And company liquidity remains healthy.
It has been noted that New World Development (NWD) has a robust sales pipeline in 2016.
According to a research note from Jefferies, management maintained HKD10bn sales in HK despite the current cyclical factors. In 1H16, NWD has achieved HKD2.8bn sales from four major launches (The Parkhill, Double Cove Grandview, 55 Conduit Road and Skypark), and it unveiled the plan to roll out another 2,942 units from new launches in the coming twelve months.
Ricacorp says NWD will account for about 10% of total potential unit supply during the year. Away from the fierce competition in TKO or Yuen Long, the company may be able to seize more buying interest for its major launches in Clear Water Bay (Mount Pavilia), North Point (Fluer Pavilia) and Tsuen Wan (TW 6).
Here's more from Jefferies:
1H16 results review: Underlying profits came in at HKD3.3bn, implying a 26% drop due to FX loss as a result of RMB devaluation. If we strip out such effect, underlying profits should have been HKD4.4bn, similar to a year ago. Most business segments stayed stable during the period and the profit declines in property sales in China and hotel operation were attributed to lowered margin/GFA delivery and disposal of 50% interest for three HK hotels respectively. Company declared an interim DPS of HKD0.13, up 8% yoy.
Company liquidity remains healthy: Privatization of NWCL (917 HK, UC) may concern investors with respect to gearing pressure but the proceeds to be received from Evergrande (3333 HK, Hold) for project disposal will offset the liquidity issue over time. Apart from that, NWD has over HKD90bn capital (including HKD22bn un-utilized faculties) to support the group's development. Even without new land purchase, its 5.3m sf of residential land bank can sustain development for the next five years.
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