New World Development Company (17) H1 2025 earnings summary

Executive summary

• Revenue for the six months ended 31 Dec 2024 decreased 1.6% year-over-year to HK$16,789 million, with core operating profit down 18% to HK$4,416 million and a loss attributable to shareholders of HK$6,633 million, mainly due to non-cash impairment and fair value losses.

• Stringent cost controls led to a 35% reduction in capital expenditures and a 9% decrease in administrative and other operating expenses year-over-year.

• No interim dividend declared for the period, with a temporary halt to prioritize financial flexibility and capital structure optimization.

• Leadership transition with a new CEO focused on overcoming market challenges and driving business development.

• Strategic focus on stabilizing core property business, improving cash flow, and reducing indebtedness through targeted measures.

Financial highlights

• Core operating profit for H1 FY25 was HK$4.4 billion, down 18% year-over-year due to lower profit margins.

• Loss attributable to shareholders was HK$6.6 billion, mainly from one-off losses: HK$1.6 billion fair value changes, HK$3.4 billion impairment, and HK$1 billion from asset sales.

• G&A expenses fell 9% year-over-year to HK$1.8 billion; CapEx dropped 35% to HK$4.9 billion.

• Gross debt decreased by HK$5.1 billion since June 2024; short-term debt down HK$9.4 billion year-over-year.

• Cash and bank balances (including restricted) stood at HK$21.9 billion, with undrawn bank facilities of HK$12.4 billion as of 31 Dec 2024.

Outlook and guidance

• FY25 CapEx guidance lowered to below HK$13 billion, with ongoing CapEx and OpEx optimization.

• Targeting HK$26 billion in property and non-core asset sales by FY25.

• Management remains focused on cash repatriation, debt reduction, and leveraging core property development and investment in Hong Kong and first-tier Mainland cities.

• Positive sales momentum is expected to continue, supported by favorable policies in Hong Kong and Mainland China, with several major projects set for launch and completion in 2025.

• Dividend payments remain suspended until further debt reduction is achieved.