According to a report on April 14 by Financial Associated Press (Reporter Li Jie), Gree Real Estate (600185.SH), which plans to exit the Real Estate Development Business, has become the focus of market attention due to the investigation of the company's former Director and the transfer of the controlling Shareholder to Zhuhai Huafa Properties.

Information released on the Guangdong Provincial Discipline Inspection and Supervision Commission website on the afternoon of April 14 shows that Lu Junsi, the former party secretary and Director of Zhuhai Duty-Free Group Co., Ltd., is suspected of serious violations of discipline and law, and is currently undergoing disciplinary review and supervision investigation by the Zhuhai Discipline Inspection and Supervision Commission.

Lu Junsi's resume is closely linked to Gree Real Estate, as he served as the Director of Gree Real Estate for a long time. In 2020, during the critical period of significant asset restructuring between Gree Real Estate and Zhuhai Duty-Free Group, he was investigated by the Securities Regulatory Commission for suspected violations of insider trading in the securities market, which cast a shadow over the restructuring road. Subsequently, in June 2022, he was subjected to criminal coercive measures and removed from the position of Director of Gree Real Estate.

The turmoil caused by Lu Junsi once led the outside world to question the future direction of the asset restructuring between Gree Real Estate and Zhuhai Duty-Free Group.

Now, with Gree Real Estate completing the asset restructuring with Zhuhai Duty-Free Group by the end of 2024, disclosing plans to change its main business and company name in March this year, and announcing on April 11 that its controlling Shareholder has been transferred to Zhuhai Huafa Properties, Gree Real Estate is believed to be set to embark on a new development path.

In fact, engaging in asset restructuring has been an important matter that Gree Real Estate has continuously promoted in recent years. As early as 2020, Gree Real Estate proposed to acquire 100% equity of Zhuhai Duty-Free and planned to expand its business segments into Real Estate, CSI Consumer 360 index, and Biomedical health sectors, but the restructuring process was fraught with difficulties and failed to materialize.

After several years, in July 2024, Gree Real Estate announced it would gradually exit the Real Estate Development Business. In December of the same year, Gree Real Estate completed a major asset swap, divesting 100% stakes in five Real Estate subsidiaries located in Shanghai, Sanya, and Chongqing while acquiring 51% equity in Zhuhai Duty-Free Enterprise Group Co., Ltd. Zhuhai Duty-Free became a controlled subsidiary of Gree Real Estate, and Gree Real Estate's strategic positioning shifted to focus on the duty-free business, establishing a conglomerate around the Industry Chain of the CSI Consumer 360 index.

In March this year, Gree Real Estate announced plans to change the company name, stock abbreviation, operation scope, and revise the company's articles of association. The Chinese name of the company is proposed to be changed to "Zhuhai Zhuhai Mian Group Co., Ltd.", the stock abbreviation is proposed to be changed to "Zhuhai Mian Group", and the stocks' security code will remain unchanged.

Subsequently, on April 11, Gree Real Estate released an announcement regarding changes in the shareholding structure of its controlling shareholder.

Gree Real Estate stated that the Zhuhai State-owned Assets Supervision and Administration Commission will transfer the entire holding of its controlling shareholder Zhuhai Investment Holdings Co., Ltd. (referred to as "Haitou Company") to Zhuhai Huafa Group without compensation. After the transfer is completed, the controlling shareholder of Haitou Company will change from the Zhuhai State-owned Assets Supervision and Administration Commission to Huafa Group, becoming a second-tier enterprise management under Huafa Group, while Gree Real Estate will fall to a third-tier subsidiary.

Analysts indicated that although Haitou Company remains the controlling shareholder of Gree Real Estate, and the Zhuhai State-owned Assets Supervision and Administration Commission is still the actual controller of Gree Real Estate, this transfer will undoubtedly further promote Gree Real Estate's transformation process, as it is expected to leverage Huafa Group's CNI Resource Index to achieve breakthroughs in the duty-free business sector.

This series of actions indicates that Gree Real Estate is gradually exiting the real estate development sector while fully focusing on duty-free commodity sales and other businesses, said Yan Yujin, vice president of the Yiju Research Institute.

Regarding the reason for withdrawing from the real estate development business, analysts pointed out that Gree Real Estate once had a certain influence in the real estate market, but in recent years, with the increasing downward pressure on the real estate industry, Gree Real Estate's operation is facing severe challenges.

According to the announcement released by the company, in 2024, Gree Real Estate expects a net income loss of 1.25 billion to -1.78 billion yuan, mainly due to a decline in gross margin of transferred real estate projects and the provisions for impairment of assets such as inventory and long-term private equity investments that may incur impairment losses.

Regarding Gree Real Estate's transfer to Huafa Group, Yan Yujin believes that under the new strategic positioning, Gree Real Estate's main business will focus on duty-free businesses, developing new businesses and new investments around the CSI Consumer 360 index. Going forward, Gree Real Estate will no longer add new real estate development projects, while existing real estate projects will enter the phase of activating the existing stock, which can be combined with Huafa Group's existing real estate projects to better promote the digestion of the existing projects.

Public information shows that Zhuhai Huafa Properties, as the largest conglomerate in Zhuhai, has significant advantages in various fields such as Real Estate, finance, and urban operation. Its real estate sales for 2024 reached 105.444 billion yuan, ranking among the top ten nationwide.

Analysts believe that after Gree Real Estate is merged into Zhuhai Huafa Properties, it is expected to gain more funding and resource support to accelerate its business transformation. Its remaining real estate business may be taken over by Zhuhai Huafa Properties, while its duty-free business may undergo further integration.

As Gree Real Estate completely bids farewell to its main business of Real Estate Development, whether it can rely on Zhuhai Huafa Properties' resource advantages to achieve breakthroughs in the duty-free market still remains to be observed.