Challenges in collecting property management fees are impacting the profitability of companies in the sector. The downturn in real estate development continues to negatively affect the property management industry. On March 20, listed property management firm ONEWO (Stock Code: 02602) disclosed during its 2025 performance briefing that the company achieved a total annual revenue of 37.272 billion yuan, a year-on-year increase of 2.7%. Its core net profit reached 2.128 billion yuan, a slight increase of 0.8% compared to the previous year. Excluding the impact of developer-related business, the core net profit was 1.708 billion yuan, representing an 11.1% year-on-year growth. Recurring business, which is the primary revenue source for ONEWO, generated approximately 33.402 billion yuan, an increase of 8.5% year-on-year, accounting for 89.7% of total revenue. This business segment comprises three main areas: residential property services, property and facility management services, and BPaaS solutions, which reported revenues of 20.555 billion yuan, 9.806 billion yuan, and 1.346 billion yuan respectively, all showing growth compared to the previous year. Despite the growth in revenue scale, the profitability across business segments showed fluctuations, with the gross profit margin decreasing by 0.5 percentage points to 11.6% year-on-year. The gross profit margin for the foundational residential property services segment declined by 0.7 percentage points to 11.7%. Analyzing the fluctuation in gross profit margin, ONEWO's Executive Director and Chief Operating Officer He Shuhua explained that rigid cost increases were largely offset, remaining basically flat compared to 2024. On the revenue side, impacts were observed from the ramp-up period for newly acquired projects and a decline in the fee collection rate. Regarding the ramp-up period for new projects, He Shuhua stated that the expansion of residential property services has shifted from focusing on new supply to competing for existing projects. "As it is now competition for existing projects, those coming onto the market often have various issues, such as service quality or tenant relations. Therefore, in the initial stages of taking over, additional investment may be required, leading to lower gross profit margins for these early-stage projects." ONEWO Chairman Zhu Baoquan also mentioned that for projects taken over within one year, both the collection rate and gross profit margin are at their lowest. As the tenure of management increases, both the gross profit margin and collection rate gradually improve, reaching a relatively reasonable level after five years of management. Difficulty in collecting property management fees is a challenge currently faced by the entire industry. A recent research report released by CRIC showed that in 2025, the average collection rate for the top 500 property management companies in China fell to 71%, marking the fourth consecutive year of decline. The average collection rate for listed property management enterprises was 78%. "Based on internal data analysis, the currently high housing vacancy rate is a significant factor affecting the collection rate," He Shuhua indicated. In projects taken over in 2025, approximately 30% vacancy was attributed to properties not fully sold by developers or properties where owners did not take possession after delivery. "Collecting fees for this portion is quite difficult and carries the risk of discounts." Simultaneously, fluctuations in housing prices have also reduced homeowners' willingness to pay fees. Zhu Baoquan described the vacancy rate issue as "exceeding expectations." "Selling properties is challenging currently; a delivered residential complex might have over 30% unsold units. Should we take on such projects?" Zhu Baoquan explained that while 70% of units in a delivered complex might be sold, the management company is passively obligated to accept responsibility for the property management fees of the 30% vacant units, which are supposed to be paid by the developer. These receivables often turn into bad debts. To reduce accounts receivable, companies may participate in debt-for-asset swaps offered by developers to suppliers, but the assets received often face impairment risks. Furthermore, vacancy rates among properties already purchased by owners are also significant, increasing the burden on paying homeowners. Facing these challenges, ONEWO is attempting, on one hand, to enhance operational efficiency through its "Butterfly City" strategy, which focuses on labor reuse and technology application to counter cost pressures. On the other hand, through its subsidiary business "Pulin," it assists developers in selling remaining inventory, using the proceeds to prioritize payment for property management fees on vacant units. "This year, we have set stricter baseline standards for accepting new projects to prevent potentially risky ventures from entering our core portfolio," He Shuhua explained. Additionally, the company is conducting specialized management for historically accumulated loss-making projects, negotiating with clients based on flexible pricing logic to reach a consensus on value-for-money service. For projects that cannot be turned around, timely exit strategies are being implemented. Regarding market concerns about related-party transactions, ONEWO continued its efforts to reduce their influence during the reporting period. ONEWO's Chief Financial Officer Wang Xubin stated that proactive management has been implemented to steadily decrease the proportion of related-party business. In 2025, revenue from related-party transactions was 2.24 billion yuan, a decrease of approximately 1.2 billion yuan year-on-year, with its share of total revenue dropping from 9.5% to 6%. "This change will bring certain short-term pressures to the company, as the contraction in related-party business will lead to some decline in both revenue and gross profit. However, from a long-term perspective, this is a necessary path for optimizing the company's revenue structure, improving operational quality, and enhancing business independence." On the other hand, ONEWO's core business is increasingly and clearly shifting towards market-oriented, non-developer-related operations. In 2025, ONEWO's revenue from non-related developer business was 34.72 billion yuan, an increase of 8.4% year-on-year. Furthermore, regarding existing related-party receivables, ONEWO is continuously working on recovery, utilizing methods including cash repayment and asset-for-debt swaps. In 2025, the company recovered a total of 2.85 billion yuan in related-party payments, with the absolute value of year-end receivables decreasing by 380 million yuan, a reduction of approximately 15.6%. In the first two months of this year, an additional 480 million yuan was recovered. "Overall, the scale of our related-party receivables is decreasing, and the risk exposure has been consistently contracting." However, judging solely from the 2025 performance data, the impact from related parties remains evident. During the reporting period, ONEWO recorded credit impairment losses of 740 million yuan, an increase of approximately 480 million yuan year-on-year. This also led to ONEWO's annual profit being 770 million yuan, a significant decrease of 38% compared to the previous year. Wang Xubin indicated that in 2026, related-party transactions with Vanke are expected to decrease further. Zhu Baoquan also noted that the impairment provision for these related receivables made the net profit figure in the annual report appear unfavorable. "The first half of 2026 is expected to be relatively volatile, but the full year should be stable."