NEW WORLD DEV(00017) 交银国际证券·2024-12-05 02:14Investment Rating - The report maintains a Buy rating for New World Development (17 HK) with a target price of HKD 11.44, representing a potential upside of 74.5% from the current price of HKD 6.56 [1][3] Core Views - New management is expected to improve operational efficiency, particularly in the mainland China business, with the appointment of Ms. Wong Siu Mui as CEO [1] - The company has completed the sale of NEW WORLD SPORTS DEVELOPMENT LIMITED (NWSPL) for HKD 416.7 million, which is expected to help recover investment costs and reduce financial burdens [2] - Sales progress is strong, with HKD 3.7 billion in attributable sales completed in Hong Kong (62% of FY2025 guidance) and RMB 4.8 billion in contracted sales in mainland China, with expectations to reach RMB 7 billion by the end of 2024 (64% of full-year guidance) [2] - The stock is currently trading at around 0.1x P/B, which is believed to reflect most negative factors, with potential re-rating catalysts including improved operational efficiency, strong FY2025 sales progress, reduced capex, and potential interest rate cuts [3] Financial Summary - Revenue is expected to decline by 34.4% YoY in FY2024 to HKD 35,782 million but rebound by 20.2% YoY in FY2025 to HKD 42,999 million [4] - Core profit is projected to decrease by 47.5% YoY in FY2024 to HKD 1,377 million but recover by 19.8% YoY in FY2025 to HKD 1,648 million [4] - The company's P/E ratio is expected to improve from 12.0x in FY2024 to 10.0x in FY2025 [4] - Dividend yield is forecasted to increase from 3.0% in FY2024 to 4.0% in FY2025 [4] Operational Highlights - The company has established separate operating committees for Hong Kong and mainland China businesses to enhance operational efficiency [1] - The launch of Guangzhou Kaixuan New World is expected to contribute to mainland China sales, with contracted sales projected to reach RMB 7 billion by the end of 2024 [2] Industry Context - The report covers other Hong Kong and mainland China real estate companies, including Sun Hung Kai Properties (16 HK), Link REIT (823 HK), and Henderson Land (12 HK), with varying ratings and target prices [8]