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11/09/01
New World Development Company Limited: Diversify or

Focus?
Maggie Chan leaned across her desk and reread an investment banks comment on her
organisation, New World Development Company Limited (NWD).
No clear investment strategy and poor management record will likely keep
the stock [New World Development Company Limited] at a wider discount to
NAV (net asset value). 1
The comment was made by American brokerage Saloman Smith Barney in a note to clients
on 29 June, 2001. It criticised NWD for not keeping its promise to focus on its core business
of property. The criticism came three months after another American brokerage, Goldman
Sachs, attacked management for giving conflicting guidance about the companys financial
performance. Meanwhile, several investment banks had cut NWDs rating from market
outperformer to market underperformer. Maggie thought it was rare for brokerages to
publicly criticise the management of a major listed company, as it could hamper future access
to information and reduce the chances of gaining lucrative business. But the attacks did
indicate the need for an objective assessment of the performance of NWDs five business
divisions. In conducting an analysis for each division, the choice of hurdle rates would be
very important. Was NWDs non-core business under-performing, as Saloman Smith Barney
had suggested? Maggie thought her organisation should fashion a response to the criticisms
in order to boost investor confidence in the company.
The Company
NWD was a leading conglomerate based in Hong Kong. Established in 1970, the Company
was listed in Hong Kong in 1972 and had become one of the constituent stocks of the Hang
Seng Index, with total assets exceeding HK$128 billion in 2001. After more than 20 years of
operations, the Group had expanded its core businesses to include property, infrastructure,
services, telecommunications and technology [see Exhibit 1 for company history].
Ng, E., Saloman delivers New World second rare blast from brokerage, South China Morning Post, 30 June, 2001.
Mary Ho prepared this case under the supervision of Prof. Su Han Chan and Prof. Ko Wang for class discussion.
The individual in this case is fictional. This case is not intended to show effective or ineffective handling of
decision or business processes.
This case is part of a project funded by a teaching development grant from the University Grants Committee
(UGC) of Hong Kong.
Copyright 2001 The University of Hong Kong. No part of this publication may be reproduced or transmitted in
any form or by any means - electronic, mechanical, photocopying, recording, or otherwise (including the Internet)
- without the permission of The University of Hong Kong.
Ref. 01/117C
9 November, 2001
1
This document is authorized for use only in B6025 - T1 (2016-2017) by Assoc Prof Chong Beng Soon, Nanyang Technological University from June 2016 to December 2016.
01/117C
New World Development Company Limited: Diversify or Focus?
As of 2000, NWD had a high debt burden, with debt-to-equity ratio over 50% and interest
cover before tax of 1.84 times. It gearing was one of the highest among Hong Kong property
developers. About 74% of the groups net debt was within NWD, the remainder being mainly
with New World Infrastructure and, to a smaller extent, 72%-owned New World China Land.
Exhibit 2 shows the group structure. NWD aimed to reduce its gearing to the mid 30%
range. However, its efforts at asset disposals, while it made additional investments in new
businesses, had confused investors.
From late 1997 to June 2001, the stock of NWD had not kept pace with the overall stock
market indices, or with the index for property stocks in Hong Kong [see Exhibits 3 and 4].2
Unlike other property developers such as Sung Hung Kai Properties and Henderson Land,
NWD was traded at a deep discount to its estimated net asset value. However, with a return
on equity at only 4%, it was not hard to understand why analysts considered the companys
performance disappointing. From 1998 to 2001, analysts had frequently downgraded their
consensus forecasts for the Company. Given the uncertainty and concerns over gearing and
conflicting strategies, many expected that the stock price of NWD would not rebound within a
short time.
Divisional Analysis
NWD had five major lines of businesses: property, construction and engineering, hotels,
infrastructure and telecommunications.
Property
By the end of December 2000, NWDs property development portfolio in Hong Kong
comprised 41 projects with 13.3 million sq.ft. of attributable gross floor area. The majority of
the projects were residential developments. The Group's investment property portfolio in
Hong Kong comprised 15 projects with 7.7 million sq.ft. of shopping malls, offices and
serviced apartments.
Property development and investments had been the groups core business, accounting for
53% of the total operating profits of the group. Looking back to the divisions financial
performance in 1998, over 65% of the profits were derived from rental income. As the more
profitable residential developments ran out in 1998, profits from property sales had decreased
significantly in 1999 and 2000. Rental income had therefore replaced property sales to
become the major revenue contributor to the division.
In late 1990s, the property divisions financial profile had been marred by provisions for a
drop in asset values or actual losses from asset disposals. However, as new development
projects began to reflect low land costs, analysts expected an increase in profit margins from
the property business to 15-20% in the short run. Since the property division was the key
