Leju Finance Li LiOn December 28, UBS issued a report believing that the market is interested in New World (00017HK) cash position concerns should ease somewhat, as it is estimated that its ** NWS (00659.).HK) proceeds of $18 billion and $23 billion of free cash on hand should be sufficient to cover the bonds maturing in FY2024 and related capital expenditures and expenses.
The bank estimates that NWS could result in a $1.5 billion loss in recurring dividend income, thus reducing the visibility of interest and dividend payments for NWS. The bank** will pay a dividend per share for fiscal 2024-2025 from 0$76 (excluding special interest) was lowered to 0$6.
The stock is currently trading** reflecting a 68% NAV discount, roughly the same as the lows of the 2004 or 2011 rights issue. As a result, the bank believes that the market has priced in New World's high gearing ratio, earnings performance and dividend cuts.
The bank believes that the recent buyback by the controlling shareholder should support the share price. New World currently has a reserve of 16.4 million square feet of agricultural land in Hong Kong, and while speeding up the pace of agricultural land repossession may slightly improve its capital structure, it will not be enough to reverse the market's perception that its debt-to-asset ratio is relatively higher than that of other Hong Kong property developers. Even assuming that all of its farmland reserves are calculated at $1,267 per square foot of farmland, the net gearing ratio will only fall from the current 83% to 65%. The bank lowered New World's 2023-25 earnings forecast with a price target of 20$4 dropped to $128 yuan, maintaining a neutral rating.
Related company: New World SH600628