The old era of China's real estate industry has come to an end. The model that leveraged scale through debt financing and covered risks with speed is being replaced by an entirely new set of rules: financial security has become the primary principle, while strategic depth is replacing extensive expansion.

In this profound paradigm shift, the steady performance of a few companies has become the best window for observing the industry's future. YUEXIU PROPERTY's interim results released on August 26 provide precisely such a sample. Just the day before, S&P granted an investment-grade rating to the company, marking another rare vote of confidence from international rating agencies in Chinese real estate companies in 2025, following Fitch.

In the current arena where prudence sets the tone, almost everyone has accepted a posture of contraction and dormancy. However, YUEXIU PROPERTY's management has clearly announced at this time: they have full confidence in achieving the annual sales target of 120.5 billion yuan.

YUEXIU PROPERTY's confidence is built on its sales data.

In the first half of 2025, while the top 100 real estate companies saw their sales decline by an average of 11.8%, YUEXIU PROPERTY's contract sales rose against the trend by 11%, reaching 61.5 billion yuan. Among the top ten giants in sales rankings, only three achieved positive growth, with YUEXIU PROPERTY's growth rate ranking second.

This counter-trend performance did not rely on the traditional playbook of "trading price for volume." On the contrary, YUEXIU PROPERTY's average selling price soared from 29,500 yuan per square meter a year ago to 42,100 yuan, nearly 2.5 times the industry average.

The answer is actually quite simple: YUEXIU PROPERTY chooses to fight only in the most solid fortresses.

Data shows that 80.5% of the company's sales in the first half came from tier-1 cities. In Beijing, it became the local market leader with a sales increase of 255.1%; in the highly competitive Shanghai market, it squeezed into the top six; while Guangzhou, its home base, remains its undisputed main granary.

In uncertain times, the greatest certainty comes from the purchasing power of those most eager to improve their living conditions in core cities and prime locations. What YUEXIU PROPERTY does is precisely target all its ammunition at this still-warm soil.

Behind the sales outperformance lies YUEXIU PROPERTY's almost obsessive investment discipline. An industry insider commented that YUEXIU PROPERTY's model turns "investment expansion" into a preliminary stage of "sales conversion," betting only on certainty at the gaming table.

This discipline is reflected in city selection. In the first half of 2025, 100% of YUEXIU PROPERTY's newly added 1.48 million square meters of land reserves were located in tier-1 and tier-2 core cities. Taking a longer view, 94% of the value in its total land bank of 20.43 million square meters is concentrated in these high-tier cities.

More noteworthy is its approach. Chairman Lin Zhaoyuan revealed that the company has favored acquiring small-scale land parcels in old urban areas in recent years. Such projects "mean quick entry and exit due to their small scale, with higher operational efficiency and investment realization rates."

This creates a flywheel effect that many companies dream of: precise investment leads to efficient sales conversion, and strong sales cash flow provides ample ammunition for the next round of precise investment. While most companies are still struggling with cash flow, YUEXIU PROPERTY achieved a net operating cash inflow of 4.1 billion yuan in the first half.

If precise investment and sales strategies are YUEXIU PROPERTY's "accelerator," then its financial stability serves as the "ballast" for navigating cycles.

In this industry, money has never been as expensive and scarce as it is now. Yet YUEXIU PROPERTY's financing costs are low enough to make many real estate companies envious. Its weighted average borrowing cost of 3.16% decreased by 41 basis points year-on-year. Lin Zhaoyuan calculated that financing costs alone can save hundreds of millions of yuan annually, money that can effectively offset profit declines.

This advantage stems partly from the credit endorsement of its state-owned enterprise status and partly from its own strict financial discipline. YUEXIU PROPERTY consistently maintains the "green" category across all "three red lines": asset-liability ratio excluding advance receipts at 64.6%; net gearing ratio at 53.2%; and cash coverage ratio for short-term debt at a high 1.7 times.

When liquidity becomes a matter of life and death, YUEXIU PROPERTY's solid financial moat becomes its greatest confidence for calm deployment and counter-trend expansion.

Of course, YUEXIU PROPERTY is not without concerns. Industry-wide profit declines are also eroding its financial statements, with the company's gross profit margin falling to 10.6% in the first half. However, Lin Zhaoyuan's response to this was exceptionally pragmatic: "During peak periods, we had gross profit margins above 30%... Later, 20% became good, then 15% became acceptable. I believe that having a gross profit margin above 10% in the current environment is also good."

This clear-headed recognition perhaps speaks more to the issue than a perfect profit statement. It reveals a fact: the era of savage growth relying on high leverage and high profits has completely ended.

For YUEXIU PROPERTY, it seems to have found the rules of the new era's game—abandoning fantasies about scale and returning to the essence of business: doing the most certain business in the safest places with the healthiest finances. This may be the real reason why it dares to discuss growth during the industry adjustment period.