first loss in 20 years! the eldest grandson of the zheng family in hong kong is “out” and a new world professional manager takes over
2024-09-27
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on september 26, in the morning, new world development temporarily suspended trading due to the release of some inside information. in the afternoon, new world development announced changes in board members. chief executive officer cheng zhigang resigned; the position of chief executive officer was taken over by ma shaoxiang. this is consistent with market rumors from the previous day.
in the context of the high-level personnel shakeup of new world development, on the same day, new world development released its 2023/2024 annual results announcement, which showed that revenue from continuing operations was hk$35.782 billion, a year-on-year decrease of 34%, and the share of shareholders from continuing operations was the loss was approximately hk$11.8 billion. this is also the first time in the past 20 fiscal years that new world development has suffered a loss, and it is a huge loss.
on september 26, new world development announced changes in board members and announced its 2023/2024 annual results. picture/ic photo
the third generation of "successors" exited due to huge performance losses
new world development mentioned in the announcement of changes in board members that ceo cheng zhigang resigned in order to devote more time to public service and other personal affairs. he will be transferred from the company's executive director and executive vice chairman to the company's non-executive director and non-executive director. vice chairman. the position of chief executive officer was taken over by ma shaoxiang. ma shaoxiang was formerly the chief operating director of new world development.
at the same time, the announcement stated that cheng zhigang resigned as chairman of the board of directors of new world department store china, executive director of chow tai fook, and non-executive director of nws group on the same day. this also means that zheng zhigang has completely withdrawn from the "real power" management of the core enterprises of new world group.
new world development is a real estate company owned by the cheng yu-tung family in hong kong. as a hong kong-owned real estate developer, why did new world development change its ceo?
on september 26, new world development announced its 2023/2024 full-year results, which showed that new world development’s core operating profit from continuing operations was hk$6.898 billion, a year-on-year decrease of 18%. during the same period, revenue from continuing operations was hk$35.782 billion, a year-on-year decrease of 34%, mainly due to a decrease in property development accounts in hong kong and mainland china; gross profit fell by 22% year-on-year to hk$12.849 billion.
in addition, losses attributable to shareholders from continuing operations were approximately hk$11.8 billion. this is also the first time in the past 20 fiscal years that new world development has suffered a loss, and it is a huge loss. the industry believes that under such a "report card", zheng zhigang's ability has been questioned.
affected by the industry's downward cycle factors, listed real estate companies generally experienced performance pressure in the first half of 2024. the increase in impairment losses was the main reason. new world development's overall profit performance was also affected by impairment. in addition, effects such as investment losses and rising interest rates are included.
as one of hong kong's oldest "four major families", the cheng family owns four hong kong-listed companies: chow tai fook, new world development, new world department store china, and nws group. cheng zhigang, who resigned as the ceo of new world development this time, is the eldest grandson of cheng yutong and the eldest son of cheng jiachun, the second generation successor of the cheng yutong family. he was once regarded as the third generation successor of new world development.
in 2017, zheng jiachun gradually faded out. also starting in 2017, zheng zhigang served as executive vice chairman and general manager, taking charge of new world development.
there is a sudden change of generals, and professional managers come to the stage
regarding the change of ceo, cheng zhigang's younger brother and co-chief executive of nws, another listed company under the cheng family, zheng zhiming, responded to the media at the nws results meeting the day before (september 25), saying, "the the issue is more sensitive and everything will come to light in 24 hours." in addition, zheng zhiming also added that his father zheng jiachun is absolutely fair and treats the situation appropriately. "if i don't do well, i can replace him."
public information shows that zheng zhigang, who was born in 1979, was educated in the united states and received a degree in east asian literature from harvard university. after graduation, zheng zhigang worked in financial institutions such as goldman sachs and ubs. after returning to the new world for development, in 2008, zheng zhigang founded k11 in tsim sha tsui, hong kong. since then, the k11 model has been copied to shanghai, beijing, tianjin, wuhan, shenyang and other mainland cities. the art shopping mall brand k11 created by him has become the commercial "label" of new world development.
previously, people in the industry believed that zheng zhigang was the next generation leader of new world development and even the entire zheng family. but at the end of 2023, zheng jiachun's views on successors seemed to have changed. in an interview with hong kong media at that time, zheng jiachun said that he was still observing the successor candidates of the family business and may also consider hiring external talents to manage the family business. zheng jiachun said: "we do not insist that the successor must be selected from within the family, but prefer to make the decision through collective discussions at the shareholders' meeting." he also emphasized that if there are no suitable family members, they can recruit from outside.
this also paved the way for this high-level personnel change. especially in the five years before this, new world development's profits attributable to shareholders have dropped from hk$23.338 billion to less than hk$1 billion.
regarding the current status of the company, cheng zhigang's successor will undoubtedly face considerable pressure. ma shaoxiang, who succeeded cheng zhigang as chief executive, is a professional manager and has served as the deputy director of the hong kong development bureau and the director of the hong kong development bureau. ma shaoxiang will serve as the executive director of new world development from july 1, 2022, and will be appointed as the company's chief operating officer from january 1, 2024. in addition to his existing duties and responsibilities, he also assists the company's executive vice chairman and chief executive officer adrian cheng in the day-to-day management and operations of the group's hong kong business.
selling non-core assets and businesses and continuing to optimize asset portfolio and returns
according to media reports, regarding the future development of new world, ma shaoxiang said at the performance conference held on september 26 that new world is a mature group and its operating policy will not change. it will focus on the real estate industry and believes that it will be better next year. better than this year.
new world development's 2023/2024 annual results announcement mentioned that it has completed the sale of approximately hk$7.7 billion of non-core assets in fiscal year 2024. by selling non-core assets and businesses, we focus on developing core businesses, continue to optimize asset portfolios and returns, improve corporate efficiency, increase cash inflows, and avoid liquidity risks.
ma shaoxiang pointed out that the asset portfolio and returns can be continuously optimized through the sale of non-core assets and businesses. the amount of non-core assets sold this year is expected to exceed hk$10 billion.
as for the group's suspension of final dividends this year, ma shaoxiang emphasized that the group hopes to increase profits and accelerate deleveraging in the long term. when the profit situation improves, it will reconsider paying dividends.
in addition, it is worth noting that on september 26, new world development sold a series of k11 brand businesses to adrian cheng for more than hk$200 million. in this regard, ma shaoxiang said that zheng zhigang will establish a new company to provide k11 shopping malls and office buildings with business strategy services such as leasing, branding and marketing promotion. the property management and front-line services are still provided by new world land, and the existing arrangements remain unchanged. for the group, this approach can directly save costs, streamline the structure, and thereby increase return rates.
beijing news shell finance reporter yuan xiuli
editor yang juanjuan and proofreader yang xuli
