CHINA OVERSEAS (00688) rose more than 3%. As of press time, the stock was up 2.9%, trading at HK$14.19 with a turnover of HK$273 million.

On the news front, a Citigroup research report indicated that China's real estate sector will face significant impairment challenges and declining gross margins in fiscal year 2025, setting the stage for a new beginning from 2026 to 2030.

Despite this, most property developers, especially state-owned enterprises, are still expected to record profits.

Citi believes that inventory reduction is progressing smoothly; however, sales realized through existing inventory may decrease due to quality improvements in fourth-generation residential properties.

Companies that have completed debt restructuring are expected to record significant net profits following debt reduction or debt-to-equity swaps, with some potentially initiating a second round of restructuring plans.

Guotai Haitong released a research note stating that, as the company's historical inventory projects are gradually cleared and the pressure from revenue recognition diminishes, its residential development business is entering a transition phase between old and new projects.

Since 2025, the company has increased its investment counter-cyclically, with new projects being highly concentrated in core, high-quality land plots in tier-one and strong tier-two cities, leading to a marked improvement in project quality.

Against this backdrop, the profit contribution from new projects is expected to gradually offset the drag from historical burdens, driving performance delivery and a recovery in profitability.

Concurrently, as a leading central state-owned enterprise in the property sector, the company possesses stronger capabilities in acquiring high-barrier projects such as urban core redevelopments and large-scale complexes, positioning it to benefit continuously during this phase of resource concentration towards industry leaders.