Midea Real Estate's 650 million yuan illegal loan flows to the actual controller; He Xiangjian family’s total dividends exceed 7 billion HKD

Recently, a notice from Midea Real Estate was pushed into the spotlight and sparked heated public discussion. According to the notice, in 2025 Midea Real Estate made an improper loan to a related company, with a maximum amount of 650 million yuan.

It is understood that the loan funds ultimately flowed to Midea Real Estate’s real estate projects that it had previously held. In 2024, Midea Real Estate had already carved out its real estate business.

After the notice was released, Midea Real Estate’s share price kept falling, dropping from HK$4.09 per share on March 13 to HK$3.44 per share on March 20.

An improper “capital injection” of up to 650 million, with the stock price falling all the way

According to the relevant notice, from January 2025 to December 2025, Midea Real Estate’s wholly owned subsidiaries Foshan Meizhi and Guangdong Meizhi entered into entrusted investment agreements with three institutions—Wanxiang Trust, Yuecai Trust, and Zhongyuan Trust—respectively.

From January 2025 to December 2025, the three trust companies, acting as conduits, provided multiple rounds of unsecured loans with the ability to demand repayment at any time to three companies—Shenyang Zhenghui, Nanhai Meiming, and Shunde Tianmei—specifically for replenishing the companies’ daily operating funds.

During this period, the total outstanding loan principal was capped at no more than 650 million yuan. At the end of 2024, Midea Real Estate held cash and cash equivalents of approximately 1.034 billion yuan, and the maximum outstanding loan amount of 650 million yuan in this improper transaction accounted for about 63% of the cash on its books at that time.

As of December 31, 2025, all outstanding principal together with accrued interest had been fully settled, and all entrusted investment agreements had been terminated.

Regarding the above transactions, Midea Real Estate stated that this was intended to improve the company’s cash management efficiency.

However, the above transactions violate relevant regulations. According to the Hong Kong Stock Exchange’s listing rules, related-party transactions must strictly comply with statutory procedures such as filing, announcement, and approval by independent shareholders. This is a core requirement to protect the information rights of minority shareholders and to maintain fairness in the capital market.

It is understood that Shenyang Zhenghui, Nanhai Meiming, and Shunde Tianmei are all indirectly held by Midea Real Estate’s controlling shareholder Lude Yan (He Xiangjian’s daughter-in-law, and He Jianfeng’s wife). Specifically, Shenyang Zhenghui is held with a 50% equity interest by Shenyang Meiyi, and Shenyang Meiyi is an indirectly wholly owned subsidiary of Midea Jiye; Nanhai Meiming and Shunde Tianmei are respectively indirectly wholly owned subsidiaries of Midea Jiye. Midea Jiye is indirectly wholly owned by Lude Yan, Midea Real Estate’s controlling shareholder, through Midea Yule Co., Ltd. and Midea Development Holding Co., Ltd.

Based on the shareholding relationships, the parties to the above transactions are clearly related parties. The relevant transactions constitute non-exempt related-party transactions, and after being aggregated, the maximum applicable percentage ratio exceeds 5% but is less than 25%. They therefore fall under related-party transactions that must be disclosed. Pursuant to regulations, the full compliant process must be followed, yet Midea Real Estate failed to implement any of the required steps.

Regarding the above improper conduct, Midea Real Estate explained that its failure to comply with the listing rules was mainly due to communication failures among departments within the Group.

After the improper disclosure was published, Midea Real Estate’s share price continued to decline. On March 13, 16, 17, 18, 19, and 20, Midea Real Estate’s share prices were HK$4.09 per share, HK$4.06 per share, HK$3.84 per share, HK$3.78 per share, HK$3.59 per share, and HK$3.44 per share, respectively.

Real estate business has been spun off, but there are still links

For the above improper transactions, according to reports from relevant media, the funds flowed to the related real estate projects. Meanwhile, Midea Real Estate had already spun off its real estate projects back in 2024.

In October 2024, Midea Real Estate completed a major business restructuring, carving out its core real estate development business from the listed entity to a private company. The transaction consideration was HK$1.8 billion. The company then transformed into light-asset segments such as development-for-construction, property services, and asset operations.

In recent years, Midea Real Estate’s real estate business has weighed on its performance. Data shows that in 2024, the core net loss attributable to owners of Midea Real Estate was RMB 1.994 billion. Of this, the core net loss attributable to owners from non-continuing operations was RMB 2.498 billion, a sharp decline from RMB 628 million in the same period of 2023.

Regarding the shift from net profit to net loss, Midea Real Estate said this was mainly due to the decline in property sales in the real estate industry, lower revenue recognized from sales during the current year, and an increase in provisions for impairment losses for property development projects with indicators of impairment.

However, despite spinning off its real estate business, Midea Real Estate still has close ties with the real estate business. The companies that received the loan funds correspond to three real estate projects: Shenyang Meide · Junlan Jiangshan, Foshan Meide · Binhuhu, and Foshan Meide · Xijiangfu. These projects were developed by Midea Real Estate previously. After the business spin-off in 2024, they were transferred to private companies under the He Xiangjian family.

Although Midea Real Estate’s performance has faced pressure, the He Xiangjian family has not “treated itself unfairly.”

It is understood that Midea Real Estate listed in 2018, raising nearly HK$9 billion. In subsequent years, it paid out dividends in large proportions. According to incomplete statistics, the He Xiangjian family’s cumulative dividends have exceeded HK$7 billion.

In addition, the He Xiangjian family also holds control of the listed company K+E Home Furnishings. In the first three quarters of 2025, K+E Home Furnishings’ net profit was RMB 1.539 billion, making it one of the He Xiangjian family’s major profit-generating enterprises.

Although the improper loans were ultimately fully settled with both principal and interest, and no direct financial loss was caused, the question of how to further improve internal controls and regulate related-party transaction conduct has become an issue that Midea Real Estate needs to address going forward. The boundary of funds flowing between the company and the controlling shareholders’ family assets is also drawing attention from minority shareholders and the market.