Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Shares of property group New World Development soared as much as 24 per cent on Friday after the third-generation scion of one of Hong Kong’s wealthiest families stepped down as chief executive.
In a rare management reshuffle, Adrian Cheng on Thursday resigned from the top job at one of Hong Kong’s biggest property developers after the company founded by his grandfather recorded its first loss in two decades.
Eric Ma, a former secretary for development of the Hong Kong government and family outsider who was appointed as New World’s chief operating officer in January this year, will be taking over Cheng’s role. Cheng will become a non-executive vice-chair of New World.
“I would like to thank my son Dr Adrian Cheng for his many years of unfaltering support for the group’s business, and his giving back to society while managing the company,” said Cheng’s father Henry Cheng, the company’s chair and executive director.
“NWD will continue to be managed by a team of professionals. We will also set up a management committee, to support the group’s business development as well as elevate corporate governance standards.”
New World reported an annual loss of more than HK$19.6bn ($2.5bn), its first loss since 2004, in part because of a jump in impairment losses. Its net debt to equity ratio, a measure of financial leverage, rose to 55 per cent, despite the company saying it had taken “tough” measures such as refinancing debt and selling non-core assets.
Hong Kong developers including the Cheng family have been under pressure from the territory’s property slump, with home prices in the city falling 20 per cent since 2022, according to official data. China’s economic slowdown has also weighed on the companies.
Cheng’s heir apparent status was cast into doubt last year after his father said he was yet to decide on a successor and might hire from the “outside”.
A former Goldman Sachs and UBS banker, Cheng had taken up senior roles at New World since becoming executive director in 2007 where he shadowed his father and grandfather Cheng Yu-tung, who founded the property business in 1970. He became chief executive in 2020.
But the 44-year-old has increasingly come under fire over the company’s high leverage and his extravagant projects in recent years, including a $2.6bn mall and office project next to Hong Kong’s airport, and a $1.3bn retail and office complex in Shenzhen.
New World’s market cap has dropped from more than HK$90bn in 2020 to HK$20bn.
The Cheng family also controls Chow Tai Fook Jewellery, one of China’s biggest jewellery retailers, as well as Rosewood hotels and an energy business in Australia through its family office Chow Tai Fook Enterprises.
Henry Cheng, who chairs the family’s key businesses, has a net worth of $19bn, according to Bloomberg’s billionaires index.
Brian Cheng, Cheng’s brother and co-chief executive of the family infrastructure and insurance business NWS Holdings, said their father was “fair” in response to a question about Adrian Cheng on Wednesday.
“Even for me, if I don’t perform well, it would be normal that I get replaced,” he said.
Read the full article here
