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<Research>JPM Reiterates Rating Underweight on NEW WORLD DEV, Expects BANK OF E ASIA/ HANG SENG BANK/ BOCHK to Be More Affected Based on HK Bank Pressure Test
Recommend 17 Positive 22 Negative 24 |
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Yesterday, it was rumored that NEW WORLD DEV (00017.HK) recently sent a letter to banks seeking a waiver for breaching financial covenants due to a net debt-to-asset ratio exceeding 100%. NEW WORLD DEV responded last night (18th). Aware of some false speculations and rumors circulating online about the company, NEW WORLD DEV reaffirmed that it will fully comply with all disclosure requirements and provide timely and appropriate information to investors and shareholders. JPMorgan released a research report believing that this and the Company's recent CEO change, is unlikely to alleviate investors' concerns about liquidity pressures on the Company. NEW WORLD DEV has collapsed 56% YTD to a new low. The broker reiterated rating at Underweight on NEW WORLD DEV, with a target price of $5.6, as it believed that the Company will only prioritize on deleveraging. Most of the Hong Kong banks covered by the broker are principal banks of NEW WORLD DEV, JPMorgan said. Assuming that all loans of NEW WORLD DEV are downgraded to "stage 3”, based on its stress test, the broker estimated that BANK OF E ASIA (00023.HK)/ HANG SENG BANK (00011.HK)/ BOC HONG KONG (02388.HK) may see a 23%/ 18%/ 10% drag on their earnings in 2025. JPMorgan was more optimistic about HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK) among Hong Kong banks, and forecasted that NEW WORLD DEV's debt will have less impact on their profit. The broker anticipated that HANG SENG BANK's potential downside will be larger. AAStocks Financial News |
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