UBS expects Chinese developers' 1H26 earnings to decline 26% YoY, but advises investors to look through the 2026E earnings trough.

Overview

This report is UBS's preview of 1H26 results for Chinese real estate developers and property management companies. The core view is that 2026E earnings mainly reflect the lagged impact of declining 2025 presales and home prices, so developers' short-term income statements remain weak, but early signals in pricing, listings, and rents have improved; by contrast, residential property management companies face more persistent pressure on earnings quality and margins due to declining completions, vacant homes, lower collection rates, and slower growth in value-added services.

Core views

For developers, UBS expects average 1H26 earnings to decline 26% YoY, worse than the 18% decline in 1H25 but better than the 41% decline in FY2025. Earnings divergence mainly depends on the investment property portfolio, disposal gains, and impairment levels. UBS expects CR Land to perform best, with core profit roughly flat YoY, followed by C&D International, COLI, and Seazen. For property management, UBS expects weighted average 1H26 earnings of covered companies to rise 4% YoY, but residential property management excluding CR Mixc is expected to decline 1%, mainly dragged by property management margins, cash collection, project exits, and slower growth in value-added services.

Analysis framework

The report uses a 1H26 earnings preview, 2026-2028E earnings forecast revisions, target price revaluation, and valuation methods including PE/PBV/SOTP/NAV, while also assessing stock-specific impacts through indicators such as land acquisition, contracted sales, managed area, collection rates, commercial rental income, margins, and dividend yield.

Methodology notes

• Earnings Forecast1H26 Earnings Preview and 2026-2028E Forecast Revisions

  Earnings forecasts are revised through assumptions on revenue recognition, contracted sales, margins, impairments, disposal gains, and expenses.

  Developers' earnings are mainly driven by DP revenue recognition, inventory impairment, and investment property/disposal gains; property management earnings are mainly driven by managed area, collection rates, property management margins, and value-added service growth.

• Valuation methodsPE/PBV/SOTP/NAV Valuation

  Different companies use P/E, P/B, sum-of-the-parts, or NAV discount based on business structure.

  COPH's target price is based on 9x 2027E PE; Greentown China is based on 7x normalized earnings; Seazen is based on SOTP NAV with a 42% NAV discount; Longfor is valued on a sum-of-the-parts basis across recurring businesses and loss-making development businesses.

• Industry TrackingPrice, Listings, Rent, and Land Investment Signals

  High-frequency industry signals are used to judge fundamental turning points beyond the income statement.

  UBS recommends looking through 2026E earnings because they reflect the decline in 2025 presales and prices; it also focuses on stabilizing home prices and rents in tier-1 cities, narrowing declines in tier-2 cities, and the impact of weaker land acquisition on future sales.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• COLI

  One of the top developer picks

  Strengths

  Market share gains; UBS continues to list it as a top developer pick.

  Weaknesses

  Industry-wide pressure from revenue recognition and margins may still affect earnings.

  Comparison

  Ranked ahead of most developers by UBS.

  Risks

  Policy tightening, tighter financing, and weaker-than-expected recovery in housing demand.

• CR Land

  One of the top developer picks

  Strengths

  1H26 core profit is expected to be roughly flat YoY, with disposal gains offsetting part of the revenue recognition and impairment pressure.

  Weaknesses

  Still affected by the development business recognition cycle and inventory impairment.

  Comparison

  UBS expects it to be the best-performing developer in 1H26.

  Risks

  Asset disposals miss expectations, commercial real estate valuation cuts, and insufficient recovery in residential sales.

• CR Mixc

  Top property management pick

  Strengths

  1H26 earnings are expected to grow 10% YoY, supported by revenue growth in the commercial segment, expansion in mall management contracts, and an approximately 5.6% 2026E dividend yield.

  Weaknesses

  The residential property management business is expected to remain broadly stable, with growth mainly reliant on commercial management.

  Comparison

  Clearly better than most residential property management companies.

  Risks

  Slower retail sales, and weaker-than-expected expansion in third-party mall management.

• COPH

  Maintained at Neutral, target price cut

  Strengths

  The share price has already corrected since the start of the year, and the market may have largely priced in the earnings downgrade; 2027E dividend yield is about 5%.

  Weaknesses

  Pressure on GFA expansion, collection rates, residential PM gross margin, and VAS margin.

