New World Development (00017.HK) reported revenue from continuing operations of HK$27.68 billion for the full year ended June, declining 22.6% year-on-year. The company recorded a loss from continuing operations of HK$16.3 billion, representing a 38% increase in losses compared to the previous year, primarily due to one-time provisions and losses totaling HK$15.1 billion. Excluding changes in investment property values, segment results reached HK$7.07 billion, down 4.1% year-on-year, while core operating profit was HK$6.017 billion, declining 13%.
New World Development attributed the revenue decrease to reduced income from construction business as several legacy projects neared completion, decreased property development bookings in mainland China, and reduced revenue from divested businesses.
**Cheng Ka-shun Says New Journey Sets Sail, Navigating Cycles with Resilience**
Chairman Cheng Ka-shun stated in the results report: "Times are beyond our control, yet changes come like tides - how shall we navigate?" He emphasized that when facing storms, the company maintains the unwavering fighting spirit of Lion Rock, working together to break through the waves. He noted that resilience has become New World Development's solid foundation for weathering storms and navigating cycles, with the group committed to high-quality development as its core objective, continuously improving product quality and brand value, describing it as "a new journey setting sail."
**New World Development's Debt Ratio Rises to 58.1%**
As of period end, New World Development's consolidated net debt stood at HK$120.11 billion, decreasing by HK$3.5 billion or 3% year-on-year. The net debt ratio was 58.1%, up 3.1 percentage points from the previous year. The group indicated it has approximately HK$45 billion in available funds, including cash and bank balances of about HK$25.9 billion and available bank loans of approximately HK$19.2 billion.
New World Development continued strict expenditure control, with general administrative and other operating expenses declining during the period. Capital expenditure was HK$12.6 billion, down 15% year-on-year, while operating expenses were HK$3.5 billion, decreasing 16%. The group expects capital expenditure to continue falling below HK$12 billion this year.
**Huang Shaomei: Financial Stabilization, "Debt Reduction Still Has a Long Way to Go"**
CEO Huang Shaomei noted that the seven debt reduction measures implemented earlier have shown initial results, with total debt and net debt declining, cash flow significantly improving and returning to positive territory, reflecting the group's gradually stabilizing financial condition. She stated, "Debt reduction work has just begun, and we still have a long way to go." The company will focus on core business, actively manage finances, and improve operational efficiency. Currently, it is capitalizing on declining interest rates and property market recovery opportunities to promote sales while adopting a steady and progressive operational approach.
Huang Shaomei continued that the company had completed HK$88.2 billion in refinancing to increase medium and short-term liquidity, and recently secured HK$3.95 billion in committed loans to handle existing debt. The scale can be increased as needed in the future. She emphasized that debt reduction and refinancing are not contradictory relationships - under risk-controlled conditions, appropriate financing tools can further strengthen capital liquidity and accelerate fund recovery.
**No Rights Issue or Placement Plans**
Chief Financial Officer Liu Fuqiang added that given the earliest maturity date of the refinancing batch is June 2028, New World Development's debt maturing within the next two years has significantly decreased to HK$29 billion, with only HK$6.6 billion due in fiscal year 2026.
Regarding future financing plans, Liu Fuqiang stated the company will prudently consider all capital instrument options but currently has no plans for rights issues, placements, or convertible bond issuances. Huang Shaomei reiterated that no major shareholder capital injection proposals have been received.
Regarding business outlook, Liu Fuqiang noted it depends on market conditions and interest rate trends. Due to uncertain overall interest rate directions, predictions are difficult, but he expressed confidence that profit performance will gradually improve when market conditions recover. He mentioned that assuming current market rates decline by 1 percentage point, it would help New World Development save HK$800 million in annual expenses.
**Hong Kong Property Sales to Contribute HK$16.8 Billion in Next Two Years**
During the period, overall property development revenue was HK$15 billion, down 7% year-on-year, with segment profit of HK$5.58 billion, declining 3%. Hong Kong property development segment revenue was HK$2.7 billion, up 12%, mainly from residential projects including Artisan Lohas and Tai Fung, as well as 888 Lai Chi Kok Road. The next two fiscal years will see HK$16.825 billion in sales bookings. Mainland China property development segment revenue was HK$12.3 billion, down 10% due to reduced property deliveries.
Property investment revenue was HK$5.055 billion, declining approximately 3% year-on-year. Segment profit was HK$3.24 billion, down 7%. Excluding contributions from sold properties and pre-opening expenses, segment results increased 2% year-on-year.
**New World Development Sets HK$27 Billion Target for Sales and Asset Disposals This Year**
Huang Shaomei stated that strategic direction will continue focusing on property development and property investment as two major businesses to address challenges and ensure sustained business growth. The current priority is strengthening cash flow and reducing overall debt levels. She said the group will maintain "business as usual" operations while fully implementing seven debt reduction measures, including accelerating property development sales; actively advancing asset disposal plans with a target of HK$27 billion total for property development contract sales and asset disposals in fiscal year 2026; unlocking agricultural land value; improving rental returns and increasing recurring income; optimizing capital and operating expenditure; suspending dividends and perpetual bond distributions; and adopting prudent financial management strategies.
**K11 by AC Has No Relationship with New World Development**
Former Vice Chairman and CEO Adrian Cheng recently announced the establishment of SCO Development Holdings to expand the "K11 by AC" cultural ecosystem globally. Huang Shaomei clarified that New World Development fully owns the K11 trademark and brand, and agreed last year to let Adrian Cheng use "K11 by AC." However, she clarified that "currently K11 by AC's investments, business, operations, including asset-light management projects, have no relationship whatsoever with New World Development Group or K11." New World Development's K11 series projects are also unrelated to K11 by AC, and the company currently does not manage any property projects developed by third parties.
Comments