New World Development Company (17) H2 2024 earnings summary

Executive summary

• FY 2024 was challenging due to high interest rates, market uncertainties, and lower property development bookings, resulting in a reported loss attributable to shareholders of HKD 19.7 billion and a net loss of HKD 17.1 billion, mainly from non-cash impairments and asset disposals.

• Leadership transition occurred with Adrian Cheng resigning as CEO and Eric Ma appointed as the new CEO.

• The group implemented a strategic reset, focusing on core property business, deleveraging, asset-light strategies, and cost optimization.

• Significant non-core asset disposals, including NWS Holdings and farmland monetization, generated proceeds for debt repayment and working capital.

• Temporary dividend halt was implemented to accelerate deleveraging and enhance financial flexibility.

Financial highlights

• Core operating profit was HKD 6.9 billion, down 18% year-on-year, with revenue down 34% to HKD 35.8 billion.

• Segment results grew 9% overall, with K11 segment up 12% year-on-year.

• G&A expenses fell 17% to HKD 4.2 billion; CapEx dropped 23% to HKD 14.8 billion.

• Gross debt reduced by HKD 12.4 billion to HKD 151.6 billion; net debt as of June 2024 was HKD 123.7 billion.

• Net gearing ratio was 55% as of June 2024, reduced to 49.9% by end-June.

Outlook and guidance

• FY 2025 CapEx expected to remain below HKD 15 billion, with large-scale projects largely completed.

• Hong Kong DP contracted sales target set at HKD 6 billion; Mainland China DP contracted sales target at RMB 11 billion.

• NCD (non-core disposal) target for FY 2025 increased to HKD 13 billion.

• No rights issue planned; dividend payments temporarily halted until deleveraging targets are met.

• Focus on property development and investment in core regions, leveraging policy support and market opportunities.