasts for 2026-2028 by 1-3%, its long-term earnings assumptions remain largely unchanged. Due to its attractive risk/reward profile, CHINA RES LAND continues to be one of Morningstar's preferred picks among Chinese property developers.

CHINA RES LAND's revenue grew by 1% in 2025, while operating profit declined by 3%. A 130-basis-point contraction in the gross margin of its property development business weighed on profitability; however, this was largely offset by strong profit growth from its property investment segment. Although the company's overall performance was slightly below expectations, its property development business demonstrated resilience, with a 15.5% gross margin outperforming most peers. The firm anticipates that new project launches in affluent regions will further enhance property sales margins.

The property investment business achieved a solid 11% revenue growth with a 77% gross margin. Additionally, retail sales in its shopping centers increased by 22%, supported by expanded floor area and an optimized tenant mix. The company plans to launch 5-7 new commercial projects annually in major cities by 2030.

CHINA RES LAND reaffirmed its strategy to recycle RMB 10-15 billion by 2026 through spinning off existing commercial assets into its own REIT. This move is viewed favorably for liquidity management, and approval is expected from regulators in 2026 to add four more shopping malls to its REIT portfolio.