New World Development Could Have Greater Flexibility for Deleveraging

Dow Jones10-05

0545 GMT - New World Development could have greater flexibility for further deleveraging after the termination of the 11 SKIES sublease, which removes a major overhang for its stock, says DBS Group Research analysts in a note. The sublease's early termination likely frees the company from heavy long-term financial obligations amid a challenging operating environment, they say. The Hong Kong conglomerate's potential to reduce financial leverage--debt used to fund an investment for higher returns--is likely to be a key driver of New World's shares, which has fallen 25% in the past six months, the analysts add. DBS cuts its target price to 7.03 Hong Kong dollars from HK$11.17 and maintains its hold rating. Shares fall 1.55% to HK$5.73.

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