strategic focus of the group, a turnaround in NWDs net income would depend very much on
a recovery in property development profits.
Hotels
NWD owned 100% of its hotel assets, but controlled 75% of the hotels management through
its 64%-owned subsidiary, New World Hotels. In May 2001, NWD consolidated the interests
in the hotel management company and sold the Regent Hotel to Bass Hotels and Resorts. The
disposal was likely to provide about HK$1 billion estimated profits in the financial year
ended June 2002, while the estimated operating income from the sale was approximately
HK$100 million per annum.
2
Kwong, D., New World Development: Positive Newsflow Coming to an End, Deutsche Bank Equity Research, 11 June,
2001.
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After the disposal, NWD still owned three hotels (two managed by Renaissance and one by
Grand Hyatt) in Hong Kong and a number of hotels in Mainland China. Driven by higher
tourist arrivals, NWDs hotels in Hong Kong had achieved satisfactory results in 2000, with
higher occupancy rates, room rates and increased food and beverage revenues. Depending on
how eager the company was to turn assets into cashflows, such hotel assets could also be
likely disposal candidates on the groups debt reduction agenda.
Infrastructure
New World Infrastructure Limited (NWI), listed on the Hong Kong Stock Exchange in
October 1995, was the Groups infrastructure arm. This 60%-owned subsidiary was one of
the largest infrastructure investors in Hong Kong, Macau and China. Its investments included
roads, bridges, power plants, and water-treatment and cargo-handling facilities. They were
located in Hong Kong and various parts of China. NWI used its existing cashflows and new
capital to construct a portfolio of e-commerce/technology projects. The portfolio amounted to
about HK$2 billion.
NWIs China power division accounted for 38% of the companys profits as of 2001. To
finance investment in technology projects and to lower gearing, NWI had started to divest
itself of its non-core businesses. NWIs divestment of Jiangsu Expressway in 2001 generated
HK$214 million in cash for the company, but the deal was struck at a loss of HK$200 million.
The disposal was one of NWIs attempts to consolidate its portfolio with a view to cutting
debt.
Construction, Engineering and Other Services
Formed in April 1997, NWDs services arm, New World Services Limited (NWS), provided
reliable and solid recurrent income to the group. The 51%-owned subsidiary was organised
into five areas: construction, electrical and mechanical engineering, facility services, transport
and financial services. The strategy of NWS was to expand market share and profit margins
across all five sectors and to invest in strategic ventures that created synergies with existing
operations. NWS had made a number of strategic moves. These included the acquisition of
26% of New World First Holdings Limited, making New World Bus Services Limited a
wholly owned subsidiary. It had also established New World First Ferry Services Limited to
operate ferry services.
Though the services division was highly profitable overall, investors were concerned about
the lack of focus in this division. In particular, NWDs acquisition of the loss-making ferry
services had disappointed some investors.
Telecommunications
One of the biggest drains on NWDs cashflow had been losses at its telecommunication
operations. NWDs telecommunications and technology division operated fixed and mobile
networks as well as e-commerce infrastructure and solutions activities. On the
telecommunications front, New World Telephone Group provided both fixed network
services and mobile phone services via New World Telephone and New World Mobility.
New World Telephone was aggressively expanding its broadband data and Internet services.
Its fibre optic network already covered 80% of Hong Kong's population. New World
Mobility operated the mobile network and had over 620,000 subscribers. Besides traditional
voice communications, it had increasingly focused on the provision of mobile data services,
including General Packet Radio Services (GPRS) Core Network, Mobile Commerce Service
and 3rd Generation Mobile Communications in Hong Kong.
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On the e-commerce front, the Groups 35% associated company New World CyberBase
provided a broad platform to tap into opportunities in the e-commerce arena. The company
was established in August 1999 with the aim of leveraging leading edge e-commerce enabling
technologies and strategic partnerships to develop innovative e-commerce services for
communities in the Greater China region.
To NWD, a sale of partial stakes in both the fixed line and mobile businesses would not only
reduce capital expenditure and risk on investment in 3G, but it would also help to reduce debt.
However, restructuring was expected to be more difficult in the coming years with a proposed
anti-trust ruling by the Office of the Telecommunications Authority (OFTA) in 2001. The
newly proposed rules governed merger and acquisition activities in Hong Kongs telecom
market, and were designed to ensure a certain level of competition in the market. Under the
proposal, fixed-line and mobile phone network operators would need to seek permission from
OFTA for transactions involving 15% or more of their shares. Thus, it was uncertain whether
NWD would be able to restructure its telecom assets.
Strategic Investments
Apart from its core businesses, NWD was also involved in a number of strategic investments.
New World Department Stores Limited operated in Hong Kong and eight major cities in the
PRC. To capture opportunities from the emerging mass consumer market in the PRC, New
