New World Development shares jump after replacement of CEO Adrian Cheng

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Shares of New World Development surged after resuming trading following the replacement of its CEO, as the property developer seeks a revamp

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New World Tower in Central. Photo: Jelly Tse

Zhang Shidongin Shanghai

Published: 10:16am, 27 Sep 2024Updated: 4:30pm, 27 Sep 2024

Shares of New World Development (NWD) surged after resuming trading following the replacement of its CEO, as the debt-laden property developer seeks to revamp itself.

NWD shares jumped 22 per cent to HK$9.96 on Friday in Hong Kong after being suspended a day earlier pending a statement on the management reshuffle. On Wednesday, sources told the Post that Adrian Cheng Chi-kong would step down as CEO.

Cheng, the third-generation scion who helmed the property conglomerate, will take a non-executive role as vice-chairman of NWD effective Thursday, according to an exchange statement. Chief operating officer Eric Ma Siu-cheung was named as the new CEO, it said.

New World Department Store China (NWDS), a retail unit of NWD that is focused on the mainland, soared 53 per cent to HK$0.38. The stock was also suspended on Thursday. The Hang Seng Index added 3.6 per cent on Friday.

NWD has been battling rising debt and worsening profitability in recent years due to property market downturns in Hong Kong and on the mainland. Its shares have lost 18 per cent this year and are heading for a fourth straight year of losses.

“We believe that the new management will take the opportunity to change its wrong strategies. Specifically, we expect NWD to focus on bringing down its gearing in the next few years,” said Raymond Cheng, a managing director at CGS International Securities in Hong Kong. “While some investors are still concerned with its liquidity issues, we think that given its proactive deleveraging strategy, coupled with strong support from its parent, NWD should be able to weather the current challenges.”