新世界发展：管理层的不确定性阻碍了重估

Investment Rating - The report maintains a "Underperform" rating for New World Development (17 HK) [1] Core Views - New World Development faces a bleak profit outlook but has stabilized its financial position [2] - Management uncertainty persists in the medium to long term, hindering a potential re-rating [2] - Potential restructuring and market recovery opportunities exist, particularly with the possible sale of the Kai Tak Sports Park to its parent company, Chow Tai Fook Enterprises [2] Financial Performance Summary - New World Development reported a significant net loss of HKD 11.8 billion in FY24, driven by HKD 6.3 billion in development property impairment losses and HKD 2.7 billion in investment property revaluation losses [2] - Core losses widened from HKD 1.4 billion to HKD 4.6 billion, with core operating profit declining by 17.8% to HKD 6.9 billion [2] - Total interest expenses exceeded HKD 10 billion, surpassing core operating profit, leading to the suspension of dividends [2] - The company is actively deleveraging through asset sales (HKD 59/77/130 billion in FY23/24/25F) and reduced capital expenditures (HKD 190/150/150 billion in FY23/24/25F) [2] Management Uncertainty - The resignation of Adrian Cheng, the former CEO and third-generation family member, has introduced uncertainty, with the appointment of a new CEO seen as transitional [2] - This management instability is expected to negatively impact the company's operations and re-rating potential [2] Market Recovery and Restructuring Opportunities - The potential sale of the Kai Tak Sports Park to Chow Tai Fook Enterprises could be beneficial, as the project is nearing completion and expected to be operational by Q1 2025 [2] - The company may benefit from a market re-rating driven by US interest rate cuts and China's property support policies, but management uncertainty remains a key risk [2] Valuation and Target Price - The target price has been revised downward from HKD 8.75 to HKD 7.25, reflecting a 17% reduction due to lower net asset value expectations [2][9] - Earnings forecasts for FY25-26 have been cut by 20-34% [2] Financial Forecasts - Revenue is expected to remain flat in FY25F at HKD 35.9 billion, with a slight increase to HKD 36.6 billion in FY26F [3] - Net profit is projected to recover to HKD 867 million in FY25F and HKD 1.8 billion in FY26F, following a significant loss in FY24 [3] - Core earnings per share are forecasted at HKD 0.34 in FY25F and HKD 0.72 in FY26F [3] Key Financial Ratios - The net debt ratio increased to 57.2% in FY24, up from 49.6% in FY23, but is expected to decline to 53.1% in FY25F [3] - The price-to-book ratio remains at 0.1x, reflecting the company's undervaluation [3] Trading Data - The stock's 52-week price range is HKD 6.20 to HKD 15.96, with a market capitalization of USD 2.64 billion [4] - The 12-month expected return is -11%, indicating continued underperformance [4] Historical Performance - The stock has underperformed the Hang Seng Index over the past 12 months, with a -37% absolute return and -50% relative return [5] Segment Performance - Property sales revenue declined by 41% YoY in FY24, while rental income increased by 4% [6] - The construction segment saw a significant revenue drop of 45.7%, reflecting weak market conditions [6] Balance Sheet and Cash Flow - Total assets decreased to HKD 445.2 billion in FY24, down from HKD 609 billion in FY23, primarily due to asset sales and reduced capital expenditures [11] - Operating cash flow improved to HKD 10.99 billion in FY24, up from HKD 6.53 billion in FY23, driven by cost-cutting measures [11]