World China Enterprise Holdings Limited invested in non-state manufacturing and service
enterprises. Most of the above strategic investments were complementary to the NWDs core
operations.
Group and Divisional Performance
The corporate performance of NWD as a whole had been disappointing [see Exhibits 5 and
6]. The financial statements show that earnings per share had decreased steadily from
HK$1.05 in 1998 to HK$0.1 in 2000. Return on equity also dropped from 5.8% in 1998 to
4.1% in 2000.
Divisional performance varied during the above period. Exhibits 7 and 8 summarise NWDs
divisional data. While property development and investment continued to be the cash cows of
the group, contribution from construction, engineering and other activities had increased
significantly.
Exhibit 9 contains the beta, leverage and other financial information for NWD and
comparable companies in Hong Kong. In 2001, NWDs asset valuation reserves accounted
for about 34% of shareholders funds. While asset valuation reserves reflected the market
value of completed rental properties, the market value of agricultural land or properties under
construction were not truly reflected in the book value figure. Assuming that the market
correctly reflected the hidden value, property developers with a large land bank were
normally traded above their book values. Yet NWD traded at only 0.35 times the book value.
The big discount was probably due to market perception that NWDs management might not
be able to turn the assets into cashflow as efficiently as others. Unless refocusing gathered
momentum, security analysts expected that the market would not give more credit to the
Company.
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Financing Strategy
To manage the risks associated with an uncertain market environment, NWD pursued a
funding strategy of substantially matching the terms of its debt with the terms of its
investment. In 2000, over 78% of the Groups total debts were on a floating rate basis, whilst
fixed-rate borrowings related mainly to the convertible bonds.
In July 1999, mandatorily convertible bonds amounting to US$350 million had been
converted into shares of New World China Land upon its Initial Public Offering. As of June
2000, US$150 million mandatorily convertible bonds, which would be mandatorily converted
into New World Infrastructure shares on 30 April, 2002, remained outstanding.
Debt Structure
Year Ended 30 June, 2000
Types of Debt
Convertible bonds
Secured borrowings
Unsecured borrowings
Others
Total
Percentage (%)
16
24
59
1
100
Source: Annual Report
Despite selling a number of properties in the first half of 2001, NWDs consolidated net debt
continued to increase at the interim stage. In June 2001, NWD announced that it acquired a
95% interest in two shopping malls from its 66%-owned subsidiary, New World China Land.
The transaction created considerable uncertainty over NWDs debt reduction programme.
Analysts questioned the need to purchase PRC properties from NWCL when NWD already
owned a stake in NWCL. Investors were also worried about the groups HK$2.5 billion
expenditure plan at its telecom division, as the divisions return remained uncertain. They
were also concerned with the lack of focus in the groups corporate strategy.
Diversify or Focus?
As Maggie learnt of the criticisms from security analysts, she became increasingly concerned
with the performance of each division. In Maggies mind, perhaps refocusing was the right
idea, but how should the group justify such a move?
In discussions with her colleagues in the finance department, a number of issues had been
raised about the hurdle rate used by the company in evaluating performance, and in setting the
annual capital budget. Maggie knew that divisional hurdle rates would have a significant
effect on the groups financial and operating strategies. Errors in the hurdle rates could lead
to incorrect decisions about the type and amount of investment and could result in the
misallocation of funds, since projected cashflows of new projects were discounted to the
present using the divisions hurdle rate to give a measure of its net present value. To reduce
the debt burden of the group and to allocate resources more efficiently, a detailed comparison
of the divisional returns and the divisional hurdle rate was of paramount importance. Maggie
therefore decided to use the weighted average cost of capital (WACC) approach to determine
the hurdle rate for the company as a whole and for each division, and to identify divisions that
had misused the groups resources by conducting a simple Economic Value Added (EVA)
analysis.3
She thought that such an assessment of NWD on both a divisional and a
3
WACC = w1 Kd(1 t) + w2 Ke,, where Kd = corporate cost of debt; Ke = corporate cost of capital; w1 = proportion of total
financing that is debt; w2 = proportion of total financing that is common equity; and t = tax rate. EVA is a registered
trademark symbol of Stern Stewart & Co.
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consolidated basis might help the company to decide whether to focus on what really drove
shareholder value, or to continue with the diversification strategy.
6
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EXHIBIT 1A
NEW WORLD DEVELOPMENT COMPANY LIMITED COMPANY BACKGROUND
Year
1970
Events
Incorporated in May as a real estate company. Listed in November 1972.
1976
Acquired an interest in publicly listed New World Hotels (Holdings) Ltd, which
was subsequently privatised in 1990 and remained a 64%-owned hotel arm of
the group as of 2001.
1985
Purchased a 49% stake in Asia Terminals Ltd, which owned and operated Berth
3 of Kwai Chung Container Terminal.
1988
Acquired a stake in Asia Television Ltd and Tates Cairn Tunnel.

