Result preview: lower development profit expected from Hong Kong
- Underlying interim earnings expected to fall modestly on lower development profit from Hong Kong.
- Interim DPS should remain stable
- K11 Musea should provide rising rental contributions
New World Development will announce its interim result for FY22 on 25 Feb. We forecast the company’s underlying earnings to be 7% y-o-y lower at HK$3.5bn mainly due to reduced property development profits from Hong Kong. Interim DPS is estimated to stay flat at HK$0.56.
Development profit should fall 11% in 1HFY22 primarily led by lower contributions from Hong Kong where no new project was completed during the period. Yet, development earnings from China should remain a key swing factor on the company’s bottom-line earnings. Rental earnings should rise 24% mainly driven by increased income from K11 Musea and effective cost control. Hotel operations, though improved, should remain in the red.
Key things to watch for include dividend paid, the company’s outlook of commercial properties in Hong Kong and China, pre-leasing progress of new investment properties such as 11 Skies, an update of new acquisitions and its financial position, amongst others.