New World Development Reports First Loss in 20 Years

　　Image source: Viewpoint Network

　　Recently, New World Development revealed its plan to transfer all shares of the Kai Tak Sports Park to Chow Tai Fook Enterprises, a transaction that is still awaiting government approval. The Leisure and Cultural Services Department stated that it will handle related matters according to the contract. Some Legislative Council members believe that the government and enterprises should clearly explain the resource allocation to the public to ensure that the operations of the sports park are not affected.

　　According to the latest report from Bank of America Securities, New World Development (00017.HK) recorded a core net loss of HK$4.2 billion for the fiscal year ending June this year, significantly higher than the bank's expectation of HK$1.2 billion. The board decided not to declare a final dividend, which aligns with the bank's expectations but falls short of the broader market consensus. Additionally, New World Development announced that Ma Shaoxiang will take over as CEO, while Zheng Zhigang will transition to a non-executive director and non-executive vice chairman role.

　　Despite this being the first loss for New World Development in 20 years, CEO Ma Shaoxiang remains optimistic, stating, “2024 will be a challenging year, but we believe this is also a good opportunity to start anew.”

　　Bank of America Securities pointed out that under the new CEO's leadership, New World is expected to continue advancing projects in the new development areas and agricultural land conversion. Although the U.S. interest rate cut cycle has already begun, New World may become a major beneficiary of falling interest rates and supportive measures from the central government. However, considering that the group may need to divest more non-core assets in the short term to reduce leverage, analysts believe there are more attractive investment options in the Hong Kong real estate market. Therefore, they reaffirm their “underperform” rating on New World, setting a target price of HK$6.4.

　　Furthermore, the bank has revised its core loss forecast for New World for the fiscal year 2025 from HK$608 million to HK$945 million, while also lowering the core profit forecast for fiscal year 2026 by 90.6% to HK$36 million, anticipating that the group will not resume dividends until the fiscal year 2026.