investing in property and infrastructure projects in China.
1989
Sold shareholdings in Wing On Intl Holdings Ltd and Shui On Group Ltd.
Bought the hotel business of Ramada Inc of the US, which was later restructured
into a hotel management and franchising company, RHG (separately listed in
the US in 1995), and a hotel investment company. Both were sold in 1997.
1990
Set up a joint venture with INFA Telecom group, which became involved in
paging, fixed-line telecommunications and PCS.
1995
Spun off New World Infrastructure in October.
1997
Sold its interest in Renaissance Hotel Group (RHG) to Marriott Intl for US$491
million.
1998
New World First Bus was awarded the franchise to operate public bus services
on Hong Kong Island, commencing September.
1999
Spun off New World China Land in July.
2000
Spun off and listed New World Cyberspace on the Growth Enterprise Market in
Hong Kong.
Began
EXHIBIT 1B
MAJOR SHAREHOLDERS
Chow Tai Fook Enterprises Ltd

The Hong Kong Exchange Fund Investment Ltd
37%
8.7%
Source: Merrill Lynch, Comment: New World Development Co Ltd, 3 May, 2001.
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EXHIBIT 2
NEW WORLD DEVELOPMENT COMPANY LIMITED: GROUP STRUCTURE (2001)
Source: Credit Suisse First Boston Equity Research Report, 25 May, 2001
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EXHIBIT 3
PRICE PERFORMANCE OF NEW WORLD DEVELOPMENT CO. LTD RELATIVE TO HANG SENG INDEX AND HONG KONG ALL ORDINARIES INDEX
JANUARY 1996 TO JUNE 2001
Cumulative return as at
29 June 2001
New World Dev.

-71.81%
Hang Seng
29.48%
HK All Ordinaries
16.80%
Source: Datastream
EXHIBIT 4
PRICE PERFORMANCE OF NEW WORLD DEVELOPMENT CO. LTD RELATIVE TO HANG SENG PROPERTIES PRICE INDEX
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JANUARY 1996 TO JUNE 2001
Cumulative return as at
29 June 2001
New World Dev.

