New World posts HK$16.3 billion loss as builder’s woes persist
The results cap another tumultuous year for the property firm, which has been trying to alleviate a liquidity crunch during the real estate slump
[HONG KONG] New World Development posted a second straight year of losses as debt pressures and a weak property market took a toll on the distressed Hong Kong builder.
The developer controlled by the billionaire Cheng family lost HK$16.3 billion (S$2.7 billion) from continuing operations in the year ended Jun 30, mainly due to one-time impairment provisions and losses, according to a filing to the Hong Kong stock exchange on Friday (Sep 26). That’s steeper than the HK$11.8 billion loss a year earlier.
The results cap another tumultuous year for the property firm, which has been trying to alleviate a liquidity crunch during the real estate slump.
Chief executive officer Echo Huang said that the group will make “every effort” to reduce debt, including by accelerating property sales and expediting asset disposals. It plans to raise HK$27 billion from contracted property development sales and asset disposals in the year ending next June.
“The group’s top priority is to prioritise cash flow and reduce overall indebtedness,” Huang said in the annual report.
The company has decided to halt dividend payments and defer distribution on perpetual capital securities to improve financial flexibility, Huang said in an online briefing. The firm has no plans for rights issue or placements at the moment, said chief financial officer Edward Lau. New World’s shares were largely flat on Friday in Hong Kong.
After securing an US$11 billion refinancing deal earlier this year, New World said this week that it obtained a separate loan of HK$3.95 billion, which was 75 per cent less than the upper end of its original target. The company is also in talks with firms, including Blackstone, for a capital injection.
The residential sectors in Hong Kong and mainland China, where New World sells homes, remain sluggish. Home values in Hong Kong have yet to recover after falling almost 30 per cent from their peak in 2021, while China’s housing crisis has dragged on for more than four years with no end in sight.
On top of that, a weak commercial real estate market is suppressing the value of New World’s assets as it seeks to raise cash from disposals. Prices of office units and retail space have slumped by 48 per cent and 41 per cent respectively from their 2018 highs, according to government data.
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New World booked an impairment loss of HK$2.7 billion after revising the valuation of its 11 Skies airport mall, it said. The company has been in talks with Hong Kong’s airport authority to explore any possibility for changes in the contractual arrangements of the project, it said.
The developer is seeking to sell the project to address its liquidity concerns, sources familiar with the matter said in July.
Consolidated net debt fell to HK$120.1 billion as at June from HK$123.7 billion a year earlier, the results showed.
Considered one of the Big Four developers in Hong Kong, New World has faced a slew of challenges in the past year, from mounting debts to frequent management changes after the sudden departure of heir Adrian Cheng in September 2024.
On Friday, New World’s CEO Huang also said that Adrian’s new firm K11 by AC has no relations to the K11 branded properties owned and operated by New World. BLOOMBERG
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