news

text/eleventh brother

in the past two days, there have been market reports that hong kong-funded real estate developers——new world development, and plans to replace the current ceo.

new world development is a real estate company owned by the cheng yu-tung family of hong kong.

there are four wealthy families in hong kong - kwok tak-seng, lee shau-kee, li ka-shing and cheng yu-tung. they all made their fortunes in real estate and their businesses are still flourishing today.

in addition to new world development, another flagship company owned by the cheng yu-tung family is a famous jewelry brand -chow tai fook。

the current ceo of new world development has always been cheng yu-tung's eldest grandson, cheng chi-kong, who is the eldest son of cheng kar-shun, the second-generation successor of the cheng yu-tung family.

on the board of directors of new world development, cheng yu-tung still serves as chairman of the board, while adrian cheng serves as executive vice chairman of the board and also serves as chief executive officer of the listed company.

from 2017 to now, adrian cheng has been working as the top leader of new world development for seven years.

although he was born into a wealthy family and ran a business empire worth hundreds of billions,adrian chenglike to be active on short video platforms.

i checked and found that zheng zhigang has more than 2.9 million fans on douyin, making him a real internet celebrity.

thanks to the internet, ordinary people can also take a peek at how billionaires eat and drink.

on the short video platform, zheng zhigang always holds a cup of coffee in his hand and shares his business activities and daily life.

with the halo of a wealthy prince, he is a man with his own bgm whenever he appears.

so, someone gave him a nickname -

the king of cups.

zheng zhigang has a beard, wears black-framed glasses, has messy hair, and usually dresses casually. he likes to climb mountains and do live broadcasts.

once when he was climbing a mountain, zheng zhigang live-broadcasted the entire process of picking up garbage, including paper scraps, instant noodle packaging bags, and mineral water bottles. he picked up whatever garbage he saw, shocking countless netizens.

he may not be the first person to live stream picking up trash, but he is definitely the first billionaire to do so.

later, someone joked, "a rich and noble young man, picking up trash on live broadcast."

sure enough, ordinary people conform to reality, while billionaires customize their own way of playing.

zheng zhigang is 45 years old and graduated fromharvard university, has worked in international investment banksubs、goldman sachsworked for three years and then returned to the family business.

in 2017, after zheng jiachun suffered a stroke, he gradually faded out of public occasions.

zheng zhigang, who had been working in the family business, moved to the center of power.

from the outside, it seems that adrian cheng took over the baton from his father and was tacitly recognized as the third-generation successor of the cheng yu-tung family.

zheng zhigang did live broadcasts on tiktok and became an internet celebrity, and he was very successful in playing with traffic, but new world development, which he was at the helm, fell into trouble.

eleventh brother checked and found that three years ago, the hong kong stock market value of new world development was still above hk$100 billion, but now it has shrunk to hk$20 billion.

in the past two years, new world development has faced tremendous financial pressure due to excessive debt and a downward real estate market.

since last year, new world development has been selling assets for cash to repay debts and fill funding gaps.

it has a hong kong listed platform under its umbrella——new world group, and transferred its 30% interest in chow tai fook finance building in qianhai, shenzhen to its parent company chow tai fook enterprises.

through these two related transactions, the cheng yu-tung family transferred nearly hk$23.3 billion to new world development.

recently, there have been market news that new world development plans to sell a core commercial property it owns in tsim sha tsui, hong kong to china resources land for hk$9 billion.

china resources land is the commercial real estate platform of china resources group, a large state-owned enterprise in hong kong, and is seeking expansion and investment opportunities.

as new world development is in trouble, it is finally the turn of state-owned enterprises to buy up the bottom of the hong kong property market.

after selling a series of assets, new world development gained much-needed cash, but it also dragged down the financial performance of the listed company.

according to new world development's performance forecast, the listed company will suffer a loss of up to hk$20 billion in the just-concluded fiscal year 2024.

this is the first time in new world development's history that it has suffered a loss in the past twenty fiscal years.

eleventh brother looked at it and found that the huge losses of new world development mainly came from two reasons:

first, it holds commercial properties and development projects, and needs to make provisions for asset impairment of up to hk$9.5 billion;

second, the sale of new world development to its parent company chow tai fook enterprises last year resulted in a book loss of nearly hk$8.3 billion.

