China / Hong Kong Company Guide
New World Development Version 4 | Bloomberg: 17 HK EQUITY | Reuters: 0017.HK Refer to important disclosures at the end of this report
DBS Group Research Equity 21 Sep 2018
Building a better tomorrow. BUY
Last Traded Price ( 20 Sep 2018):HK$10.36 (HSI : 27,478) Good long-term value. The stock is trading at 60% discount to Price Target 12-mth: HK$13.50 (30.3% upside) (Prev HK$14.5) our appraised current NAV and offers dividend yield of 4.9% for FY19. Valuation is by no means expensive from the historical A nalyst Jeff YAU CFA, +852 2820 4912 [email protected] viewpoint. The company has made a string of acquisitions Ian CHUI +852 2971 1915 [email protected] which should brighten its long-term growth prospects. We Jason LAM +852 29711773 [email protected] believe the counter offers good long-term value. Although we lowered our target price (TP) to HK$13.50 by assigning a wider What’s New target discount of 50% to our Jun-19 NAV (to reflect increased risks in residential market), we maintain our BUY call. High development earnings visibility; improving . earnings quality Sow ed seeds for long-term growth. We believe that a series of Sowed seeds for long term growth new acquisitions made in Hong Kong and Shenzhen, including the commercial development in SKYCITY, has laid a solid BUY with HK$13.50 TP foundation for the company’s long-term earnings growth,
which is the basis for our positive view on the stock’s long term Price Relative share price performance.
High development earnings visibility; improving recurrent earnings base. With successful pre-sales of its projects, New World Development should see high visibility of its near-term development earnings in Hong Kong. Recurrent earnings should improve remarkably when Victoria Dockside becomes fully operational in 2019. Its newly acquired commercial project at
SKYCITY should become a new retail & entertainment hub Forecasts and Valuation FY Jun (HK$ m) 2017A 2018A 2019F 2020F among tourists and locals, given its strategic location. This Turnover 56,629 60,689 74,070 59,880 should also boost rental earnings upon its completion in phases EBITDA 11,911 13,958 14,814 13,422 from 2023 onwards. Office developments in Cheung Sha Wan Pre-tax Profit 15,230 33,354 15,810 13,078 Underlying Profit 7,133 7,978 9,485 7,425 are expected to offer decent development earnings in the EPS (HK$) 0.75 0.80 0.93 0.73 medium term. EPS Gth (%) (0.9) 7.1 16.2 (21.7) PE (X) 13.9 13.0 11.1 14.2 Valuation: EV/EBITDA (X) 17.6 15.1 14.2 15.7 Our TP is derived from assigning a 50% discount to our Jun-19 NAV DPS (HK$) 0.46 0.48 0.51 0.51 estimates. Div Yield (%) 4.4 4.6 4.9 4.9 Net Gearing (%) 39 33 32 34 ROE (%) 4.1 11.1 4.1 3.1 Key Risks to Our View: Est. NAV (HK$): 25.9 27.0 Any deterioration in property demand in Hong Kong and Disc. to NAV (%) (60) (62) China could drag the company’s earnings and share price Earnings Rev (%): (2) New performance. Consensus EPS (HK$): 0.79 0.91 0.97 Other Broker Recs: B: 11 S: 1 H: 3 A t A Glance
Source: Company, DBS Bank (Hong Kong) Limited (“DBS HK”), Issued Capital (m shrs) 10,206 Thomson Reuters Mkt Cap (HK$m/US$m) 105,737 / 13,478 Major Shareholders (%) Chow Tai Fook Enterprises, Ltd. 44.4 Free Float (%) 55.6 3m Avg. Daily Val. (US$m) 13.6 I CB Industry: Financials / Real Estate Investment & Services
ed-KK/ sa- CS / AH
Company Guide China / Hong Kong Company Guide New World Development
WHAT’S NEW also greeted with a favourable initial response. Over 77% of Building a better tomorrow its total 611 units have been snapped up. Overall, New World Development achieved record contracted sales of HK$24.7bn New World Development’s FY18 underlying earnings grew in FY18, far exceeding its sales target of HK$10bn. This should 12% to HK$8bn, 2% above our estimate. The growth was point to high visibility of development earnings from Hong mainly led by strong earnings from property sales. Final DPS Kong in FY19-20. In China, the company sold Rmb16.3bn increased 3% to HK$0.34. This brought the total DPS to worth of properties in FY18, slightly above its sales target of HK$0.48, up 4%. Rmb16bn.