-71.81%
Hang Seng Properties

-5.97%
Source: Datastream
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EXHIBIT 5
NEW WORLD DEVELOPMENT COMPANY LIMITED INCOME STATEMENT
YEARS ENDED 30 JUNE 1998-2000
Year ended 30 June

(HK$ million)
1998
1999
2000
Turnover
20,389
17,527
20,535
EBITDA
Depreciation/amortisation
EBIT
Net interest income/(expense)
Associates
Exceptional/extraordinary items
Profit before tax
Tax
Profit after tax
Minority interests/preferred dividend
Net profit
6,660
(458)
6,202
(2,055)
637
(1,202)
3,582
(735)
2,847
(704)
2,143
3,792
(653)
3,139
(2,189)
1,351
345
2,646
(546)
2,100
(772)
1,328
4,511
(880)
3,632
(2,303)
774
(175)
1,928
(567)
1,361
(1,146)
215
EPS
EPS growth (%)
1.05
-57.6
0.65
-37.9
0.1
-85.3
DPS
DPS growth (%)
0.64
-46.7
0.3
-53.1
0.2
-33.3
ROE (%)
5.82
5.22
4.12
Interest cover (times)
2.76
2.21
1.84
15
23.25
8.7
2133.99
2133.99
2133.99
Share price
Number of shares in issue (in million)
Source: Annual Reports, Datastream and Sequencer
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EXHIBIT 6
NEW WORLD DEVELOPMENT COMPANY LIMITED BALANCE SHEETS
AS AT 30 JUNE, 1998-2000
As at 30 June
(HK$ million)
Current assets
Properties held for sale
Stocks
Current portion of long-term & other loans
receivable
Debtors and prepayments
Cash and bank balances
Total current assets
1998
1999
2000
20,309.0
313.7
300.6
23,258.0
333.0
306.3
23,688.3
348.2
250.5
5,661.7
2,534.8
29,119.8
6,342.4
3,746.5
33,986.2
7,048.1
6,369.1
37,704.2
37,545.1
6,618.3
22,952.6
7,556.1
692.6
75,364.7
39,912.5
7,001.4
25,005.2
8,820.4
627.2
81,366.7
44,556.3
7,602.1
27,735.4
9,945.3
473.9
90,313.0
4,019.7
1.7
579.8
9,478.6
1,122.5
635.2
6,112.3
14.6
498.4
16
10,775.5
905.7
319.2
4,710.4
11.5
918.4
235.2
10,614.2
1,016.6
211.4
Total current liabilities
15,837.5
18,641.7
17,717.7
Financed by
Share capital
Reserves
Shareholders' funds
1,984.9
52,827.2
54,812.1
2,127.8
54,362.8
56,490.6
2,114.1
56,094.0
58,208.1
Minority interests
Mandatorily convertible bonds
Long-term liabilities
Deferred taxation
Funds employed
9,079.6
24,960.4
17
88,869.1
9,805.8
3,864.6
26,526.4
23.8
96,711.2
17,298.7
1,162.2
33,611.9
18.6
110,299.5
Fixed assets
Associated companies
Jointly controlled entities
Other investments
Long-term receivables
Total non-current assets
Current liabilities
Bank & other loans
Finance lease obligations
Amount due to customers for contract work
Properties sales deposits
Creditors
Taxation
Dividend payable
Source: Annual Reports
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EXHIBIT 7
NEW WORLD DEVELOPMENT COMPANY LIMITED
FINANCIAL SUMMARY BY BUSINESS SEGMENT
1996
1997
1998
1999
2000
Property development & investment

Sales
Operating profit
Depreciation*
5,400
3,763
6,604
3,847
7,959
4,288
3,447
1,321
3,460
1,356
615.8
Construction & engineering

Sales
Operating profit
Depreciation*
4,268
237
5,899
179
8,413
434
8,129
382
7,420
411
43.2
Hotel & restaurant operations

