HONG KONG (ECONOMY TODAY NEWS, Aug 2) — New World Development (00017) surged nearly 11% earlier today but later reversed to close down 5%, at HK$5.75, with about 15.43 million shares traded, involving HK$926.7 million.
Bank of America published a research report stating that New World Development reported a net loss attributable to shareholders of HK$28.1 billion for the fiscal year 2026. Excluding a HK$18.3 billion impairment related to 11 SKIES, a HK$1.36 billion investment property fair value loss, and HK$9.4 billion in development property (DP) and other impairments, the bank estimates the underlying net profit after deducting perpetual bonds to be HK$240 million. The net gearing ratio (treating perpetual bonds as debt) increased from 84% at the end of December 2025 to 98% at the end of June 2026, while the cash-to-short-term debt ratio deteriorated from 2.5x at the end of December 2025 to 0.7x. Given New World Development's high leverage amid a rising interest rate environment, the bank reiterated its 'Underperform' rating. It also believes the terms of New World Development's exit agreement from 11 SKIES could be unfavorable to equity shareholders.
The bank stated that although the Airport Authority becoming the second-largest shareholder might enhance banks' and bondholders' confidence in future refinancing, the option can only be exercised if Chow Tai Fook Enterprises maintains a shareholding of 30% or above after exercise. Given that Chow Tai Fook Enterprises currently holds only 45.2%, the bank believes a potential placement and/or rights issue, with Chow Tai Fook Enterprises subscribing in excess, may be required to increase its stake before the Airport Authority can enter as a shareholder. This implies minority shareholders could face dilution.
The bank noted a target price of HK$4.7 and reiterated its 'Underperform' rating.
Currently, the Hang Seng Index stands at 23,976, down 636 points or 2.6%, with over HK$88.8 billion traded on the main board. The Hang Seng China Enterprises Index is at 8,031, down 188 points or 2.3%. The Hang Seng Tech Index is at 4,150, down 103 points or 2.4%. (nw)
Bank of America published a research report stating that New World Development reported a net loss attributable to shareholders of HK$28.1 billion for the fiscal year 2026. Excluding a HK$18.3 billion impairment related to 11 SKIES, a HK$1.36 billion investment property fair value loss, and HK$9.4 billion in development property (DP) and other impairments, the bank estimates the underlying net profit after deducting perpetual bonds to be HK$240 million. The net gearing ratio (treating perpetual bonds as debt) increased from 84% at the end of December 2025 to 98% at the end of June 2026, while the cash-to-short-term debt ratio deteriorated from 2.5x at the end of December 2025 to 0.7x. Given New World Development's high leverage amid a rising interest rate environment, the bank reiterated its 'Underperform' rating. It also believes the terms of New World Development's exit agreement from 11 SKIES could be unfavorable to equity shareholders.
The bank stated that although the Airport Authority becoming the second-largest shareholder might enhance banks' and bondholders' confidence in future refinancing, the option can only be exercised if Chow Tai Fook Enterprises maintains a shareholding of 30% or above after exercise. Given that Chow Tai Fook Enterprises currently holds only 45.2%, the bank believes a potential placement and/or rights issue, with Chow Tai Fook Enterprises subscribing in excess, may be required to increase its stake before the Airport Authority can enter as a shareholder. This implies minority shareholders could face dilution.
The bank noted a target price of HK$4.7 and reiterated its 'Underperform' rating.
Currently, the Hang Seng Index stands at 23,976, down 636 points or 2.6%, with over HK$88.8 billion traded on the main board. The Hang Seng China Enterprises Index is at 8,031, down 188 points or 2.3%. The Hang Seng Tech Index is at 4,150, down 103 points or 2.4%. (nw)
