Shares of HK’s New World Development Sink After $2.6-B Loss Estimate

Shares of New World Development, a major Hong Kong property developer, plunged 14% after estimating a net loss of up to HK$20 billion ($2.6 billion) for the financial year ended in June.

New World's full-year loss estimate follows a first-half net loss of HK$5.8 billion. I Photo: COLA CARKZ 222 Wikimedia Commons

The shares fell to HK$6.74 in early trading, marking a fresh 21-year low, Clare Jim and Donny Kwok reported for Reuters.

The company said in a Friday filing that it expected a drop of as much as 23% in core operating profit from continuing operations due to a lack of revenue and that it would have fair value and impairment losses of up to HK$9.5 billion.

"Together with the continuous interest rate hikes experienced during the year as well as the depreciation of the Renminbi, the group expects to record a (net) loss," it said.

The company also noted that the provisions were one-off non-cash and unrealized items that do not affect the group's cash flow. New World has one of the highest debt-to-equity ratios among Hong Kong's property developers, and its de-leveraging plan has been closely watched over the past year.

While Hong Kong has not seen major defaults on debt by property developers like in mainland China, investors worry about weakening liquidity in the sector due to sluggish residential and commercial property markets.

New World's full-year loss estimate follows a first-half net loss of HK$5.8 billion, South China Morning Post (SCMP) also reported.