Shares of New World Development, one of Hong Kong's major property developers, ended the day nearly 13 percent lower after it estimated a net loss of as much as HK$20 billion for the financial year ending in June.

The shares fell to HK$6.74 in early trading, marking a 21-year low.

They finished the day at HK$6.83.

The company said in a Friday filing it expected a drop of as much as 23 percent in core operating profit from continuing operations due to a lack of revenue and it would have fair value and impairment losses of as much as HK$9.5 billion.

"Together with the continuous interest rate hikes experienced during the year as well as the depreciation of renminbi, the group expects to record a net loss," it said.

The company also said the provisions were one-off non-cash and unrealised items and did not affect the group's cash flow.

New World has one of the highest debt-to-equity ratios among Hong Kong's property developers and its de-leveraging plan has been closely watched over the past year.

While Hong Kong has not seen any major defaults by its property developers, like in China, investors worry about weakening liquidity for the sector due to sluggish residential and commercial property markets.

New World's full-year loss estimate follows a first-half net loss of HK$5.8 billion.

JPMorgan analysts said in a note to clients that New World's loss "is not as drastic as the headline suggests", because its pro-forma core net loss may only be HK$2-3 billion if non-cash items like the impairment loss and losses on asset sales are excluded.

"The net loss situation is more a status quo. For New World Development, the more important consideration is not earnings, but the balance sheet and refinancing ability," JPMorgan said, adding the developer secured HK$16 billion in loan arrangements in July and August.

New World is expected to report its earnings later this month.

Its stock has slid some 80 percent since its peak in mid-2021, just before the debt crisis in China's property sector began to emerge. It currently has a market cap of around HK$17.15 billion. (Reuters)