Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- New World Development Co Ltd (NWWDF, Financial) has made significant progress in reducing its indebtedness, with a decrease in gross debt by HKD11.4 billion over the past year.
- The company has achieved impressive property sales, with 72% of its FY25 annual target already completed in Hong Kong.
- The group's commercial projects, particularly in Hong Kong, are performing well with high occupancy rates, such as K-11 Atalia Victoria Dockside at 99%.
- New World Development Co Ltd (NWWDF) has successfully improved its cash flow from operations, which, along with asset sales, nearly covers its CapEx and interest expenses.
- The company is actively managing its finances and has received strong support from major banks, indicating confidence in its operations.
Negative Points
- The property market in both mainland China and Hong Kong is facing challenges, with high interest rates and a slow recovery impacting the company's operations.
- New World Development Co Ltd (NWWDF) reported a loss attributable to shareholders of HKD6.6 billion in the first half of FY25, due to one-off losses and impairments.
- The company's core operating profit decreased by 18% year-on-year, reflecting lower profit margins in property development projects.
- There is ongoing uncertainty in the global economy, which could continue to affect the real estate industry and the company's performance.
- The company has suspended dividend payments to retain cash, which may be a concern for income-focused investors.
Q & A Highlights
Q: As the new CEO, are you going to focus the group's future development direction on the mainland?
A: Echo Huang, Executive Director and CEO, emphasized that New World Development's core business remains rooted in Hong Kong while also looking towards overseas and the mainland. She reassured that her extensive experience in the real estate industry, both in Hong Kong and the mainland, positions her well to navigate both markets effectively. The group's development strategy will continue to focus on both Hong Kong and the mainland.
Q: Will the company consider debt restructuring, given recent rumors?
A: Echo Huang clarified that there is no current plan for debt restructuring. The company is actively managing its finances, focusing on reducing gross debt and complying with debt obligations. They are committed to providing necessary and appropriate information to investors.
Q: What is the strategic significance of the large-scale refinancing discussions with banks?
A: Edward Lau, CFO, explained that the group is actively managing its finances to reduce indebtedness and control financing costs. They are in discussions with banks for refinancing arrangements, with the primary goal of lowering total gross debt and improving operating cash flow.
Q: Why is the company not reporting NCD (Non-Core Disposal) progress independently anymore?
A: Echo Huang stated that previous independent disclosures of NCD led to unnecessary speculations and reports, affecting daily operations. Moving forward, NCD and DP (Development Projects) contracted sales will be disclosed together to strategically dispose of non-core assets and achieve capital recovery.
Q: Does the group have a clear debt reduction goal, including perpetual debts?
A: Edward Lau highlighted that the group is focused on improving cash flow and reducing total debts, especially short-term debts. The goal is to lower the leveraging ratio to a sustainable level, with significant improvements already seen in cash flow from operations.
Q: Will the majority shareholder inject funds, and what are the plans for New World Department Store?
A: Echo Huang emphasized the group's resilience and high-quality properties. The focus is on reducing indebtedness through various measures, and there are no current plans for rights issues or privatization of New World Department Store by Chow Tai Fook Holdings.
Q: How does the company plan to handle the upcoming perpetual bond call date?
A: Edward Lau explained that the company will consider various aspects in handling debts and perpetual debts. The earliest notice for redemption can be given in mid-March, with the setup time in mid-June, allowing flexibility in decision-making without additional costs.
Q: What is the outlook for the mainland property market in 2025, especially after Chinese New Year?
A: Echo Huang expressed optimism, noting that the central government's policies aim to stabilize the property market. The market is expected to gradually recover, with tier-two cities like Shenzhen, Guangzhou, Hangzhou, and Shanghai leading the way. The company has revised its full-year target to RMB14 billion, reflecting confidence in market recovery.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
