GREENTOWN CHINA (03900.HK) is facing dual pressures from public opinion and operational fundamentals this spring, following public accusations from a business partner, management changes, and declining performance. The long-standing dispute over the Tangshan project has resurfaced, while an imbalanced profit structure and tightened dividend policies are prompting the market to reassess the true operational condition of this high-end residential property benchmark company.

Tianhong Real Estate has made a real-name accusation. On April 5, GREENTOWN CHINA issued a statement regarding the recent allegations, labeling them as "false statements" and confirming that the company has reported the matter to the police. The company emphasized that the dispute with the development entity and its actual controller of the Tangshan "Tianhong Jiadi Guanlan" project (registered name "Longxili Bihuyuan," formerly known as "GREENTOWN · Guiyu Jiangnan") is already under judicial process and currently being heard in court. This response addresses a media communication session held in Beijing on March 31 by Wei Guoqiu, Chairman of Tianhong Real Estate Development Co., Ltd. (referred to as Tianhong Real Estate).

At the session, Wei Guoqiu made a real-name accusation alleging that certain senior executives of GREENTOWN CHINA engaged in "systematically hollowing out the listed company" through off-balance-sheet companies, diverting investments and profits that should have been realized within the listed company's structure to entities outside it. Wei Guoqiu further claimed, "It is estimated that over 100 billion in listed company funds were misappropriated through lending, profits exceeding 10 billion were intercepted, resulting in a loss of state-owned assets exceeding 3 billion." According to Phoenix Net Finance, Tianhong Real Estate has sent a risk alert letter and corresponding evidence to GREENTOWN CHINA's auditor, EY, and has submitted a comprehensive report to the Hong Kong Stock Exchange, the Securities and Futures Commission of Hong Kong, and the Hong Kong Financial Reporting Council, which has now been recorded by the regulators.

The core of the dispute between the two parties revolves around a cooperation initiated in 2019 concerning a prime plot of land in Lubei District, Tangshan City. At that time, Tianhong Real Estate acquired the land for approximately 860 million yuan, intending to develop "Tangshan's first luxury mansion" and brought in leading developer GREENTOWN as the project brand and operator. The initial agreement was for a "financing + construction management" model, where GREENTOWN would provide a 600 million yuan loan, with its subsidiary GREENTOWN Management Group responsible for construction management, promising a sales rate of about 90% and sales proceeds of 2.18 billion yuan within two years.

However, during the formal contract signing phase, the cooperation structure changed. Tianhong Real Estate's expectation of a "direct cooperation with GREENTOWN CHINA" was split into two contracts: one was a construction management agreement signed between Tianhong Real Estate and GREENTOWN Management Group, and the other was an investment cooperation agreement signed with "Shenyang Quanyun Village Construction Co., Ltd." (referred to as Shenyang Quanyun Village). Public information shows that Shenyang Quanyun Village was registered and established in March 2011 and currently appears to have no direct equity relationship with GREENTOWN CHINA. However, Li Jun, the current Executive Director and Vice President of GREENTOWN CHINA, previously served as the person in charge of Shenyang Quanyun Village and resigned from his directorship in December 2022. GREENTOWN CHINA's 2020 annual report indicates that Shenyang Quanyun Village was an associate company of GREENTOWN CHINA, which held a 50% interest.

According to Wei Guoqiu, during the signing, GREENTOWN stated that Shenyang Quanyun Village was its "internal unit." Trusting GREENTOWN, Tianhong Real Estate ultimately accepted the cooperation plan. In November 2019, the project company for "GREENTOWN · Guiyu Jiangnan" – Tangshan Hongke Real Estate Development Co., Ltd. (referred to as Tangshan Hongke) – was registered and established. Tianyancha data shows that Tangshan Hongke is 90% owned by Tianhong Real Estate and 10% owned by Shenyang Quanyun Village. Despite the low shareholding percentage, Wei Guoqiu stated that after the investment, Shenyang Quanyun Village held the project company's sole executive director seat, becoming the de facto decision-making body. Tangshan Hongke does not have a board of directors; all major matters are decided by the executive director appointed by Shenyang Quanyun Village. Tianyancha shows that the company's current executive director is Zuo Wenhui, reportedly a manager in GREENTOWN's Financial Business Department.

Regarding the financing arrangement, according to the cooperation agreement, Shenyang Quanyun Village was responsible for providing a 600 million yuan loan to the project, with an annual interest rate as high as 16%. Wei Guoqiu claimed that, based on his understanding, approximately 500 million yuan of this funding came from an internal interest-free loan from GREENTOWN Real Estate Group, and 100 million yuan came from GREENTOWN Management Group. While the intention of mutually beneficial cooperation was sound, the project's actual progress was not smooth. The project's first launch in 2020 saw sales fall short of expectations. By the end of 2021, cumulative project sales proceeds were only 93.93 million yuan, less than 5% of the original promise.

Poor sales, combined with high-interest debt, quickly put pressure on the project's finances. In 2022, conflicts between the two parties fully erupted. In February of that year, Tianhong Real Estate sued GREENTOWN's related parties in Tangshan, demanding confirmation of the loan relationship and accountability for negligence in construction management. In April of the same year, Shenyang Quanyun Village filed a lawsuit in Shenyang, demanding that Tianhong Real Estate repay the remaining loan principal and interest of approximately 390 million yuan in advance and applied for pre-litigation preservation. After the assets were frozen, the "GREENTOWN · Guiyu Jiangnan" project stalled. Wei Guoqiu disclosed that the project has been suspended for over a year, hundreds of units cannot be delivered, and in 2023, it was included in the Ministry of Housing and Urban-Rural Development's key list for ensuring project delivery.

