Author: Cao Anxun.

In today's weather is good. Today's weather is good.

Ten years ago, Dong Mingzhu, then chairman of Gree Group, said that Gree should not focus on real estate business, but should focus on home appliances. Ten years later, the prediction has come true. Gree Real Estate, which has dissociated from Gree Group, has decided to withdraw from real estate business.

On July 7th, Gree Real Estate announced that it would gradually withdraw from real estate development business and plan to sell assets and liabilities related to real estate development business in Shanghai, Chongqing, Sanya and other places. At the same time, it updated the restructuring plan for Zhuhai Duty Free Group and planned to acquire no less than 51% equity of Zhuhai Duty Free Group, promoting the transformation of Gree Real Estate's main business into duty-free business. Capital markets have responded enthusiastically to this. After the announcement was released, Gree Real Estate has had two consecutive trading days of limit up.

After the announcement was released, Gree Real Estate has had two consecutive trading days of limit up.

Gree Real Estate said that in recent years, there have been significant changes in the internal and external environment of the company. Based on comprehensive consideration of the good operating performance and prospects of Zhuhai Duty Free Group, this adjustment will help the company's transformation, enhance asset quality and profit level.

This adjustment also means that Gree Real Estate will once again face a crucial moment, and its strategic transformation will enter a deep water period.

Gree Real Estate Chairman Chen Hui said at the operational work conference that 2024 is a crucial year for Gree Real Estate to complete the reform of restructuring, achieve strategic transformation, and open up a new era of high-quality development. It is necessary to serve the South China Greater Bay Area and Hengqin Guangdong-Macau Deep Cooperation Zone well.

Looking back on the past 25 years of Gree Real Estate, it has had its ups and downs.

Due to Dong Mingzhu's contempt, Gree Real Estate's development was slow in the early days.

By 2015, Gree Real Estate bid farewell to Gree Group and invested in Zhuhai Investment Holding under Zhuhai SASAC's embrace. After that, it was finally able to let go of its hands and feet. After shouting out its vision of becoming a "city comprehensive operator," it successively won many large-scale coastal restoration projects such as Zhuhai Xianglu Bay Beach and Tangjiawan Beach.

In Shanghai, Zhuhai and other places, Gree Real Estate has repeatedly defeated Poly, Renheng, Shenye and other real estate companies to win high-priced land. From fishery operations, education industry, tourism to finance and other businesses, Gree Real Estate's tentacles continue to extend to new areas, and even has set up branches in the United Kingdom, the United States, Hong Kong and other places.

However, high land acquisition costs and aggressive expansion have brought tight cash flow. Gree Real Estate attempted to transform, and proposed an acquisition plan for Zhuhai Duty Free Group in 2020.

However, due to suspected violation of disclosure regulations and other reasons, the restructuring has undergone many twists and turns and is still ongoing. Gree Real Estate is gradually silenced in the long wait.

From the regional leader who defeated Poly and won the Zhuhai land king, to being ranked outside the top 200 real estate companies in the country, Gree Real Estate, a veteran state-owned developer, has gradually faded away in the real estate industry.

From the financial report, Gree Real Estate's operational pressure is not small, and it is more urgent to seek a breakthrough. The financial report shows that Gree Real Estate achieved operating income of about 4.732 billion yuan in 2023 and a net loss of 0.733 billion yuan attributable to its parent. This is also Gree Real Estate's second consecutive year of losses.

Fortunately, after years of wandering, the transformation path of Gree Real Estate is gradually becoming clear, and it can also go into battle without heavy debt burdens of real estate businesses.

According to the financial report, due to the drag of the real estate main business, Gree Real Estate's net cash flow from financing activities in 2023 was -5.96 billion yuan. At the end of 2023, the cash in hand could not cover short-term debts.

This adjustment will be a new beginning for Gree Real Estate.

It is worth mentioning that its former controlling shareholder Gree Group and former "brother company" Gree Electric Appliances no longer have equity relations with Gree Real Estate, but have entered a new chapter of development.

According to Qichacha, after the state-owned enterprise reform, Gree Electric Appliances has become a company without controlling shareholders and actual controllers. Zhuhai Mingjun, a subsidiary of Hillhouse Capital, holds 16% of Gree Electric Appliances' shares, making it the largest shareholder; Gree Group only holds 3.44% of Gree Electric Appliances' shares, making it the fourth-largest shareholder.

By withdrawing from the real estate business, we can see that the transformation trend in the real estate industry is becoming more and more intense.

The China Index Research Institute pointed out that in recent years of industry-wide adjustments, many real estate companies, such as Midea Real Estate and Hua Yuan Property, have divested their real estate development businesses to reduce their debt pressure. It is expected that there will be more emulators in the future.

After spending twenty years in the real estate industry, Gree Real Estate now welcomes the fast-developing duty-free market.

Jiang Han, a senior researcher at Pangu Institute, said that the current duty-free market has huge potential, and as a state-owned enterprise in Zhuhai, Gree Real Estate's deep cultivation of the duty-free industry will be more obvious, helping Gree Real Estate to develop new profit growth points.

With the gradual recovery of the tourism industry and policy support, the duty-free industry is back in the spotlight.

China Securities Co., Ltd. predicts that by 2025, the domestic duty-free market is expected to surpass 150 billion yuan, and may eventually exceed 200 billion yuan.

However, as a major asset restructuring, it is still uncertain when Gree Real Estate will complete the acquisition.

Moreover, with more and more companies obtaining duty-free licenses, the competition facing Gree Real Estate's duty-free business is only increasing.

Jiang Han stated that the business model of duty-free and real estate has a significant difference, and how to adapt is a problem. Moreover, the duty-free industry is facing multiple uncertain factors, such as policy adjustments and changes in the domestic and international economic environment, which are potential challenges.

For the industry, Gree Real Estate, which has had a tumultuous fate, represents another way for state-owned developers to operate. Compared to other state-owned developers such as Yuexiu Property, Jianfa, and Zhuhai Huafa Properties, which have increased investment in real estate, Gree Real Estate chose to switch to the duty-free track, taking advantage of its geographical advantages and integrating into the state-owned enterprise reform trend, which may be a way out.

After withdrawing from the real estate business, Gree Real Estate may change its name, officially consigning its history of dominating the Zhuhai property market to dust, and will undoubtedly embark on a long journey to the future.