G Sachs Rumored to Acquire Discounted Loans from EW WORLD DEV

The analyst rating for New World Development (00017.HK) is Underweight, with a target price of $5.5. The reasoning behind this rating is that while the company's US$1.9 billion debt exchange offer is seen as marginally positive for equity holders, it does not fully address the company's high debt situation. The stock is currently trading at a projected price-to-book (PB) ratio of 0.1x and is at a 34% discount to its anticipated net asset value (NAV) per share, indicating concerns about its financial health and valuation.

The analyst rating for NEW WORLD DEV (00017.HK) is a "Sell" with a target price of $4, as per UBS' research report. The reasoning behind this rating includes the belief that the announced debt exchange offer could be beneficial to shareholders by potentially achieving a net debt reduction of $13 billion, lowering the adjusted net debt from $160 billion to $147 billion, and reducing the net debt-to-equity ratio from 93% to 80%. However, UBS also noted that the exchange offer would result in an additional $1.2 billion in incremental cash interest expenses, which they do not expect to significantly impact the company's cash flow.

The analyst rating for NEW WORLD DEV (00017.HK) is set at "Underperform" by BofA Securities due to several factors. While the recent exchange offer could potentially reduce the company's total debt by up to USD1.9 billion and lower annual interest expenses by USD44 million, there are significant concerns regarding the company's financial stability. The need for another debt management operation in 2026 raises red flags about its long-term viability. Additionally, the likelihood of attracting new third-party investors for capital injection appears low, especially considering the potential delay in dividend payments on the new perpetual bonds. The target price of HKD4 reflects a 64% discount to net asset value, indicating uncertainty regarding the company's access to bank loans due to its high leverage. Overall, these factors contribute to the cautious outlook and the Underperform rating.