Despite High Financial Gearing, NWD Should Improve Liquidity Through Stronger Property Sales

New World Development is a leading property developer in Hong Kong and mainland China under the Cheng family, with property development and investment as core businesses. As NWD aims to raise the revenue mix of investment properties, we think execution efficiency remains crucial for the group to maintain healthy top-line growth. We believe NWD is poised to leverage the success of its well-received K11 commercial project in Victoria Dockside to expand its portfolio of K11 malls in mainland China over the next few years. With continued floor area expansion and upward rental reversion, we estimate that recurring earnings from investment properties should represent over 30% of NWD’s operating profit in fiscal 2030.