Development profits in Hong Kong went up 26% to For FY19, New World Development is targeting to sell HK$2.86bn with gross margin improved to 40% from FY17’s HK$10bn worth of properties in Hong Kong and Rmb16bn in 27%. A significant portion stemmed from Mount Pavilia in Sai China. Since Jul-18, the company has achieved contracted Kung. The balance came from inventory sales at Masterpiece, sales of HK$1.6bn in Hong Kong representing 16% of its Pavilia Hill, Park Villa and Double Cove. In China, New World FY19 target. Going forward, New World Development plans booked development earning of HK$6.6bn. Key contributors to launch Reach Summit and Lung Tin Tsuen Ph 3 in Yuen included Guangzhou Covent Garden, Guangzhou Foshan Long, the Sheung Heung Road project in To Kwa Wan and the Canton First Estate, Shenzhen New World Signature Hill, Waterloo Road redevelopment project in Ho Man Tin. They Wuhan New World Times, Changsha La Ville New World, will altogether provide >1,350 units. Langfang New World Garden, Beijing New World Li Zun and Shenyang New World Garden. New World Development repurchased 11.46m shares in the
open market in FY18 for HK$131m or HK$11.39/sh on Gross rental receipts from its Hong Kong portfolio grew 17% average. Any potential share buyback could limit downsides to HK$1.84bn aided by positive rental reversion for its office risk on share price. portfolio in Central and new contribution from K11 Atelier at the Victoria Dockside and The Forest in Mongkok.
Since Apr-18, the company has expedited the sales of completed inventory such as units at Mount Pavilia and Park
Villa. Meanwhile, units at Mount Pavilia have been nearly 90% sold. The newly launched Fleur Pavilia in North Point was
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Company Guide China / Hong Kong Company Guide New World Development
Results Summary
FY Jun (HK$m) F Y17 F Y18 % Chg Comments Turnover 56,629 60,689 7 FY18: mainly due to highe rrevenue from Sevice division
Property investment 1,378 1,628 18 Property development 7,420 9,164 24 FY18: Driven by Mount Pavilia, Masterpiece, Pavilia Hill, Park Villa, and Double Cove in HK and Guangzhou Covent Garden, Shenyang New World Garden, Wuhan New World Times, Guangzhou Foshan Caton First Estate, and Langfang New World Garden in China. Service 775 646 (17) Infrastructure 1,167 1,309 12 FY18: driven by higher profits from roads and aviation business.
Department stores 220 233 6 Hotel operations (52) (109) n.a. Others 226 (179) n.a. Other gains, net 429 4,133 864 FY18: included gains on partial disposal and remeasurement of interests in Beijing Capital International Airport Co. and disposal of Tonkin Street project Unallocated corporate expenses (1,173) (1,216) 4 Fair value change on investment 1,364 15,367 1,027 FY18: mainly from Victoria Dockside and office properties in properties Hong Kong Operating profit 11,751 30,975 164 Financing costs (2,152) (2,180) 1 Financing income 1,706 1,475 (14)
Share of results of associates/JCEs 3,925 3,083 (21) Property investment 87 824 845 Property development 597 312 (48) FY18: included impairment loss of HK$400m for road assets and HK$200m for power asset Service 1,253 213 (83) FY17: includeddisposal gain of Tricor holdings of HK$933m and impairment loss in Newton Resources of HK$204m Infrastructure 2,146 1,892 (12) Hotel operations (27) 33 n.a. Department Stores 0 (1) n.a. Others (131) (191) 46
Profit before taxation 15,230 33,354 119 Taxation (4,756) (6,272) 32 Non-controlling interests (2,403) (3,207) 33 Holders of perpetual securities (396) (537) 36 Net profit 7,676 23,338 204
Underlying earnings 7,133 7,978 12 Interim DPS 0.13 0.14 8 Final DPS 0.33 0.34 3 Total DPS (HK$) 0.46 0.48 4 Source: New World Development., DBS HK
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Company Guide China / Hong Kong Company Guide New World Development
CRITICAL FACTORS TO WATCH KEY ASSUMPTION
Critical Factors Residential price - HK Share price performance primarily driven by NAV. New World’s share price performance should be primarily driven by NAV growth. We estimate that property assets in Hong Kong and China represent c.90% of the company’s GAV. These assets should play a crucial role in driving its share price. Its latest investments in Hong Kong/China should also be the key to its long-term share price performance.
