The real estate sector is currently undergoing a profound structural adjustment, where debt restructuring has become a critical indicator for testing the viability and operational resilience of financially distressed developers. By the end of 2025, CIFI Holdings (00884) announced the completion of its domestic and offshore debt restructuring, which is expected to reduce its debt by approximately RMB 43 billion and transform its existing debt structure from "short-term, high-interest" to "long-term, low-interest," signaling the company's steady emergence from a severe liquidity crisis. As the restructuring plan is gradually implemented, the Mandatory Convertible Bonds (MCBs) formed during the earlier debt resolution phase are successively entering the conversion and circulation stage, leading to a temporary increase in share supply. Recent market trading volume has noticeably amplified, accompanied by periodic stock price volatility. However, from the intrinsic logic of debt restructuring, this process represents a common, phased phenomenon in market-based debt resolution and does not undermine the long-term positive development foundation of CIFI.

From a trading perspective, the direct cause of CIFI's stock price fluctuation stems from the temporary supply increase following the conversion of MCBs, where the pace of share capital expansion has temporarily exceeded the market's absorption capacity, thereby exerting downward pressure on the share price. Yet, this is not a situation unique to CIFI but a common pathway for the industry to achieve substantive debt restructuring through market-based mechanisms. Observations of similar cases reveal that when property developers utilize tools like debt-to-equity swaps to reduce their debt burden, it is often accompanied by temporary equity dilution and selling pressure from certain institutions due to liquidity needs or other factors. Although this creates short-term disturbances in the stock price, this "short-term pain" is exchanged for a systematic repair of the balance sheet, representing a necessary process for the company to achieve a "lighter operational load." Particularly noteworthy is that CIFI has achieved a fundamental optimization of its financial structure through this restructuring: its debt scale has been significantly reduced, interest-bearing liabilities have been cut to under RMB 50 billion, and its net gearing ratio has markedly improved, securing a valuable window for subsequent business operations.

During the industry adjustment phase from 2021 to the present, CIFI has successfully completed its project delivery obligations, restructured its credit bonds, and maintained the integrity of its core operational team, establishing itself as one of the few financially distressed private developers achieving sustainable operations. Its capability to manage risks and sustain operations has already been validated. From an asset valuation perspective, even considering the equity dilution from the conversion, the substantial increase in net assets resulting from the debt restructuring is expected to maintain the net asset value per share close to HKD 1, providing a solid safety margin for the company's intrinsic value and valuation. In contrast, CIFI's current share price is below HKD 0.10, corresponding to an expected price-to-book ratio of less than 0.1 times. This not only significantly underperforms the average level of the domestic property sector but also deviates substantially from the company's own historical valuation range, placing it in a rare state of undervaluation where the long-term investment value, due to "short-term overselling," has become prominent.

As the phased selling pressure from the MCB conversion is gradually absorbed, and the post-restructuring business recovery and operational improvements steadily progress, the current severe undervaluation is expected to revert towards a more reasonable level. Furthermore, it is noteworthy that during CIFI's debt restructuring process, internationally renowned investment institutions such as GIC and PAG have become significant shareholders of the company through the MCBs. The strategic positioning of such long-term capital is not based on short-term trading but stems from a deep conviction in CIFI's restructuring pathway, balance sheet repair progress, and long-term operational capabilities, thereby bolstering market confidence in the company from a capital perspective. A recent Citigroup report also indicated that CIFI is expected to achieve a net profit in the tens of billions scale for the 2025 fiscal year through the debt restructuring, further corroborating the clear trend of fundamental improvement via the restructuring.

Short-term stock price fluctuations are more a reflection of the market's normal reaction to the concentrated realization phase of debt restructuring instruments, whereas the company's long-term trajectory will ultimately revert to its fundamentals. As the selling pressure from the MCB conversion gradually subsides, market focus is expected to shift back to CIFI's valuation advantage and business recovery potential. For value investors, the current period may represent a crucial juncture to focus on the opportunity for a turnaround in high-quality private developers facing distress, as short-term volatility does not alter the logic of long-term value recovery.