Hong Kong’s New World Development CEO resigns; shares to resume trading on Friday
THE chief executive of Hong Kong’s New World Development, Adrian Cheng – the third-generation scion of the firm’s founding family – has resigned and will be replaced by its chief operating officer Eric Ma Siu-cheung, the company said on Thursday (Sep 26).
New World Development made the announcement in a stock exchange filing as it reported a loss of HK$11.8 billion (S$2 billion) for the financial year ended June.
Trading in shares of the company were suspended on Thursday and will resume trading on Friday.
“(Cheng) has tendered his resignation as the chief executive officer of the company to devote more time on public services and other personal commitments,” the company said, adding that he will take up a non-executive role.
New World has struggled to recover from a drop in property demand brought about by the Covid-19 pandemic while also facing a prolonged slump in retail markets and surging interest rates.
Cheng will establish a separate firm to manage the business of New World’s flagship K11 retail projects, the company said. The 44-year-old tycoon succeeded his father Henry Cheng as CEO in 2020 and rapidly expanded New World’s business in Hong Kong and mainland China with large-scale projects including malls and offices.
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However, New World’s market capitalisation has shrunk to about US$2.7 billion from US$12 billion when Adrian Cheng took over, and its stock has slid nearly 80 per cent since a mid-2021 peak reached before the onset of a debt crisis in China’s property sector.
New World has the highest debt among Hong Kong peers at HK$199 billion, JPMorgan data showed in July, with net gearing that counts perpetual bonds as debt standing at 77 per cent.
That compared to 17 per cent to 40 per cent at Henderson Land, CK Asset and Sun Hung Kai Properties.
New World has accelerated the sale of assets to raise funds. Last year, it sold roughly 97 per cent of infrastructure arm NWS Holdings to parent Chow Tai Fook Enterprises, receiving nearly US$3 billion to help cut debt.
This month it said it expected core operating profit from continuing operations to fall as much as 23 per cent due to lack of revenue, with a fair value and impairment loss of as much as HK$9.5 billion.
Cheng’s father said last year in a television interview that he had yet to decide on a successor to run the broader group and that he could hire someone from outside the family.
It is uncommon for an outsider to lead the business of a Hong Kong tycoon’s family.
“It depends on whether a company is being managed well; it may not necessarily suit all family businesses to introduce someone from outside,” said UOB Kay Hian director Steven Leung. “But for New World, changing corporate culture by bringing in professional management could be good, but the person has to balance the interests of family members as well.”
New World was founded by late billionaire Cheng Yu-tung and has businesses in sectors as varied as infrastructure, retail, transport and insurance. REUTERS
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