(March 3): Shares of New World Development Co rose the most in five months after the company’s CEO pledged to cut costs and sell HK$26 billion ($3.3 billion) in assets.

Echo Huang, who took over as CEO in November, set out key measures to improve the company’s cash flow in a media briefing on Friday (Feb 28), including plans to offload non-core assets, cut costs and improve rental returns.

The developer’s stock jumped as much as 17% on Monday, the biggest intraday increase since September, before paring gains in the afternoon to 8.9%.

The rally is due to New World’s “clear road map of deleveraging ahead”, said Raymond Cheng, head of China property research at CGS International Securities Hong Kong. He added that the firm’s refinancing plans “should further ease market concerns of its liquidity issue”.

The company lifted its mainland China sales guidance for the year to RMB14 billion (RM8.57 billion) from RMB11 billion. It also plans to offload a grade A office building in Hangzhou this year, which could net RMB1 billion, the Hong Kong Economic Times reported on Monday.

New World’s 6.15% perpetual bond rose 10 cents, on pace for its biggest daily jump since issuance, according to traders.

While the company’s commitment to ease liquidity risk is a positive sign, it could continue to face refinancing challenges, Bloomberg Intelligence analysts Patrick Wong and John Wong wrote in a Monday note. The developer has HK$32 billion of debt maturing this year and HK$33 billion in 2026, they added.

New World’s earnings last week highlighted the depth of its challenges. It recorded a net loss of HK$6.6 billion (RM3.79 billion) for the six months ended December, mainly due to writedowns on its residential and commercial properties. Its revenue fell 1.6% to HK$16.8 billion.

The developer has refinanced about HK$18.7 billion of its bank loans since July, slightly more than the HK$17.8 billion reported in its previous update on Jan 23. Management said during its earnings call that there’s no urgency for redemption of its 6.15% perpetual bonds before June.

New World has proposed to pledge US$19.1 billion of property as collateral to refinance bank loans as of Feb 18, people familiar said earlier.

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