New World firms diverge in strategy
The retail arm of New World Development plans to expand aggressively on the mainland, while its infrastructure company says it will tread cautiously in future acquisitions.
New World Department Store China, the retailer of the conglomerate controlled by Hong Kong tycoon Cheng Yu-tung, yesterday said it would add self-owned stores with a total gross floor area of one million square metres in the mainland market over the next five years.
The retailer, with 35 self-owned stores as of December, plans to deepen its footprint on the mainland.
'We expect government policies to boost consumption in second- and third-tier cities as incomes increase and public services expand,' retailer chairman Cheng Kar-shun said.
The retailer reported a 12 per cent gain in net profit, to HK$330 million, for the six months to December 31, from a year earlier. Revenue rose 33 per cent to HK$1.7 billion during this period, from a year earlier.
Its Hong Kong stock rose 4.43 per cent to HK$4.95 yesterday. It declared an interim dividend of 9.8 HK cents per share for the period.
Tsang Yam-pui, executive director of infrastructure arm NWS Holdings, said the company was 'not in a hurry to seek acquisitions in the near future', even though it has increased its stake in the Hangzhou Ring Road, in Zhejiang, to 95 per cent in January for more than HK$2.8 billion.
However, NWS does not rule out acquiring quality infrastructure projects in future, said Tsang, younger brother of Hong Kong chief executive Donald Tsang Yam-kuen.
As of the end of last year, NWS had HK$7.8 billion in cash, while its net gearing ratio, or proportion of its debt to its equity, was 34 per cent.
NWS saw a 43 per cent rise in net profit, to HK$3.42 billion, from a year earlier, but its operating profit dropped 11 per cent to HK$1.97 billion in the second half of last year. The Hong Kong-listed firm's revenue surged 47 per cent to HK$6.94 billion during this period, from a year earlier.
For the fiscal year to June 30 this year, NWS declared a dividend of HK$0.50 per share, with a dividend payout ratio of 50.6 per cent.
Shares rose 0.47 per cent to HK$12.96 yesterday.