Contribution from Victoria Dockside kicking in. The newly built Victoria Dockside, a 3.08m sf mixed development in Tsim Sha Tsui, accounts for c.20% of GAV and has started to contribute. The K11
Atelier (office portion) is >70% occupied with anchor tenants already moved in. Occupancy is expected to reach c.90% by end-18. The Office rental - HK Rosewood Hotel is scheduled to open in Mar-19 and the K11 Artus (serviced apartments) will commence operations in mid-2019. The K11 Musea (retail mall) is currently >60% pre-committed with a full opening scheduled in 3Q19. We estimate that Victoria Dockside will bring in cash flow of >HK$2bn p.a. to the company when it is fully operational. This should strengthen its recurrent earnings from Hong Kong.
Strategic commercial investment at SKYCITY. New World secured the rights to develop and manage a mega-sized commercial project at SKYCITY in Chep Lap Kok. The project is adjacent to the No.2 Retail rental (High street shops) - HK passenger terminal at the Hong Kong International Airport (HKIA) and close to the Boundary Cross Facilities Island of the Hong Kong-Zhuhai- Macau Bridge (HZMB) project. The strategic location will also benefit from increased customer flow brought by the commissioning of the HZMB and the third HKIA runway. Scheduled for completion in phases from 2023 to 2027, this project will have a total GFA of c.3.8m sf, mainly for retail, dining, entertainment and office use. This project should become a new retail-entertainment hub in Hong Kong. The Airport Authority granted a lease to New World on this commercial development until Sep 2066. With an estimated total development cost of HK$20bn, this strategically located integrated Retail rental (Shopping centre) - HK commercial project should become a major earnings catalyst for the company in the medium-to-long term.
Benefits from Greater Bay Area initiative. Over 35% of the company’s land bank in China is in the Greater Bay Area (GBA), including the Qianhai project and Prince Bay project (a joint venture with China Merchants Shekou Industrial Zone Holdings) in Shenzhen. The company also signed a strategic co-operation with the Lo Wu government on a modification project at Man Kam To Crossing that covers a total area of 840,000sm.
Strong office footprint in Cheung Sha Wan. In 2017, the company Source: Company, DBS HK acquired three office sites in Cheung Sha Wan through government tenders for a total of HK$14.8bn. These sites will have a combined GFA of 1.9m sf. These projects are close to the Lai Chi Kok MTR Station from which it takes 18 minutes from this station to Central by subway. The company will retain the King Lam Street project for long- term investment. The other two are slated for sale with healthy pre- tax margins of >20% expected.
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Company Guide China / Hong Kong Company Guide New World Development
A ppendix 1: A look at Company's listed history – what drives its share price?
New World Development share price vs. estimated NAV
(HK$/sh) (HK$/sh) 32.00 24.00 30.00 28.00 19.00 26.00 24.00 14.00 22.00 9.00 20.00 18.00
4.00 16.00
Jul-09
Jul-14
Jan-07
Jan-12
Jan-17
Jun-07
Jun-12
Jun-17
Feb-09
Oct-10
Feb-14
Oct-15
Apr-08
Sep-08
Apr-13
Sep-13
Apr-18
Dec-09
Dec-14
Nov-07
Nov-12
Nov-17
Mar-11
Mar-16
Aug-11
Aug-16
May-10 May-15 17.HK NAV
Source: Bloomberg Finance L.P., DBS HK
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Company Guide China / Hong Kong Company Guide New World Development
New World Development share price vs. key events
28 26 24 22 20 18 1 16 14 4 24 7 (HK$/sh) 19 22 12 6 10 10 8 12 13 17 23 2 8 3 9 16 25 11 21 6 5 18 20 14 15 4 2 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 17.HK Event Project Launch