Sales
Operating profit
Depreciation*
7,018
814
7,420
891
2,672
349
2,095
222
2,361
479
96.4
265
170
368
231
677
400
741
480
719
312
93.3
432
(163)
1,680
(195)
2,345
(646)
2,618
(718)
2,879
(252)
21.4
705
47
820
7
1,056
77
2,124
16
3,696
310
9.8
18,088
22,791
23,122
19,154
20,535
(1,373)
16,715
4,868
(2,816)
19,975
4,960
(2,733)
20,389
4,902
(1,626)
17,527
1,703
20,535
2,616
Infrastructure operations
Sales
Operating profit
Depreciation*
Telecommunication services
Sales
Operating profit
Depreciation*
Others
Sales
Operating profit
Depreciation*
Total sales
(including intragroup activities)
Less: intragroup activities
Total sales
Operating profits
* Casewriters estimates
Source: Deutsche Bank Asia Equity Research, 3 December 1999 and 11 June, 2001
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EXHIBIT 8
NEW WORLD DEVELOPMENT COMPANY LIMITED
NET ASSET VALUATION (2001)
Property development & investment

- HK development properties
- HK investment properties
- Agricultural landbank
- New World China Land

New World Services
Wai Kee Holdings
Hotels & restaurant

- New World Renaissance Hotel Kowloon
- Renaissance Harbour View Hotel
- Grand Hyatt Hong Kong
- Hotels in China & South East Asia
Infrastructure
- New World Infrastructure
Telecommunication
New World Telephone
New World Cyberbase
TAV
(HK$m)
TAV/share
% of TAV
20,165
24,540
4,170
3,375
52,250
9.54
11.61
1.97
1.6
25
43.4
52.9
9
7.3
113
3,613
52
3,665
1.71
0.02
1.73
7.8
0.1
7.9
1,015
2,517
2,338
2,307
8,177
0.48
1.19
1.11
1.09
3.87
2.2
5.4
5.0
5.0
17.6
2,801
1.32
4,500
187
4,687
2.13
0.09
2.22
9.7
0.4
10.1
85
264
210
40
44
98
24
12
55
832
0.04
0.12
0.1
0.02
0.02
0.05
0.01
0.01
0.03
0.4
0.2
0.6
0.5
0.1
0.1
0.2
0.1
0
0.1
1.9
72,413
(25,985)
46,428
34
(12)
22
156
(56)
100
Others
Kwoon Chung Bus Holdings
SHK HK Industries
Beijing North Star
Beijing Enterprises
Beijing Yanhua Pet.
China Southern Airlines
Chongqing Iron & Steel
Tianjing Development
China.com
Total Asset Value

Less: Net Debt
Net Asset Value
Source: Estimates from Saloman Smith Barney, 22 May, 2001
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EXHIBIT 9
INFORMATION ON COMPARABLE COMPANIES IN HONG KONG
For the year 2000
As at 30 June, 01
Sales (in
HK$m)
ROE
Debt to Equity#
Estimated
cost of debt*
Beta
P/E
M/BV
New World Development
20,535.2
4.12%
57.7%
6.64%
1.311
14
0.35
New World China Land
607.0
1.3%
19.51%
6.66%
N/A
25.7
0.33
2,656.0
12.79%
77.11%
6.96%
0.816
16.5
0.28
New World Infrastructure
588.4
10.19%
66.15%
8.63%
1.078
0.36
New World Cyberbase
57.5
-22.05%
101.86%
7.07%
1.027
N/A
0.49
Properties
Sun Hung Kai Properties
Sino Land
Henderson Land
Cheung Kong Holdings
25,826
2,373.5
16,303.7
9,341.0
10.27%
6.34%
11.14%
12.2%
23.17%
31.69%
20.60%
11.7%
6.4%
7.9%
7.4%
5.6%
1.298
1.093
1.171
1.212
15.5
13.6
17.3
10.1
1.4
0.46
1.02
1.24