they would rather incur losses on the books and sell the assets under their name to the parent company in exchange for transfusion funds.

it can be seen how much it needs money now.

compared with the real estate companies owned by the other three wealthy hong kong families, new world development's debt ratio has continued to rise in the past few years.

i checked and found that the guo desheng familysun hung kai properties, the net debt ratio is as low as 18%;

lee shau kee familyhenderson land development, the net debt ratio is only 22%;

li ka-shing familycheung kong group, the net debt ratio is maintained at a low leverage level of less than 6%.

the net debt ratio of new world development is nearly 50%, far higher than that of the other three established real estate developers in hong kong.

by last year, new world development had interest-bearing debt of nearly hk$162.2 billion.

of this, short-term debt, which it needs to repay within one year, exceeds hk$62 billion.

the cash resources held by new world development are less than hk$39 billion, which is not enough to cover short-term debts.

in fact, its actual interest-bearing debt scale and net debt ratio are much higher than they are now.

new world development also issued perpetual bonds worth up to 36.3 billion.

this type of debt is included in equity on the balance sheet rather than being classified as interest-bearing debt.

this means that perpetual bonds actually dilute new world development's leverage level.

its actual interest-bearing debt scale is as high as hk$198.5 billion; the corresponding debt ratio is also higher than the current net debt ratio of 50%.

the huge amount of perpetual bonds under new world development has swallowed up a considerable portion of the listed company's profits due to the need to pay interest to creditors, greatly weakening its profitability.

the more than 20 billion in cash it obtained from selling assets to its parent company is a drop in the bucket compared to the size of its debt.

with high debt scale and high debt levels, and having suffered losses for the first time in history in the past 20 fiscal years, new world development has fallen into a huge predicament.

as the helmsman of new world development, zheng zhigang's work is not as easy as he became an internet celebrity on douyin holding a coffee cup.

sure enough, when it comes to doing business, you can’t just keep it.

we are not afraid of the second generation of rich people living a life of luxury, but we are afraid of them proving themselves.

the new world development, which he runs, has fallen into trouble, which may have cast a shadow on zheng zhigang's future as the third-generation successor of the cheng yu-tung family.

at the end of last year, zheng jiachun, who rarely appeared in public, made a rare appearance and accepted media interviews.

he told reporters that he was still in power.

"he continued to work after the stroke, but more often worked from home, including holding meetings, meeting with colleagues or signing documents, and the main decision-making power was still his."

as for the family successor, zheng jiachun did not shy away from answering the question:

"the successor must be both capable and virtuous, and it is not easy to find such a person. i am still observing, but i feel it will not be easy to find one."

"family inheritance does not necessarily require a successor. i have an idea. our company's business scope is relatively wide, involving all walks of life. in fact, it requires a lot of talents to manage it. therefore, family members can be responsible for individual areas of the business."

"if there is no suitable family member, we can recruit from outside and let the shareholders decide whether he stays or leaves."

"family inheritance is not limited to business, but also about culture and ideas. some people say that wealth cannot last for more than three generations. the reason is simple: some successors have bad morals and only take care of their own interests."

"if there is no successor and the decision is made by the shareholders, there will be no such worry. because the shareholders of the family will not change, the number of people and the shareholding ratio will remain the same. this can prevent the next generation from being affected by the bad morals of the successor."

in the past few years, the outside world has always regarded zheng zhigang as the third-generation successor of the cheng yutong family.

zheng jiachun's words cast a question mark and added suspense.

money is important, sons are important, but not giving money to sons is the most important thing.

zheng zhigang's position as the crown prince is no longer so secure.

it is said that the person who will succeed zheng zhigang as ceo is the current senior executive of the listed company - ma shaoxiang.

currently, ma shaoxiang serves as the executive director and chief operating officer of new world development.

he is a professional manager and worked in the development bureau of the hong kong government before joining new world development.

changing the leadership does not mean that new world development can get out of its predicament and turn things around immediately.

but for new world development, this is a big move——

professional managers are promoted to top positions, while family members step back from the front and become shareholders.

the family business of this wealthy hong kong family may be about to change completely.