# Ev ent 1 New World Department Store (825.HK, 72% owned by NWD) was listed on the main board of HKEx 2 Bankruptcy of Lehman Brothers marks the height of the global financial crisis 3 Launched Emerald Green in Yuen Long 4 New World China Land (NWCL) proposed to raise >HK$4.9bn through a 1 for 2 rights issue 5 NWD proposed to raise HK$11.3bn via 1 for 2 rights issue 6 Launched The Riverpark in Shatin 7 Awarded the development right of Tsuen Wan West Station (TW 6) 8 Launched Park Signature in Yuen Long 9 Launched The Austin in West Kowloon 10 Launched Grand Austin in West Kowloon 11 Awarded the development right of Tai Wai Station project 12 Agreed to sell partial stake in 3 HK hotels to Abu Dhabi Investment Authority 13 NWCL agreed to dispose three mainland China projects in Wuhan, Huiyang, and Haikou to Evergrande (3333.HK) 14 Agreed to subscribe to HK$900m of perpetual securities issued by Evergrande 15 Proposed cash offer to privatize 69% owned NWCL at HK$7.80/sh 16 NWCL delisted from the main board of HKEx 17 Announced acquisition of four parcels of land at Prince Bay, Shenzhen, in a JV with China Merchants 18 Acquired an office site (NKIL 6564) in Cheung Sha Wan for HK$7.79bn or HK$7,808psf 19 Launched The Pavilia Bay in Tsuen Wan 20 Dr Adrian Cheng designated as Executive Vice Chairman and General Manager 21 Acquired an office site (NKIL 6582) in Cheung Sha Wan for HK$4.03bn or HK$7,478psf 22 Launched Mount Pavilia in Sai Kung 23 Acquired an office site (NKIL 6572) in Cheung Sha Wan for HK$2.97bn or HK$7,997psf 24 Awarded the development rights of SkyCity commercial project in Chek Lap Kok 25 Launched Fleur Pavilia in North Point Source: Bloomberg Finance L.P., New World Development, various press reports, DBS HK
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Company Guide China / Hong Kong Company Guide New World Development
Balance Sheet: Gearing As of Jun-18, New World Development’s consolidated net debt stood at HK$74.9bn, down from Dec-17’s HK$78.3bn partly due to proceeds from property sales. This translated into a net debt to total equity ratio of 29%. Overall, its financial risk remains manageable. .
Share Price Drivers: Its recurrent income base should expand after Victoria Dockside becomes fully operational in 2019, enhancing its earnings quality. A string of new investments has laid down solid Net capital expenditure foundations for the company’s long-term growth. Coupled with an improving earnings quality, this warrants a higher stock valuation in the long term.
Key Risks: Market risk. Any deterioration in property demand in Hong Kong and China could drag its earnings and share price performance.
Policy risk. Any unexpected housing policy changes could trigger a sector-wide re-rating or de-rating. ROE
Company Background New World Development is engaged in property and hotel businesses in Hong Kong. It has development land bank of 12m sf in Hong Kong as of Jun-18. The company also owns a 61% stake in NWS Holdings and 72% interest in New World Department Store.
Discount to NAV % 0 +2SD: -31% (10) (20) +1SD: -42% (30) Average: -53% (40) (50) -1SD: -63% (60) (70) (80) -2SD: -74%
(90)
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16 Jan-17 Jan-18
Source: Company, DBS HK
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Company Guide China / Hong Kong Company Guide New World Development
Key Assumptions (%) FY Jun 2018F 2019F Residential price - HK 13 0 Office rental - HK 5 3 Retail rental (High street 0 5 shops) - HK Retail rental (Shopping 5 5 centre) - HK
Source: DBS HK
Segmental Breakdown (HK$ m)
FY Jun 2016A 2017A 2018A 2019F 2020F R e venues (HK$ m) Property Investment 2,492 2,411 3,110 3,510 4,932 Property Development 28,528 25,968 23,381 35,303 18,524 Services 19,904 20,556 25,912 26,300 26,695 Infrastrcture 2,444 2,411 2,815 2,843 2,871 Hotels 1,762 1,422 1,479 1,931 2,475 Department Stores & 4,440 3,862 3,993 4,183 4,382 Others T otal 59, 570 56, 629 60, 689 74, 070 59, 880
Source: DBS HK
