Takeaways from virtual property conference
? Despite macroeconomic uncertainties, NWD is confident of achieving its
sales targets in HK and China for FY6/22F.
? NWD expects to add a total of 6m sq ft of attributable GFA to its land bank in
the New Territories from new farmland conversion and up-zoning.
? NWD has also met its FY6/22F non-core asset disposal target, which gives it
room to replenish land bank in HK. Reiterate Add.
Still confident of achieving FY6/22 contracted sales targets
? Despite challenging economic environment, NWD’s management says it is confident
of achieving its FY6/22F development property (DP) contracted sales targets in both
HK (HK$10bn) and China (Rmb20bn).
? HK DP sales in FY6/22F are primarily attributable to sales of office space in 888 Lai
Chi Kok Road (now renamed as NCB Innovation Centre), where NWD has sold 75%
of office GFA.
? In addition to Rmb9.3bn DP contracted sales in 1HFY22, NWD successfully locked in
c.Rmb7bn of subscription sales (ASP: Rmb69.8k/sq m) a few days ago from its
Wangjiang New Town project in Hangzhou. The subscription sales will gradually be
converted into contracted sales when formalities are completed.
Taking actions to speed up farmland conversion
? Following the HKSAR Government’s objectives of increasing land supply for flats and
of developing the Northern Metropolis (NM) in the New Territories, NWD is attempting
to speed up the conversion pipeline of its farmland reserve.
? It expects to add 2m sq ft of attributable GFA into its land bank from new farmland
conversion in the next two fiscal years, and another 4m sq ft of attributable GFA from
up-zoning, from farmland sites located in the NM.
Non-core asset disposals make room for new land banking
? NWD secured more non-core asset disposals in 2HFY22F, such as the disposal of
aircraft leasing business (Goshawk) held by its listed subsidiary NWS (659 HK, NR),
so that the total value of assets disposed in FY6/22F amounts to over HK$13.8bn
(higher than initial full-year target of HK$8bn-10bn).
? The capital recycling activities at both NWD and NWS levels have increased NWD’s
capacity for land banking (e.g. Kai Tak JV project from Kaisa and Tseung Kwan O
residential JV project via public tender), and would enable NWD to achieve a stable
net gearing of ~40%.
Reiterates target of higher underlying profit from recurring income
? NWD reiterated its target of achieving at least 50% of its underlying net profit from
recurring income businesses (i.e. investment properties, insurance) by FY6/24F.
? We reiterate our Add rating for NWD with an unchanged TP of HK$42.5, based on a
40% discount to NAV of HK$70.8.
? Key downside risks are a prolonged Covid-19 outbreak in China, leading to slower
rental growth and DP sales. Stronger-than-expected DP sales in HK and China are
potential re-rating catalysts.