This home furnishing company has become a "landlord" who collects rent

Text / Leju Finance Jin Wenyu

Zhongyuan Home (603709.SH) recently announced a leasing notice, once again bringing the industry’s “asset revitalization trend” into the public eye.

According to the announcement, the company’s wholly owned subsidiary Zhejiang Zechuan Furniture plans to lease out the 2nd to 4th floors of Factory No. 3 in Tangpu Industrial Park, Anji County, with a leasing area of 12,080.32 square meters. The total rent, including tax, amounts to 2.5891 million yuan, with the lease term extending from March 1, 2026, to June 22, 2028.

Against the backdrop of a downturn in real estate and weakening industry demand, this move is not an isolated asset disposal but a strategic response to industry cycles, reflecting a profound transformation in the home furnishing industry from “scale expansion” to “efficiency optimization.”

In fact, Zhongyuan Home’s factory leasing is not a first-time move. According to company disclosures, based on a 12-month cumulative calculation, from September 2025 to February 2026, Zhongyuan Home and its wholly owned subsidiaries completed multiple external leasing transactions, involving a total lease amount of 9.4442 million yuan.

All tenants are local companies in Anji, including Anji Muxiang Smart Home, Anji Hongchuang Property, Anji Kaifeng Technology, and Anji Haotian Springs, covering various operational assets such as factories and dormitories.

Behind these frequent leasing activities is Zhongyuan Home’s ongoing performance pressure. Financial reports show that in 2024, the company reported a net loss attributable to shareholders of 41.739 million yuan. Although losses are expected to narrow to between 24.5 million and 36 million yuan in 2025, the company has not yet escaped the loss cycle.

The performance forecast indicates that macroeconomic fluctuations and tariff policy adjustments have led to rising export costs, with traditional foreign trade orders shrinking. Meanwhile, investments in cross-border e-commerce have not yet generated sufficient profits, putting continued pressure on the company’s profitability.

At the same time, as of the end of Q3 2025, the company’s total assets reached 1.273 billion yuan, with liabilities of 755 million yuan, and an asset-liability ratio approaching 60%. Although net cash flow from operating activities was 61.0395 million yuan, net cash flow from financing activities was -63.16 million yuan, indicating some pressure on the capital chain. In this context, leasing idle factories becomes a pragmatic move to supplement cash flow and optimize asset structure.

Zhongyuan Home’s decision to lease factories essentially results from the resonance between individual business needs and industry development cycles. From a corporate perspective, the primary motivation is to activate idle assets and supplement cash flow.

As order volumes temporarily contract, some factory utilization rates decline. Leasing allows the company to convert dormant assets into stable rental income, hedging against core business losses. For example, the 2.5891 million yuan in rent from this lease will be gradually received over the more than two-year lease period, effectively easing the company’s cash flow pressure.

Second, focusing on core business strategy is especially critical. The company is increasing investment in cross-border e-commerce, and leasing non-core production areas enables resource concentration on new business expansion and digital upgrades, achieving optimized resource allocation.

From an industry perspective, this behavior is a microcosm of the “capacity reduction” cycle in the home furnishing sector. According to the National Bureau of Statistics, in 2024, the capacity utilization rate of furniture manufacturing was only 68.4%, 9 percentage points below the manufacturing industry average, indicating overcapacity has become a widespread industry problem.

The downturn in real estate has led to weak terminal demand, with factory vacancy rates soaring in furniture clusters like Foshan and Pengshan. Rents have fallen from peak levels of 12-15 yuan per square meter to 6-8 yuan, still difficult to rent out. As a major furniture hub, Anji County, where Zhongyuan Home is located, also faces an imbalance between capacity and demand. Leasing idle factories has become a common choice among industry players.

Zhongyuan Home’s actions are not isolated. Recently, a wave of factory leasing has swept through the home furnishing industry. Leading companies like Oppein Home have leased 13,800 square meters of idle factories, explicitly stating that this is to improve asset allocation efficiency and respond to industry changes and project delays.

Jinpai Home, due to declining real estate prosperity, has postponed its Xiamen project three times to avoid capacity idling, employing a strategy similar to leasing factories. Even across industries, companies like Langsha Co., which has low in-house underwear production capacity (some categories below 20%), have leased 12,700 square meters of factory space to activate assets.

Behind these cases lies a profound shift in industry logic: from a high-speed growth “scale competition” to a deep adjustment phase where “cash is king.” For leading companies, leasing factories is a proactive strategy to optimize capacity layout and support core business.

For small and medium-sized enterprises, it is a survival strategy to cope with declining orders and ease cost pressures. This differentiation further promotes industry resource concentration among top players, with industry consolidation expected to continue.