Hong Kong developer New World to tap improved sentiment by bringing property launches forward after posting interim loss

The company unveiled the plan on Thursday after it reported that its profit attributable to shareholders arising from continued operations for the six months ending on December 31 fell 12.8 per cent to HK$502 million (US$64 million). Its shares slipped 2.1 per cent to HK$9.87 on Thursday, bringing its loss so far this year to 18.6 per cent.

“As the financial secretary has announced the lifting of property curbs, and the Hong Kong Monetary Authority has relaxed mortgage loan policies, which are in effect attracting the public and investors to the market and driving its recovery, the group will leverage this positive sentiment,” said Adrian Cheng Chi-kong, NWD’s CEO.

“We hope that we can achieve a positive sales revenue result in the coming year.”

NWD’s projects, given their prime locations, can “bring good cash flow to the group in a short period of time”, Cheng said.

These include a redevelopment project at the site of the former State Theatre in North Point, as well as joint-venture projects in the Kai Tak area, such as a 1,305 unit development with Far East Consortium.

Phase one of the State Theatre project comprises 400 units and had been scheduled for sale in the second half of this year. It will be offered for sale within the next four months.

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NWD announced an interim dividend payout of HK$0.2 per share, a 56.5 per cent drop from last year’s HK$0.46 per share. If the group’s profitability improves in the future, it will increase dividend payouts or conduct buy-backs to enhance shareholders’ returns, Cheng said.

The group’s continuing operations revenues recorded a year-on-year decrease of 25 per cent to HK$17.06 billion due to fewer bookings in property developments in both Hong Kong and mainland China. Gross profit was up by 2 per cent to HK$7.25 billion, thanks to a higher margin from property investments in its K11 portfolio.

Losses for the year amounted to HK$5.77 billion, against a net profit of HK$2.48 billion previously. The loss included discontinued operations, which includes the one-time non-cash impact from the sale of New World Services Holdings, according to the company.

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Revenue from property investment in Hong Kong stood at HK$1.74 billion, up by 17 per cent. The increase was attributed mainly to an improvement in the operational efficiency and occupancy rate of K11 Musea and K11 Art Mall in Tsim Sha Tsui, the company said.

Meanwhile, Hong Kong’s property market has seen an immediate uptick in transactions after the removal of all curbs. Twelve deals had been recorded as of 4pm on Thursday at Yu Tai Hing’s residential project The Uptown in To Kwa Wan, according to Centaline Properties. It was first launched in November last year.

The contract prices of the 12 units sold ranged from HK$8 million to HK$11.8 million.

“Many end users and long-term investors visited the show flats before the budget speech, and seized the opportunity to enter the market as soon as the government scrapped the cooling measures,” Centaline said.