Adrian Cheng Chi-kong, a third-generation leader of one of Hong Kong’s largest conglomerates, will be stepping down as chief executive of New World Development and taking on a non-executive role in the company, sources have confirmed.
Born in 1979, Cheng will transition into the role of non-executive vice-chairman, relinquishing his position as CEO. Sources say that Eric Ma Siu-cheung, former Hong Kong Secretary for Development and current chief operating officer at New World, will likely be promoted to CEO as the company announces its full-year financial results on Thursday.
According to one source, Ma had recently instructed colleagues to review the financial situation of the company’s subsidiaries for possible restructuring.
New World is expected to report a loss of between HK$19 billion (US$2.44 billion) and HK$20 billion for the financial year ended June 30, which would be its biggest loss since Cheng’s grandfather founded the company over 50 years ago. The company released a profit warning last month, estimating a decrease of 18% – 23% in core operating profit from continuing operations for the year.
Cheng’s exit from his current position is part of a larger reshuffle within Chow Tai Fook Enterprises (CTEF), New World’s parent company. CTEF has created a CEO’s office, which will be led by three executives, including one of the youngest Cheng scions, Christopher Cheng Chi-leong. The other two executives are Patrick Tsang On-yip, co-CEO and head of Americas, Australia and Europe; and Ho Gilbert Chi-hang, co-CEO and head of corporate functions and operations.
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There have been rumors of family discord over the group’s succession plans after patriarch Henry Cheng Kar-shun, 77, sparked speculation and uncertainty over the future of the family’s extensive empire. In a November 2021 interview with Hong Kong’s HOY TV, Cheng stated that he may not be looking for a successor within the family, though a senior family member denied the rumors.
Brian Cheng Chi-ming, co-CEO of New World’s sister company NWS, declined to comment on rumors of Adrian Cheng’s replacement, but stated that the news will be announced within the next 24 hours. Speaking after NWS’ results press conference on Wednesday, he said that his father, Henry Cheng, is completely fair. “Succession is normal,” he added, stating that he would also be replaced if he did not perform well.
As of December 2023, New World had a consolidated net debt of approximately HK$118.92 billion. In recent months, the company has ramped up its debt reduction efforts, completing over HK$16 billion of loan arrangements and debt repayments in July and August, as well as early refinancing of certain loans due in 2025. In the first half of the year, the company repaid HK$35 billion of loans and debt.
Since 2022, the company has divested several assets, including selling a 51% stake in a prime office building in Cheung Sha Wan to joint venture partner Ares SSG, a local unit of the US private equity firm Ares Management, for HK$3.07 billion. Three months later, it sold the 695-room Pentahotel in Kowloon for HK$2 billion. In 2023, the company sold its D-Park Shopping Centre and associated parking spaces in Tsuen Wan to private developer Chinachem Group for HK$4.02 billion.
On Wednesday, New World’s shares closed 2.5% higher at HK$8.19, while the benchmark Hang Seng Index rose 0.7%.