Shares of the Hong Kong-listed New World Development Co. Ltd. (HK:0017) rallied over 20% after the company’s CEO Adrian Cheng resigned. The company suspended trading on Thursday after Cheng’s departure and also released its annual results for FY24, posting its first loss in around 20 years.
Eric Ma, New World’s COO (chief operating officer) since January 2024, has assumed Cheng’s role. Meanwhile, Cheng took on the role of non-executive vice chair of the company.
New World Development is a Hong Kong-based developer, specializing in real estate, hotels, infrastructure, services, and department stores. Cheng was the third-generation heir of the founding family, known to be one of Hong Kong’s wealthiest clans.
New World Reports Loss in FY24
New World reported an annual loss attributable to shareholders of HK$19.7 billion, marking its first one since 2004. This was mainly attributed to higher impairment charges, declining sales, and investment losses. The company’s performance was also weighed down by high levels of debt.
New World’s net gearing ratio, a financial metric that measures a company’s financial leverage, climbed to 55% in June 2024 from 49.9% in December 2023. This increase occurred despite the company’s initiatives, such as debt refinancing and divesting of non-core assets, to bring down its leverage.
Additionally, New World’s struggles reflect ongoing property challenges in Hong Kong and mainland China. The company’s shares have lost over 30% of their value in the last 12 months.
What Is the Price Target for New World Development?
On TipRanks, 0017 stock has received a Moderate Sell consensus rating based on one Sell recommendation from J.P. Morgan in the past three months. The New World share price prediction is HK$5.60, which implies a downside of 32% on the current trading price.