  Comparison

  UBS is generally cautious on residential property management, and COPH's 1H26 earnings are expected to decline 15% YoY.

  Risks

  Fewer new projects from associated developers, intensifying third-party competition, and exits from low-margin projects dragging net GFA growth.

• Seazen Group

  Maintained at Buy, target price cut

  Strengths

  Shopping mall assets can still support refinancing and unlock IP value, and the market has not yet fully reflected the reduced drag from the DP business and the potential value of IP.

  Weaknesses

  1H26 contracted sales declined sharply YoY, IP revenue growth slowed, and earnings forecasts were cut significantly.

  Comparison

  Compared with liquidity concerns, the market focus has shifted to earnings; valuation is 0.19x 2026E P/BV.

  Risks

  Continued decline in contracted sales, weak IP revenue growth, poor REIT market performance, and wider NAV discount.

• Longfor

  Earnings forecast cut but target price unchanged

  Strengths

  Investment property and property management businesses still retain segment value, and UBS values it on an SOTP basis.

  Weaknesses

  The development business may incur losses in 2027-2028E, with evident pressure from contracted sales and DP revenue recognition.

  Comparison

  Compared with CR Land, which is supported by disposal gains, Longfor faces greater profit pressure.

  Risks

  Wider development business losses, lower interest capitalization, and weaker-than-expected recovery in sales and margins.

Key data

• Developers' 1H26 Earnings Forecast-26% YoYUBS expects average 1H26 earnings of covered Chinese developers to decline 26% YoY.
• Developers' 1H26 Land Acquisition-18% YoYAverage 1H26 land acquisition of the top ten major developers declined 18% YoY.
• New Saleable Resources/Contracted Sales0.54xAs of 1H26, the average ratio of new saleable resources to contracted sales for major developers was 0.54x.
• Property Management Companies' 1H26 Earnings Forecast+4% YoYWeighted average 1H26 earnings of covered property management companies are expected to grow 4% YoY, below 8% in 1H25 and 6% in FY25.
• CR Mixc 1H26 Earnings Forecast+10% YoYDriven by 8% same-store mall retail sales growth and expansion in third-party mall management.
• Residential Property Management Excluding CR Mixcabout -1% YoYDragged by pressure on property management margins, collection rates, project exits, and value-added services.
• COPH Earnings Forecast Revision2026E/27E/28E cut by 23%/29%/31%Target price cut by 29% to HK$3.90, based on 9x 2027E PE.
• Seazen Earnings Forecast Revision2026-2028E cut by 53-61%Target price cut by 30% to HK$2.30, based on a 42% NAV discount.
• Greentown China Earnings Forecast Revision2026-2028E cut by 30-94%Target price cut by 13% to HK$13.00, based on 7x normalized earnings.

Impact & implications

In terms of investment implications, the report advises against focusing only on the decline in 2026E developer earnings, and instead evaluating more forward-looking signals such as home prices, listings, rents, and asset disposals. Among developers, COLI and CR Land are preferred for their market share gains, support from investment properties, and dividend yield. In property management, CR Mixc is favored for its expansion in commercial management and dividend yield support. Overall caution is still warranted for residential property management, especially for companies with high developer exposure and pressure on collection rates and gross margins.

Risks

• Government administrative policies restrict demand or mortgage lending.
• Financing conditions for Chinese developers remain tight.
• Chinese housing demand and economic growth fall short of expectations.
• Property management companies face lower cash collection rates, persistent vacant home issues, and more exits from low-margin projects.
• Reduced land acquisition may drag contracted sales in 2H26 and beyond.
• Inventory destocking and price discounts may keep pressure on gross margins and impairments in the development business.
• Valuation cuts in commercial real estate, REITs, and investment properties may weigh on NAV and target prices.

What to watch

• Whether home prices, listing volumes, and rents in tier-1 cities continue to stabilize.
• Whether the YoY decline in home prices in tier-2 cities continues to narrow.
• Whether developers' 2H26 land acquisition and new saleable resources recover.
• Developers' contracted sales, DP revenue recognition gross margin, inventory impairment, and realization of disposal gains.
• Property management companies' net GFA growth, project exits, collection rates, PM gross margin, and VAS demand.
• After the target price cut for COPH, whether the market has fully priced in the earnings downgrade and drag from the residential sector.
• Seazen's shopping mall asset refinancing, progress on private REITs, and IP revenue growth.