The cash flow surged by 681% behind the strategic transformation is a victory declaration of L&A GROUP's "light asset revolution."

According to the Zhitong Finance APP, on August 19, A&O Group (300949.SZ) officially released its mid-year report for 2025, which appears contradictory yet holds profound significance.

The financial report shows that A&O Group achieved a revenue of 197 million yuan in the first half of the year; however, the net cash flow generated from operating activities experienced a historic reversal—from a net outflow of over 90 million yuan in the same period last year to a net inflow of 527.6 million yuan, a year-on-year increase of 681.71%.

In the context of continued external pressure and a deep adjustment in the real estate industry, the decline in revenue is not surprising, but the stark contrast of surging cash flow indicates that the underlying changes are not merely simple financial repairs, but rather a profound strategic transformation within the company is quietly taking place.

The Strategic Pivot Behind 500 Million in Cash Flow

In fact, the operating cash flow of over 500 million yuan is far from a one-time peak in collections; it is the result of A&O Group's firm promotion of the "O+EPC+IP+O" (Design + General Contracting + Brand + Operation) model transformation since 2024. It also serves as a crucial pivot for the company's leap from a traditional "heavy asset EPC general contractor" to an "urban value operator."

The traditional EPC model is mired in issues such as funding construction and slow collections (especially in real estate landscaping projects). Government-led projects like the Luoyang Guanlin area (1.275 billion) and Quzhou Yanjia Yudao (330 million) have achieved breakthroughs in receiving high proportions of advance payments at project initiation through an innovative path of "pre-operational + EPC general contracting + IP embedding + long-term operation." More importantly, through refined operations and IP empowerment, these projects have endowed public spaces with new meanings, bringing long-term stable cash flow returns to the company.

Main Business Adjustment: Anchoring Value Heights Amid Trade-offs

It is noteworthy that A&O Group's two core businesses—landscape design and comprehensive cultural tourism—faced revenue declines during the reporting period, with revenues of 83.81 million yuan and 98.33 million yuan, respectively. However, the cornerstone of its profitability—the gross profit margin—demonstrated resilience and quality far exceeding the industry average.

Specifically, the revenue from landscape design business decreased by 41% year-on-year, yet the gross profit margin remained as high as 45.87%. Behind these seemingly contradictory figures is A&O's proactive decision to hit the brakes: abandoning low-priced real estate landscaping in favor of urban renewal and public landscapes.

From a market perspective, the ongoing adjustment in the real estate industry has significantly impacted the real estate landscaping business, but A&O Group has not compromised with the low-end market. The logic behind this is that the value anchor of the design industry has never been the quantity of drawings, but rather whether it can create irreplaceable scenes for land, cities, and people's hearts.

This strategic choice aligns closely with national policy directions. In 2025, the country continues to intensify urban renewal actions, with the Ministry of Housing and Urban-Rural Development clearly proposing the "Four Goods" goal of "building good houses, good communities, good neighborhoods, and good urban areas," emphasizing the enhancement of living quality and cultural connotation. Leveraging its deep accumulation in areas such as "child-friendly spaces" and "cultural IP embedding," A&O has established in-depth cooperation with leading real estate companies like Jinmao, China Resources, and China Overseas, creating multiple benchmark projects that are both well-received and commercially successful, validating the value-boosting effect of "design + operation" on real estate In terms of comprehensive cultural tourism, although the gross profit margin slightly decreased by 3.9% to 20.96% in the first half of 2025, it demonstrated strong resilience amid industry fluctuations. As the first stock in China's parent-child cultural tourism sector, L&A GROUP has built a complete industrial chain covering IP incubation, scene operation, and private domain ecology through brands such as Luojia Children and Tangyue.

In 2025, the company accelerated the nationwide replication of light asset projects such as the "Luojia Nature Exploration Center," quickly penetrating lower-tier markets through a combination of standardized modules and customized designs. The establishment of JoyKey in 2025, focusing on independent IP operation and commercialization, marks its strategic leap from a design service provider to a "cultural tourism content operator."

Accelerating the "AI + IP" Strategy in Partnership with Qiyihuo Technology to Enter RWA

It is noteworthy that despite short-term revenue fluctuations, L&A GROUP's investment in strategic emerging fields has not slowed down; instead, it has accelerated the dual-engine layout of "AI + IP." Its self-developed UrbanFlow large model has been widely applied in multiple projects, opening up imaginative space for future growth.

Additionally, L&A GROUP has partnered with the Web3 technology company Qiyihuo Technology to explore the path of RWA (Real World Asset Tokenization), combining physical IP derivatives with blockchain technology to create a closed loop of digital assets and physical consumption. This project has received investment from Linear Capital, demonstrating the capital market's recognition of its "technology + culture" integration model.

Conclusion

L&A GROUP's mid-2025 report is a paper that combines subtraction and addition. It has made a subtraction in revenue but an addition in cash flow and strategic clarity; it has endured the short-term pain of the real estate cycle but has accumulated momentum in urban renewal, IP operation, and AI innovation.

As "good housing" becomes a national policy direction and cities shift from "incremental expansion" to "stock quality improvement," L&A GROUP's "O + EPC + IP + O" model further matures, with the AI and IP dual engines accelerating. It may carve out a unique evolutionary path for Chinese design enterprises—no longer dependent on the real estate cycle but growing into content creators and value operators for a better urban life