New World weighs replacing billionaire heir Adrian Cheng as CEO: Bloomberg

New World Development is considering replacing third-generation scion Adrian Cheng Chi-kong as chief executive officer after writedowns that led to the company’s first annual loss in two decades, according to Bloomberg citing people familiar with the matter.

Cheng is poised to be replaced by current Chief Operating Officer Ma Siu-Cheung, sources added.

New World didn’t immediately reply to a request for comment.

The company, owned by the family of billionaire Henry Cheng Kar-shun, is due to report financial results on Thursday.

According to Bloomberg's report, such a move would be rare in property industry where the biggest players are all controlled by families that carefully plan their succession.

Long assumed to be a favorite of the late patriarch Cheng Yu-Tung, Adrian had until recently been seen as the heir apparent of the family’s conglomerate, which spans industries from property to jewelry and logistics.

Adrian joined the family’s flagship developer in 2007 as an executive director and soon helped lead the company before cementing his position as CEO in 2020.

As a Harvard graduate with a stint at Goldman Sachs Group Inc. as an investment banker, he has transformed the traditional property company into a brand with artsy apartment blocks and ambitious projects while accumulating heavy debt. 

The 44-year-old has created the K11 brand that incorporates art elements into shopping malls and offices.

New World’s debt level — the highest among its rivals in the past few years — has become a concern for investors amid high borrowing costs and a weak property market. Its net debt to equity was 82.7 percent at the end of last year, compared with 41.4 percent at peer Henderson Land Development Co. and 21.2 percent at Sun Hung Kai Properties Ltd., according to Bloomberg Intelligence.

However, some of the large-scale commercial projects overseen by him began operating during inopportune periods. The flagship shopping mall K11 MUSEA, now a top retail destination for locals and tourists, opened in 2019 during the city’s anti-government protests before the pandemic shut borders.

Another mega project, a HK$20 billion shopping-and-entertainment complex at the airport, started opening in phases since last year. Its office space and shopping mall — set to be the largest in Hong Kong — may prove hard to fill as the city’s office and retail sectors experience a prolonged downturn.

Adrian’s potential departure is reminiscent of an earlier piece of history at the company. Back in 1989, when his father Henry was new to the top job, he undertook an aggressive expansion of New World that left the company mired in debt. Cheng Yu-Tung had to step in to carry out a series of asset sales to generate much needed capital.

The Cheng family’s succession plan was thrown under the spotlight last year after Henry said he was still looking for a successor for the family’s conglomerate, shattering the previous assumption in the business world that Adrian would pick up the baton. The Chengs, valued at $23.6 billion, are among Asia’s wealthiest clans.

(Staff reporter and Bloomberg)