Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<ul>
<li>
0.08x P/B. That's where <a href="https://www.smartkarma.com/entities/new-world-development" target="_blank" data-smartkarma-citation="entities:7037:1" rel="noopener">New World Development (17 HK)</a> is currently trading. Less than half the P/B of the next comparable real estate peer.</li>
<li>
So, what's going on? Announcing an expected <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0830/2024083003082.pdf" target="_blank" rel="noopener">HK$19-20bn loss for FY24 </a>last week didn't help matters. Shares are down 14% this week and 85% since Covid.</li>
<li>Landlords need to drastically cut rents to jumpstart the retail sector. That translates to further impairment losses for property developers. </li>
</ul>



0.08x P/B. That's where New World Development (17 HK) is currently trading. Less than half the P/B of the next comparable real estate peer.

So, what's going on? Announcing an expected HK$19-20bn loss for FY24 last week didn't help matters. Shares are down 14% this week and 85% since Covid.
Landlords need to drastically cut rents to jumpstart the retail sector. That translates to further impairment losses for property developers. 


Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<ul>
<li>In today's Morning Views publication we comment on developments of the following high yield issuers: New World Development, China Vanke, Vedanta Resources</li>
<li>The US market was closed for the Martin Luther King Jr Day holiday yesterday.</li>
<li>In China, the one-year and five-year loan prime rates (quoted by commercial banks) have been maintained at 3.10% and 3.60%, respectively.</li>
</ul>


In today's Morning Views publication we comment on developments of the following high yield issuers: New World Development, China Vanke, Vedanta Resources
The US market was closed for the Martin Luther King Jr Day holiday yesterday.
In China, the one-year and five-year loan prime rates (quoted by commercial banks) have been maintained at 3.10% and 3.60%, respectively.


<ul>
<li>In today's Morning Views publication we comment on developments of the following high yield issuers: New World Development, Vedanta Resources, Softbank Group, AAC Technologies</li>
<li>In the US, the December (preliminary) S&amp;P manufacturing PMI fell to 48.3 (49.5 e / 49.7 p), while the services PMI expanded to 58.5 (55.8 e / 56.1 p).</li>
<li>The composite PMI also rose to 56.6 (55.1 e / 54.9 p). Treasuries were little changed, ahead of the Fed’s rate decision tomorrow. The yield on the 2Y and 10Y UST were flat at 4.25% and 4.40%, respectively.</li>
</ul>


In today's Morning Views publication we comment on developments of the following high yield issuers: New World Development, Vedanta Resources, Softbank Group, AAC Technologies
In the US, the December (preliminary) S&amp;P manufacturing PMI fell to 48.3 (49.5 e / 49.7 p), while the services PMI expanded to 58.5 (55.8 e / 56.1 p).
The composite PMI also rose to 56.6 (55.1 e / 54.9 p). Treasuries were little changed, ahead of the Fed’s rate decision tomorrow. The yield on the 2Y and 10Y UST were flat at 4.25% and 4.40%, respectively.


Listed Real Estate Asia, KT Capital Group

Jacob Cheng

Listed Real Estate Asia

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

<ul>
<li>NWD has the highest gearing among all HK real estate names.  It has significantly underperformed since the rate hike cycle begun.  Now it has the biggest potential to rebound</li>
<li>The stock is trading at attractive valuation, 0.27x P/B, like a distressed Chinese developer.  The major market concerns are potential earnings downgrade and dividend cut</li>
<li>I am quite convicted on the stock for rebound given 1) company has clear de-leveraging plan 2) no plans for equity-raise 3) lots of corporate actions ahead to unlock value</li>
</ul>


NWD has the highest gearing among all HK real estate names.  It has significantly underperformed since the rate hike cycle begun.  Now it has the biggest potential to rebound
The stock is trading at attractive valuation, 0.27x P/B, like a distressed Chinese developer.  The major market concerns are potential earnings downgrade and dividend cut
I am quite convicted on the stock for rebound given 1) company has clear de-leveraging plan 2) no plans for equity-raise 3) lots of corporate actions ahead to unlock value


New World Development(17 HK):High Leverage in HKRE but Likely the First to Rebound if Rate Peaks Out

<ul>
<li>In today's Morning Views publication we comment on developments of the following high yield issuers: New World Development, Indofood CBP, Azure Power, Adani Green Energy, Meituan</li>
<li>In the US, treasuries climbed in a holiday-shortened session on Friday, with yields falling 8-10 bps across the curve. The yield on the 2Y UST dropped 8 bps to 4.15%, while that on the 10Y UST declined 10 bps to 4.17%.</li>
<li>Equities rallied, with the S&amp;P 500 rising 0.6% to a new record high of 6,032.</li>
</ul>


In today's Morning Views publication we comment on developments of the following high yield issuers: New World Development, Indofood CBP, Azure Power, Adani Green Energy, Meituan
In the US, treasuries climbed in a holiday-shortened session on Friday, with yields falling 8-10 bps across the curve. The yield on the 2Y UST dropped 8 bps to 4.15%, while that on the 10Y UST declined 10 bps to 4.17%.
Equities rallied, with the S&amp;P 500 rising 0.6% to a new record high of 6,032.


Hong Kong

New World Development Company Limited, through its subsidiaries, develops and invests in properties, provides contracting services, property management, and transportation services.  The Company also operates infrastructure business, telecommunication services, department stores, hotels and restaurants, and media and technology business.

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New World Development (17 HK)

We Need To Talk About New World (17 HK)

Avoid NWD. Landlords need to materially reduce rents to kickstart the retail sector. That translates to more impairment losses. And further woes...

David Blennerhassett

Lucror Analytics - Morning Views Asia

In today's Morning Views publication we comment on developments of the following high yield issuers: New World Development, China Vanke, Vedanta...

Lucror Analytics

Lucror Analytics - Morning Views Asia

In today's Morning Views publication we comment on developments of the following high yield issuers: New World Development, Vedanta Resources,...

Lucror Analytics