NEW WORLD DEV(HK:00017)2024-02-29 16:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 15.80, indicating a potential upside of 56.7% from the current price of HKD 10.08 [1][23]. Core Insights - The company's revenue for the first half of the 2024 fiscal year decreased by 25% year-on-year to HKD 17 billion, primarily due to a decline in deliverable projects. However, core profit from ongoing operations increased by 12% to HKD 4.86 billion, attributed to improved profit margins and cost control measures [1][6]. - The company anticipates a 40-50% increase in transaction volume in the Hong Kong market following policy relaxations, and plans to accelerate sales of its projects in Kai Tak and Wong Chuk Hang, with approximately 2,500 units available for sale [2][6]. - Rental income from both Hong Kong and mainland China showed growth, with increases of 17.0% and 3.7% respectively. The overall operating profit margin improved by 1.3 percentage points to 65.6% [2][7]. - The company has raised its target for disposing of non-core assets to HKD 8 billion from the previous HKD 6 billion [2][6]. Financial Performance Summary - For the first half of the 2024 fiscal year, the company's revenue from property development fell by 40.2% to HKD 6.74 billion, while operating profit margin surged by 26.7 percentage points to 58.6% [6][8]. - The rental income segment reported a 12.0% increase, with Hong Kong rental income rising by 17.0% and mainland rental income by 3.7% [7][8]. - The company expects a compound annual growth rate of approximately 23% in rental income from 2024 to 2026 [2][6]. Financial Data Overview - The company's projected revenue for the fiscal year 2024 is HKD 68.43 billion, reflecting a year-on-year decline of 28.1%. Core profit is expected to drop to HKD 3.23 billion, a decrease of 47.3% [5][24]. - The price-to-earnings ratio is projected to be 7.9 for 2024, with a dividend yield of 6.4% [5][24]. - The net debt ratio is expected to be around 50.6% in the coming years, indicating a relatively high level of leverage compared to industry peers [24].