GREENTOWN CHINA has denied the above allegations, emphasizing that Shenyang Quanyun Village is an independent entity, the construction manager is not responsible for sales performance, and attributed the failure to meet sales expectations to market conditions and the partner's own operational capabilities. As of now, related cases are still under second-instance trial in the high courts of Hebei and Liaoning provinces.

Profit attributable to owners of the company plummeted. On the same day Wei Guoqiu held the media communication session to publicly accuse GREENTOWN, the latter disclosed its 2025 annual results. The financial report shows that in 2025, GREENTOWN CHINA achieved revenue of approximately 154.966 billion yuan, a decrease of about 2.26% year-on-year; it recorded a profit for the year of approximately 2.286 billion yuan, a decrease of about 44.86% year-on-year. Among these figures, the profit attributable to owners of the company was 70.989 million yuan, a sharp decrease of about 95.55% year-on-year, the lowest since listing; the non-controlling interests amounted to 2.215 billion yuan, only decreasing by about 13.11% year-on-year.

It is noteworthy that the profit attributable to owners of the company accounted for only 3.10% of the company's annual profit, while non-controlling interests accounted for a high 96.90%. This means that out of the over 2 billion yuan net profit GREENTOWN CHINA achieved in 2025, the company's shareholders received only a small portion, with the vast majority being taken by minority shareholders of cooperative projects. GREENTOWN CHINA explained in its financial report that the decline in profit attributable to owners was mainly due to the real estate market still being in an adjustment period, and the company's continued active promotion of long-term inventory reduction, leading to a decrease in the gross profit margin of revenue recognized in 2025 and a decline in the share of results of associates and joint ventures. Simultaneously, the company recognized net impairment and fair value change losses of 4.921 billion yuan in 2025, which further impacted profit attributable to shareholders.

According to the financial report, in 2025, GREENTOWN CHINA's share of results of joint ventures was a loss of 598 million yuan, and its share of results of associates was a loss of 536 million yuan, totaling a loss of 1.134 billion yuan. This represents an increased loss of 501 million yuan compared to the loss of 633 million yuan in 2024. GREENTOWN pointed out that the increased loss was mainly due to the rise in the equity proportion of newly developed projects in recent years, a decrease in new joint ventures and associates, leading to a decline in sales revenue and a decrease in gross profit margin affected by the downturn in the real estate industry.

On the sales front, GREENTOWN maintained its scale advantage. In 2025, GREENTOWN CHINA achieved total contracted sales金额 of approximately 251.9 billion yuan, ranking second in the industry,仅次于 Poly Development (600048.SH). Among these, self-invested project sales amounted to approximately 153.4 billion yuan, and equity sales were approximately 104.3 billion yuan, both ranking fifth in the industry. However, it is evident that such scale has not translated into profit improvement.

Meanwhile, the company's cash and debt structure showed some optimization. As of the end of 2025, GREENTOWN held bank deposits and cash of approximately 63.238 billion yuan, which is 2.6 times its borrowings due within one year, reaching a record high. Total borrowings during the same period were 133.386 billion yuan, net debt was 70.148 billion yuan, and borrowings due within one year amounted to 24.744 billion yuan, accounting for 18.6% of total borrowings, a record low.

In terms of shareholder returns, the company's attitude has become more conservative. A final dividend of 0.30 yuan per ordinary share for the 2024 fiscal year, totaling approximately 762 million yuan, was paid in 2025. However, the board clearly stated that it does not recommend paying any final dividend for the 2025 fiscal year.

Around the time of the annual results disclosure, GREENTOWN CHINA's management also underwent adjustments, with the timing coinciding with the earnings release and the escalation of public opinion. On March 30, GREENTOWN CHINA announced the resignation of Chief Executive Officer Guo Jiafeng, with Executive Director Geng Zhongqiang appointed as Acting Chief Executive Officer. On the same day, the company's board also saw several personnel changes, with management adjustments being concentrated.

Looking at their resumes, Guo Jiafeng was born in 1965 and turned 60 last year. He joined GREENTOWN as early as May 1999, left for a period, but returned in July 2019, and was promoted to Chief Executive Officer in December 2020. He is widely recognized in the industry as a "veteran GREENTOWN person." His resignation was explained externally by the company as due to retirement reasons. The successor, Geng Zhongqiang, was born in August 1972 and is currently 53 years old. He joined China Communications Construction Group in July 1995 and served as President of CCCC Real Estate (000736.SZ) from September 2018 to July 2019. In July 2019, Geng Zhongqiang joined GREENTOWN CHINA, serving as Executive Director and Executive President. In April 2025, he was appointed as a Non-Executive Director and Co-Chairman of the board of GREENTOWN Management Group, and became Chairman of the board effective March 30, 2026.

In the capital markets, as of April 2, 2026, GREENTOWN CHINA's stock price was HK$8.41, with a total market capitalization of approximately HK$21.358 billion.

In conclusion, from the dispute over the Tangshan project to the changes in profit structure, the problems currently faced by GREENTOWN CHINA are not caused by a single event but are the result of the combined effects of its cooperation model, the industry cycle, and internal governance. For this property developer renowned for its "quality," how it rebalances scale, profit, and risk will determine its direction in the next phase.