STOCKWATCH: New World Development closes morning higher on bargain-hunting

HONG KONG (AFX-ASIA) - New World Development Co Ltd shares closed the morning session higher against a generally weak market on bargain hunting following recent sharp losses, dealers said. Interim results released yesterday were slightly better than expected, particularly after analysts had earlier downgraded their estimates following a reported meeting with the company's management, they said. New World yesterday said management did not disclose financial information in advance to analysts before officially announcing the results. New World Development closed the morning up 0.40 hkd or 3.94 pct at 10.55 on volume of 11.23 mln units. The Hang Seng Index finished the session down 67.50 points at 13,436.67. "I think the stock is quite attractive at its current price after it fell almost 26 pct over past two weeks before the results," GK Goh Securities analyst Roger Luk said. He said he expects the share price rise to be sustainable given that the company is likely to soon sell the Regent Hotel in Hong Kong. He added that the interim results were slightly better than expected. New World posted 311.40 mln hkd in net profit for the six months to December, after a loss of 907.10 mln a year earlier, while sales rose to 15.90 bln hkd from 9.13 bln. "We expect the sale of the Regent Hotel may bring in about 2.5 bln hkd revenue for the company. After compensation to the Regent's hotel management company, net revenue may amount to about 1.5 bln hkd," Luk added. Looking ahead, he said the company's earnings will be affected by interest expenses on infrastructure and property projects in 2001. "We've revised our earnings estimate for full-year earnings down by about 17 pct to 1.0 bln hkd from the original 1.2 bln, with interest expenses at about 790 mln hkd for the six months to December and 660 mln hkd forecast for the second half of the fiscal year," Luk said. But he said he is recommending the stock as a "trading buy" rating and "buy on weakness" after the recent losses, adding that the price will be "very attractive if it goes below 12.0 hkd."

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