Chevalier Construction
ITC Corporation
2,390.9
122.9
8.48%
36.32%
0.9%
46.97%
7%
0.309
0.922
N/A
0.7
0.51
0.2
3,043
30.8
3.08%
-0.68%
46.61%
8.06%
11.26
12.69
0.83
0.978
51.4
N/A
0.32
0.43
Infrastructure
Hopewell Holdings
Cheung Kong Infrastructure
1,509.6
51.6
3.29%
15.66%
77.21%
41.38%
6.77%
N/A
1.041
0.652
16.6
9.4
0.31
1.28
Telecommunications
Smartone Telecommunciations
Pacific Century CyberWorks
China Unicom
China Mobile
2,941.5
7,291
22,327.9
54,775.5
-6.54%
-22.79%
19.22%
37.79%
62.54%
44.81%
5.24%
N/A
4.2%
0.851
0.592
N/A
N/A
N/A
N/A
46.9
35
0.98
-3.37
N/A
N/A
Wai Kee Holdings
Hotels
HK & Shanghai Hotels
Far East Hotels
# Long-term debt to equity

* Casewriters estimates: Interest expense/Interest-bearing debt (excluding convertible bonds)
Source: Sequencer, datastream and HSBC Broking (Data Services) Limited
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EXHIBIT 10
CAPITAL MARKET INFORMATION IN HONG KONG
Average yield p.a. (%)

Jun 91 to Jun 01
Jun 95 to Jun 01
Current yield (%)

As at Jun 01
Exchange Fund bills/notes

- one month
- one year
- ten years
4.93
5.65
NA
5.65
6.29
7.53*
3.46
3.7
6.37
All Ordinaries Index
14.1
9.9
Hang Seng Index
17.4
12.5
* Exchange fund notes were only available from October 1996.
Year-on-year
Rates of change
(%)
Composite CPI
1992
1993
1994
9.6
8.8
8.8
INFLATION RATES
1995
1996
1997
9.1
6.3
5.8
1998
1999
2000
2.8
-4.0
-3.7
Average
(92 00)
4.83
Profits tax rate in Hong Kong = 16%

Prime Rate (June 2001) = 7%
Sources: Datastream, CEIC DRI Asia Database and http://www.info.gov.hk/hkbi/enghkbi/5/57a.htm
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New World Development Company Limited: Diversify or

New World Development Company Limited: Diversify or Focus?

New World Development Company Limited: Diversify or Focus?

New World Development Company Limited: Diversify or Focus?

New World Development Company Limited: Diversify or Focus?

Source: Annual Report

New World Development Company Limited: Diversify or Focus?

New World Development Company Limited: Diversify or Focus?

Acquired a stake in Asia Television Ltd and Tates Cairn Tunnel.

Spun off New World Infrastructure in October.

Spun off New World China Land in July.

Chow Tai Fook Enterprises Ltd

New World Development Company Limited: Diversify or Focus?

New World Development Company Limited: Diversify or Focus?

New World Dev.

New World Development Company Limited: Diversify or Focus?

JANUARY 1996 TO JUNE 2001

New World Dev.

Hang Seng Properties

New World Development Company Limited: Diversify or Focus?

Year ended 30 June

Interest cover (times)

Source: Annual Reports, Datastream and Sequencer

New World Development Company Limited: Diversify or Focus?

Total current liabilities

Source: Annual Reports

New World Development Company Limited: Diversify or Focus?

Property development & investment

Construction & engineering

Hotel & restaurant operations

New World Development Company Limited: Diversify or Focus?

Property development & investment

Construction & engineering

Hotels & restaurant

Total Asset Value

Source: Estimates from Saloman Smith Barney, 22 May, 2001

New World Development Company Limited: Diversify or Focus?

For the year 2000

New World Development

New World China Land

New World Infrastructure

New World Cyberbase

Construction & engineering

Wai Kee Holdings

# Long-term debt to equity

New World Development Company Limited: Diversify or Focus?

Average yield p.a. (%)

Current yield (%)

Exchange Fund bills/notes

All Ordinaries Index

Hang Seng Index

* Exchange fund notes were only available from October 1996.

Profits tax rate in Hong Kong = 16%

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