New World Development joined our Access Asia Conference in Singaporetoday. We summarize the key takeaways below.
　　Strong contracted sales achieved. In Hong Kong, the company achievedcontracted sales of over HK$10.8bn as of end-17 （boosted by The Pavilia Bayproject）， surpassing the FY17 sales target of HK$10bn. Aside from the 680unit Mount Pavilia project in Sai Kung （currently on-sale by tender）， twomore projects are in the pipeline: Artisan House in the Western district andthe Tuen Mun project, collectively about 350 units. In China, contractedsales of Rmb12.8bn were achieved as of end-16 （44% came from SouthChina）， locking in about 80% of the FY17 sales target of Rmb16bn. OverallASP rose 16% to Rmb19,548/sf on favorable inventory situation.
　　Good progress with landbanking via farmland conversion and old buildingredevelopment in HK, with over 1.6mn sf GFA added in FY17. In China,over 240,000 sqm GFA was added over the period, mostly via the JV withChina Merchant in Shenzhen. Currently, NWD has an attributable 10mn sflandbank in Hong Kong （50% residential） and 11mn sqm GFA in China（45% in Tier-1 cities）。 Based on the current pace of development, thecurrent landbank should be adequate for the next 4-5 years ofdevelopment.
　　New World Centre redevelopment progresses as scheduled. The hightower （office, hotel and serviced apartments） is expected to be completedby 2Q17. Mizuho Bank is the anchor tenant in the office portion, taking up~40% of total leasable area. The hotel is to be managed by the RosewoodHotel Group, with soft opening expected in 2Q-3Q18. The podium（comprising retail and serviced apartments） is expected to be completed byend-2017 and ready for physical occupation in 2Q-3Q18. The retail mall ispositioned for life-style and F&B （instead of high-end luxury focus）。
　　The China operation is benefiting from lower funding cost after thecompletion of privatizing New World China last year. It is recycling capitalin China （i.e. spend the proceeds from sales/disposals to buy new landbanks）； hence, there is no need for actual remittance of capital.
　　The company expects new gearing to increase to 38-39% following thenumerous acquisitions （up slightly from 34% as of end-16）， but to comedown upon upcoming asset disposals. The company is looking to disposeof non-core investment properties located in lower-tier cities in China（mostly retail shops and car parks）。