Income Statement (HK$ m) FY Jun 2016A 2017A 2018A 2019F 2020F Turnover 59,570 56,629 60,689 74,070 59,880 EBITDA 11,751 11,911 13,958 14,814 13,422 Depr / Amort (1,929) (1,953) (2,484) (2,682) (2,897) EBIT 9, 822 9, 959 11, 475 12, 132 10, 525 Associates Inc 2,661 3,925 3,083 4,758 3,857 Interest (Exp)/Inc (537) (446) (704) (1,081) (1,305) Exceptionals 6,761 1,792 19,501 0 0 Pre -tax Profit 18, 707 15, 230 33, 354 15, 810 13, 078 Tax (6,424) (4,756) (6,272) (3,979) (3,135) Minority Interest (3,617) (2,799) (3,743) (2,346) (2,517) Ne t Profit 8, 666 7, 676 23, 338 9, 485 7, 425 Underlying Profit 6, 893 7, 133 7, 978 9, 485 7, 425
Sales Gth (%) 8 (5) 7 22 (19) Net Profit Gth (%) (55) (11) 204 (59) (22) EBITDA Margins (%) 20 21 23 20 22 EBIT Margin (%) 16 18 19 16 18 Tax Rate (%) 34 31 19 25 24
Source: DBS HK
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Company Guide China / Hong Kong Company Guide New World Development
Balance Sheet (HK$ m) FY Jun 2016A 2017A 2018A 2019F 2020F Fixed Assets 112,402 138,283 180,732 183,793 185,966 Other LT Assets 124,652 119,923 131,424 132,166 133,614 Cash & ST Invts 55,171 67,107 63,456 68,546 66,503 Other Current Assets 99,884 111,744 105,843 111,054 120,734 T otal Assets 392,109 437,056 481,455 495,558 506,817 ST Debt 20,090 21,225 20,629 31,435 31,435 Creditors 26,770 33,179 49,784 49,734 49,684 Other Current Liab 19,663 25,097 24,267 24,267 24,267 LT Debt 114,842 125,895 120,124 114,318 119,318 Other LT Liabilities 9,848 10,716 11,469 11,469 11,469 Minority Interests 21,322 25,402 29,480 30,327 31,347 Shareholder’s Equity 179,573 195,543 225,702 234,008 239,297 T otal Cap. & Liab. 392,109 437,056 481,455 495,558 506,817 Share Capital (m) 9,388 9,815 10,206 10,206 10,206 Net Cash/(Debt) (77,049) (76,870) (74,859) (74,769) (81,812) Working Capital 88,532 99,350 74,618 74,163 81,851 Net Gearing (%) 43 39 33 32 34
Source: DBS HK
Cash Flow Statement (HK$ m) FY Jun 2016A 2017A 2018E 2019F 2020F
EBIT 9,822 9,959 11,475 12,132 10,525 Tax Paid (4,359) (5,276) (6,272) (3,979) (3,135) Depr/Amort 1,929 1,953 2,484 2,682 2,897 Chg in Wkg.Cap 1,344 (3,007) 1,682 (1,661) (5,931) Other Non-Cash (731) (472) 19,501 0 0 O pe rating CF 8, 006 3, 156 28, 868 9, 175 4, 357 Net Capex (8,921) (16,158) (2,000) (2,000) (2,000) Assoc, MI, Invsmt 9,529 4,073 2,939 5,536 4,004 I nvesting CF 608 ( 12,085) 939 3, 536 2, 004 Net Chg in Debt 20,384 20,335 5,000 5,000 5,000 New Capital 4 208 0 0 0 Dividend (1,882) (1,485) (6,049) (6,421) (6,703) Other Financing CF (31,030) (2,126) (5,380) (6,200) (6,700) Financing CF ( 12,525) 16, 932 ( 6,428) ( 7,621) ( 8,403) Chg in Cash (3,911) 8,003 23,379 5,090 (2,043) Source: DBS HK
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Company Guide China / Hong Kong Company Guide New World Development
Target Price & Ratings History
S.No. Date Closing 12-mth Rating HK$ 14.0 Price T arget 13.5 Price 1: 22-Sep-17 HK$11.04 HK$12.24 Buy 13.0 3 2 4 6 2: 25-Sep-17 HK$11.22 HK$12.24 Buy 12.5 1 7 3: 24-Jan-18 HK$12.44 HK$13.90 Buy 12.0 4: 23-Feb-18 HK$11.64 HK$13.90 Buy 11.5 5 5: 28-Feb-18 HK$11.88 HK$13.90 Buy 11.0 6: 3-May-18 HK$11.50 HK$13.90 Buy 10.5 7: 18-Jul-18 HK$11.04 HK$14.50 Buy 10.0 9.5
9.0
Jul-18
Jan-18
Jun-18
Oct-17
Feb-18
Sep-17
Apr-18
Sep-18
Dec-17
Nov-17
Mar-18
Aug-18 May-18 May-18 Source: DBS HK
Analyst: Jeff YAU CFA, Ian CHUI Jason LAM
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Company Guide China / Hong Kong Company Guide New World Development
DBS HK recommendations are based an Absolute Total Return* Rating system, defined as follows:
S TRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) B U Y (>15% total return over the next 12 months for small caps, >10% for large caps) H O LD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FU LLY VALUED (negative total return i.e. > -10% over the next 12 months) S ELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends
Completed Date: 21 Sep 2018 08:22:23 (HKT) Dissemination Date: 21 Sep 2018 09:46:21 (HKT)
Sources for all charts and tables are DBS HK unless otherwise specified.
