Hong Kong’s New World to speed up asset disposals, flat sales in next 6 months

HONG Kong property developer New World Development said it aims to raise more cash this year by selling assets and 2,500 new flats in the next six months, helped by a major policy move this week that boosted market sentiment.

Hong Kong’s property market immediately celebrated the removal of decade-long curbs with a jump in transactions, property agents said on Thursday (Feb 29), as authorities made a concerted bid to boost the city’s depressed real estate market.

With one of the highest debt ratios among Hong Kong peers, New World’s de-leveraging plan has been in the spotlight in the past year, especially after a string of defaults by Chinese property developers.

New World CEO Adrian Cheng told an earnings conference on Thursday the company had raised its target for the disposal of assets this financial year ending in June by 33 per cent to HK$8 billion (S$1.4 billion), after selling HK$5.9 billion worth of those assets in the previous financial year.

Cheng said some of the talks with buyers are in advanced stages, and raising the target would accelerate cash collection for the company.

New World also planned to speed up new launches, as it expects the latest policy changes to draw more homebuyers and investors back to the property market.

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The developer posted a 12 per cent rise in core profit in the first half ended in December to HK$4.9 billion, while net profit from continuing operations was HK$502 million, down 12.8 per cent from a year ago.

New World’s net gearing ratio was 49.9 per cent at the end of December, up from 48.7 per cent in June, and the developer aims to lower the ratio to mid-high 30 per cent by the financial year of 2026/27.

Cheng said he expected New World’s retail K11 business would see a compound annual growth rate (CAGR) of 30 per cent during the financial years of 2023-to-2027, and the group’s recurring business to contribute 50 per cent of profit by 2026, up from 30 per cent now. REUTERS