New World Development reports losses as debt ratio worsens amid property slump
New World Development (NWD), controlled by Hong Kong's third-richest family, reported weaker interim results in its underlying property business, suggesting the worst is not over as the city's most indebted developer struggled to contain its debt burden and loss of confidence among investors.
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Earnings from its core business declined 18 per cent from a year earlier to HK$4.42 billion (US$567 million) in the six months to December 31, it said in a Hong Kong stock exchange filing on Friday. Revenue slipped 1.6 per cent to HK$16.8 billion.
After accounting for almost HK$5 billion of one-off items, such as the erosion in the fair value of investment properties and cost of refinancing its bonds, the group incurred an interim loss of HK$6.63 billion, versus a profit of HK$502 million a year earlier, it added.
'The loss mainly arose from a drop in market value of projects in both development and investment properties, due to quick changes in market macro factors,' chairman Henry Cheng Kar-shun said. These included a slower-than-expected pace of interest rate cut and caution amid US policy shift and Beijing's stimulus measures, he added.
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Shop occupancy recovers in Hong Kong, but vacant stores still visible across the city
Shop occupancy recovers in Hong Kong, but vacant stores still visible across the city
The company's efforts to address its debt levels failed to improve as net gearing ratio rose to 57.5 per cent on December 31 from 55 per cent on June 30, its report showed. Consolidated net debt increased by less than 1 per cent to HK$124.6 billion over the six-month period.
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