Bank of America Securities has released a report stating that selling assets to Chow Tai Fook is positive for New World (00017.HK), but more action needs to be taken to alleviate investor concerns about the group's leverage ratio. The rating is maintained as "underperform" with a target price of HKD 8.4.

The bank believes that New World's sale of 30% equity in its office building in Qianhai to its parent company Chow Tai Fook is good news due to the oversupply of office buildings in Qianhai. The additional sales revenue of HKD 1.56 billion, plus the sale of D Park by New World Development, help the company approach its non-core sales target of HKD 8 billion for the whole year.

According to CBRE Group data, compared with the average capital value of high-quality office or retail space in Shenzhen of RMB 28,000 to 290,000 per square meter, the implied selling price of RMB 38,000 per square meter in this transaction seems high. However, the bank believes that New World needs to make more progress in unsecured bonds and contract sales to alleviate stock investors' concerns about the leverage ratio.