His grandfather passing just a few months ago and his father ill, heir apparent to the New World Development throne, Adrian Cheng Chi-Kong, led his first earnings briefing for the $54 billion Hong Kong real estate developer last week, reporting that the company saw net profits grow by 31 percent to reach HK$4.3 billion for the six months ending December 31st.
Highlights of the financial results for the first half of the fiscal year included an underlying profit of HK$5 billion and revenue of HK$26.6 billion. At the meeting, Adrian said the company, “is continuing to uplift its brand value by focusing on two core businesses, property sales and property rental, in both Hong Kong and Mainland China.” Sales in China amounted to 80 percent of the FY2017’s contracted property sales, 44 percent of that coming from South China.
Tsuen Wan Project Leads Strong Hong Kong Sales
“During the period under review, the attributable contracted sales in Hong Kong amounted to HKD4.7 billion. The launch of the Pavilia Bay in Tsuen Wan in January 2017 has been an immense success,” Cheng said of strong sales performance in Hong Kong, pointing out that 400 units at the joint venture with China Vanke were “snatched up” in the first day. Other major sources of property sales revenue for New World in Hong Kong during the period were its Skypark, Masterpiece, Double Cove Summit and 55 Conduit Road projects.
On the commercial side, the company recently secured the potential for future leasing revenue in the city earlier this month when New World won a commercial site in Kowloon’s Cheung Sha Wan at auction for HK$7.79 billion. The project, when completed, is expected to yield two office towers with a maximum gross floor area of nearly a million square feet.
New World Development shares jumped 3.5 percent after Adrian Cheng’s report, closing at HK$9.78, a sign that investors are keen on the company despite recent leadership concerns.
K11 Creator Becomes New World Vice Chairman
As speculation swirls around succession in the wake of his father’s reported stroke in late January, Adrian Cheng was also given the role of executive vice-chairman and general manager on Wednesday of last week. “Please don’t over-interpret it,” said Cheng. “It just happened to be a coincidence.”
Since the death of Cheng Yu-tung – New World Development’s founder and a Hong Kong rags-to-riches icon – at 91, investors have been wary of the company’s new helmsman, Henry Cheng Kar-shun. A bit more cultured than his salt-of-the-earth father, Henry Cheng took bad bets on Ramada and Renaissance hotels in the early 1990s and even got entangled in a lawsuit over a project with future US president Donald Trump, leading to early doubts about his decision-making.
Wednesday marked the first day that Henry Cheng missed the presentation of New World’s earnings since taking the top spot at the developer in 2012; Adrian stated that his father is recovering and would be meeting with everyone soon.
Cheng Yu-tung left some very big shoes to fill indeed, and doubts remain due to Adrian Cheng’s relatively untested K11 art/retail malls, which, in his own words, create “a sustainable cross-commerce business model, creating a museum retail concept which is a breakthrough to the traditional retail transformation.” A graduate of Harvard and an art aficionado, Adrian joined the family business in the early 2000s after a stint as an investment banker and two years in Beijing.