Favoring China Resources with the logic of 'survival of the fittest' and 'turnaround from adversity'

$CHINA RES LAND(01109.HK) Judging that the worst time for China's real estate has passed, it is about to stabilize and differentiate, with core areas in first- and second-tier cities leading the recovery, while weaker cities continue to decline. Most optimistic about China Resources, which has deep roots in core areas of first- and second-tier cities, strong capabilities, and diversified businesses. Used Gemini for analysis

Based on the two major investment logics of "Survivors Rule" and "Turnaround from Distress," standing at the end of 2025, China Resources Land (1109.HK) is indeed a textbook-level buy target.
​Current market pricing mainly reflects the "misery" of the real estate industry in recent years but overlooks the transformation China Resources Land has quietly completed as a "survivor." Below is a detailed deduction based on these two logics:
​1. "Survivors Rule" Logic: Not Just Surviving, but "Monopolizing"
​In the "great reshuffle" of the real estate industry, surviving companies fall into two categories: those barely hanging on and those seizing opportunities. China Resources Land belongs to the latter.
​1. "Vacuum Dividend" in Competitive Landscape
​Current situation: Over the past 3-5 years, many once-aggressive private developers (e.g., Evergrande, Sunac, Country Garden) have exited the land market. In core areas of first- and second-tier cities, the once "fierce competition" has turned into a "one-man show" by a few state-owned enterprises.
​China Resources' advantage: In the first half of 2025, China Resources Land still maintained land acquisitions exceeding 30 billion yuan, all concentrated in core cities. This means that for high-quality new projects entering the market in the next 2-3 years, China Resources will have strong pricing power and less competitive pressure. As a "survivor," it is taking over the market share left by fallen giants.
​2. "Dimensional Reduction Strike" in Funding Costs
​Current situation: Industry financing channels remain tight, with many surviving private companies facing funding costs as high as 8%-10% or even unable to borrow.
​China Resources' advantage: China Resources Land's funding costs are extremely low (weighted average funding cost in 2024-2025 remains at a historical low of around 3%). In the capital-intensive real estate industry, having cheap funding is a core weapon. This ensures it can still calmly acquire high-quality assets during the industry's winter and release profits through "buy low, sell high" in the future.
​Conclusion: The "Survivors Rule" logic not only holds for China Resources Land but is also being realized as an increase in market share and optimization of land acquisition quality.
​2. "Turnaround from Distress" Logic: Valuation Recovery After Extreme Pessimism
​The core of this logic lies in: bad news has already been priced in, and good news (even a little) will bring significant elasticity.
​1. What is the Distress? (Priced-in negatives)
​Revenue growth without profit growth: The 2024 and 2025 financial reports are indeed ugly, with development business gross margins dropping from over 30% to 10-15%. This is a common industry issue and a core factor suppressing the stock price.
​Expectation of falling housing prices: The market worries that housing prices will continue to fall, leading to asset impairments.
​2. Where is the Turnaround Momentum? (Expectation correction)
​Momentum 1: Fundamental Turnaround in Profit Structure (Most important point)
​The best thing China Resources Land has done in recent years is aggressively building shopping malls (MixC).
​Key data: By 2025, core net profit contributed by its operating real estate (rental) business has exceeded 60%.
​Turnaround logic: This means China Resources Land is no longer a pure "real estate developer" but has transformed into an"asset management company." Previously, its performance fluctuated with housing prices (strong cycle); now, it fluctuates with consumption (weak cycle). Once the market realizes it has become a "landlord," its valuation system will shift from "5x PE for real estate stocks" to "15x PE for consumer/asset management stocks."
​Momentum 2: Bottoming Out of Gross Margins
​Those loss-making projects from "buying land at high prices and selling houses at low prices" have mostly been settled in 2024-2025.
​In recent years (2024-2025), China Resources' land acquisitions have been relatively reasonably priced, mostly in core areas without purchase restrictions, and gross margin expectations for new projects have stabilized and rebounded. As long as housing prices do not plummet again, the worst of the margin decline is over.
​Momentum 3: Policy "Stabilization"
​By the end of 2025, the macro policy tone is already "full support." Once any stabilization signals appear in the first-tier city property market, China Resources Land, as a leader, will be the first choice for foreign and institutional investors to replenish positions (Beta returns).
​3. Summary and Action Recommendations
​Buying China Resources Land now is essentially making an "asymmetric trade":
​Downside risk is limited (with a floor): A high dividend yield of around 6% provides solid defense. As a state-owned enterprise, it will not go bankrupt, and dividends are guaranteed. Holding it is like holding a high-yield bond.
​Upside potential opens (turnaround): Once the "turnaround from distress" logic is confirmed by the market (margin recovery or valuation model switching to rental stocks), the stock price may have 30%-50% recovery space.
​Investment philosophy:
Use the"Survivors Rule" logic to embolden yourself (believe it won't die and will grow stronger), and use the"Turnaround from Distress" logic to seek returns (believe the worst is over).