Behind the major reshuffle of top executives, China Jinmao Asset Management's transformation "ambition"
After nine months, China Jinmao once again underwent a major management reshuffle.
On April 29, China Jinmao announced that Tao Tianhai stepped down as chairman, and Qiao Xiaojie and Zhang Hui also left the board. Ding Rui was appointed as the new chairman, while Zhou Honghui and Zhao Lei were appointed as directors.
Tao Tianhai officially took over as chairman in July 2023. At that time, the position had been vacant for two months after Li Congrui stepped down. Tao, who was already the second-in-command at Jinmao Holdings, succeeded Li as the "acting" chairman. Now, it seems China Jinmao has found a suitable successor.
However, given that China Jinmao has seen multiple "chairmen" with short tenures—Li Congrui served only 33 days—the length of Ding Rui’s tenure has sparked market curiosity. The frequent leadership changes also reflect China Jinmao’s urgency to improve its performance.
"Top General" Suffers Waterloo
Tao Tianhai has worked at China Jinmao for 24 years, with extensive experience in hotel and real estate development management.
He has long been known as China Jinmao’s "top general." In 2011, Tao shifted from North China to Shanghai, starting from scratch to expand Jinmao’s presence in East China. Under his leadership, Zhejiang and the Yangtze River Delta became Jinmao’s "breadbasket." By 2021, East China contributed nearly half of the group’s performance, with contracted sales exceeding 100 billion yuan.
Today, East China remains Jinmao’s most significant region in terms of project volume, scale, and profitability. Jinmao has entered 17 cities in East China with over 150 projects, including landmark developments like Shanghai Daning Jinmao Mansion, Hangzhou Binjiang Jinmao Mansion, Ningbo Life Science City, Wenzhou Lucheng Jinmao Mansion, and Suzhou Science City Jinmao Mansion.
Appointing such a high-achieving leader as the "top executive" suggests China Jinmao hoped to reverse its declining performance.
China Jinmao’s 2023 interim report showed revenue of 26.84 billion yuan, down 6.62% year-on-year, while net profit attributable to shareholders plummeted 83.16% to 430 million yuan.
However, new contract signings remained strong, with contracted sales reaching 86 billion yuan in the first half, up 23% year-on-year, and collections at 90.9 billion yuan, a 106% collection rate.
Yet, in the second half of 2023, the market downturn exceeded expectations, with declining property demand, falling prices, and significant asset impairments. Even with a seasoned leader at the helm, China Jinmao couldn’t escape the slump.
According to its 2023 annual report, China Jinmao’s revenue fell 13% to 72.404 billion yuan, while net loss attributable to shareholders was 6.897 billion yuan, down 448% from a profit of 1.984 billion yuan the previous year. Excluding investment property fair value losses (net of deferred tax), the adjusted loss was 6.794 billion yuan, down 846% from a profit of 910 million yuan.
In sales, contracted sales for 2023 dropped 8.9% to 141.2 billion yuan, meaning the second half saw less than 60 billion yuan—200 billion yuan short of the first half and the previous year.
In 2024, the decline continued. Q1 contracted sales fell 60.39% year-on-year to 17.52 billion yuan, while sales area dropped 61.77% to 954,000 square meters.
This performance marked a "Waterloo" for Tao Tianhai’s career, possibly shortening his tenure.
Why Choose Ding Rui?
The slump has eroded market confidence in this state-backed developer. Moody’s has downgraded China Jinmao multiple times recently.
On April 10, Moody’s noted that despite Jinmao’s focus on tier-one cities (with stronger fundamentals than lower-tier cities), weak housing demand would lead to slower sales. Discounts to boost sales would pressure margins.
In 2023, gross margin fell 4 percentage points to 12%, mainly due to declines in urban operations and property development.
Moody’s also warned that weak sales cast uncertainty on Jinmao’s ability to reduce high debt leverage. It expects EBIT/interest coverage to improve slightly to 2.0x in 12-18 months from 1.4x in 2023, while adjusted debt/EBITDA may moderate to 8.5x-9.0x from 10.8x.
Still, Moody’s believes Jinmao’s liquidity remains sound due to strong financing channels. As of end-2023, unrestricted cash of 30.9 billion yuan covered 1.3x short-term debt.
To improve performance, China Jinmao restructured its organization and hired several executives before announcing the new chairman. Among them, Li Jian, former Longfor city head and Hainan Development Holdings assistant GM, joined as CMO, while Han Feiyu, former Modern Land senior VP and R&D design head, became design center GM.
With Ding Rui’s appointment, this restructuring phase may conclude. How he steers China Jinmao’s turnaround will be closely watched.
Little is known about Ding Rui outside the announcement: aged 42, he holds a master’s degree in HVAC engineering and is a senior engineer. Currently, he serves as VP of China Jinmao Holdings, Party secretary, and GM of Jinmao Wine Business.
Notably, newly appointed director Zhou Honghui also has a commercial management background, currently serving as acting deputy GM of China Jinmao’s asset management department. Previously, he held roles at Dongyuan Real Estate and Shanghai Wanda Plaza Commercial Management.
The personnel changes signal a strategic shift. China Jinmao is transitioning to an asset management model for long-term stability and growth.
In January, China Jinmao Commercial REIT listed, marking a milestone in completing its capital cycle from investment to exit and reinvestment, enhancing asset liquidity.
Ding Rui was instrumental in this REIT. At a recent earnings call, he revealed plans to inject more assets into the REIT platform: "We’ve preliminarily selected target projects and will initiate expansion preparations once they meet regulatory requirements."
As the era of large-scale asset management dawns, Ding Rui’s appointment as "top executive" seems apt. Whether China Jinmao recovers, however, remains to be seen.
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