GEN ERAL DISCLOSURE/DISCLAIMER
Th is report is prepared by DBS Bank (Hong Kong) Limited (“DBS HK”). This report is solely intended for the clients of DBS Bank Ltd., DBS HK, DBS Vickers (Hong Kong) Limited (“DBSV HK”), and DBS Vickers Securities (Singapore) Pte Ltd. (“DBSVS”), its respective connected and associated corporations and affiliates only and no part of this document may be (i ) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS HK.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which co llectively refers to DBS Bank Ltd., DBS HK, DBSV HK, DBSVS, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research . Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contain ed in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, wh o should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will n ot materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in th e futures contract relating to the commodity referred to in this report.
DBS Vickers Securities (USA) Inc (“DBSVUSA”), a US -registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making.
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Company Guide China / Hong Kong Company Guide New World Development
A N ALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this resear ch report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate 1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment ba nking function of the DBS Group.
C O MPANY-SPECIFIC / REGULATORY DISCLOSURES
1. DBS Bank Ltd, DBS HK, DBSVS or their subsidiaries and/or other affiliates have a proprietary position in New World Development Company Limited (17 HK) recommended in this report as of 17 Sep 2018.
2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.
3. C o mpensation for investment banking services: DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to e ffect a transaction in any security discussed in this document should contact DBSVUSA exclusively.
4. D isclosure of previous investment recommendation produced: DBS Bank Ltd, DBSVS, DBS HK, their subsidiaries and/or other affiliates of DBSVUSA may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA in the preceding 12 months.
1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities i n respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new lis ting applicant.
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R ESTRICTIONS ON DISTRIBUTION Ge neral This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. A ustralia This report is being distributed in Australia by DBS Bank Ltd, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial Services Licence no. 475946. DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.
H o ng Kong This report is being distributed in Hong Kong by DBS Bank Ltd, DBS Bank (Hong Kong) Limited and DBS Vickers (Hong Kong) Limited, all of which are registered with or licensed by the Hong Kong Securities and Futures Commission to carry out the regulated activity of advising on securities.
I ndonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia. Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.
Wong Ming Tek, Executive Director, ADBSR S ingapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report. Th ailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. U nited This report is produced by DBS HK which is regulated by the Hong Kong Monetary Authority Ki ngdom This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd (“DBSVUK”). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom.
In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or d uplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication. D u bai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3 rd Floor, I n ternational Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Fi nancial Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for C entre professional clients (as defined in the DFSA rulebook) and no other person may act upon it.
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Company Guide China / Hong Kong Company Guide New World Development
U nited Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined Em irates in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent. U nited States This report was prepared by DBS HK. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein shou ld contact DBSVUSA directly and not its affiliate. O ther In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, j urisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. D BS Bank (Hong Kong) Limited 18th Floor Man Yee building, 68 Des Voeux Road Central, Central, Hong Kong Tel: (852) 2820-4888, Fax: (852) 2521-1812
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Company Guide China / Hong Kong Company Guide New World Development
D BS Regional Research Offices
H O NG KONG MA LAYSIA S INGAPORE D BS Bank (Hong Kong) Ltd A llianceDBS Research Sdn Bhd D BS Bank Ltd C o ntact: Carol Wu C o ntact: Wong Ming Tek (128540 U) C o ntact: Janice Chua 18th Floor Man Yee Building 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard, 68 Des Voeux Road Central Capital Square, Marina Bay Financial Centre Tower 3 Central, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982 Tel: 852 2820 4888 Kuala Lumpur, Malaysia. Tel: 65 6878 8888 Fax: 852 2521 1812 Tel.: 603 2604 3333 Fax: 65 65353 418 e-mail: [email protected] Fax: 603 2604 3921 e-mail: [email protected] e-mail: [email protected] Company Regn. No. 196800306E
I N DONESIA TH AILAND PT DBS Vickers Sekuritas (Indonesia) D BS Vickers Securities (Thailand) Co Ltd C o ntact: Maynard Priajaya Arif C o ntact: Chanpen Sirithanarattanakul DBS Bank Tower 989 Siam Piwat Tower Building, Ciputra World 1, 32/F 9th, 14th-15th Floor Jl. Prof. Dr. Satrio Kav. 3-5 Rama 1 Road, Pathumwan, Jakarta 12940, Indonesia Bangkok Thailand 10330 Tel: 62 21 3003 4900 Tel. 66 2 857 7831 Fax: 6221 3003 4943 Fax: 66 2 658 1269 e-mail: [email protected] e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand
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