New World Development Company Limited
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Risk Factors
D. Major Risk Factor on Subsidiaries
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NWS Holdings Limited (“NWSH”)
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Logistics
13. The operation of NWSH’s logistics facilities in Mainland China and Hong Kong may be adversely affected by many
factors, such as the breakdown of shore cranes, forklifts and other equipment, labour disputes, inclement weather,
natural disasters, stricter government regulations, the lack of adjoining land for expansion, the lack of qualified
equipment operators and the overall performance of the logistics and transportation sectors.
14. In addition, the terminals outsource various internal operations and trucking services to contractors. The failure or
inefficient operations of such contractors could disrupt the terminals operation. Cargo handling charges, logistics
services fees and rental rates may be adversely affected by many factors, such as increase in warehouse supply,
availability of alternative terminals and slowdown in domestic and international trade.
Aviation
15. NWSH’s aircraft leasing business depends heavily on the willingness and/or ability of our airline customers to enter
into new aircraft operating leases and to honour their payment and other obligations under their existing or future
leases. The business may be adversely affected by factors such as downturn or disruptions in the aviation industry,
global economic and financial markets and geographical issues.
16. Aircraft movements and passenger volume handled by NWSH’s airport project may be adversely affected by many
factors, such as downturn in the domestic and global economies, airspace constraints for civil aviation, inclement
weather, increase in airfares, competition from other airports and alternative modes of transport and changes in
regulations. Concessions and other non-aeronautical income may be adversely affected by many factors, such as
changes in passengers’ consumption ability and preference, failure to renew concession contracts and competition
from other new airports.
Services Division
Facilities Management
17. NWSH’s facilities management of HKCEC may be adversely affected by factors such as limited expansion capacity,
fierce competition from other exhibition venues, continuous increase in operating costs, inadequate supply of skilled
labour, economic downturn and potential political sensitivities associated with HKCEC being a government owned
Hong Kong icon. HKCEC generally has a high occupancy rate, however, it is located at the heart of the city with limited
land supply, the increase in physical capacity is restricted. HKCEC has also been affected by the rapid emergence of
competing exhibition centres across Hong Kong, Mainland China, Macau and other south-east Asian countries. Being
an icon of Hong Kong, HKCEC has from time to time come under pressure from a variety of media and social-political
groups in Hong Kong which may impact on its attractiveness both commercially and socially.
18. NWSH’s duty free business has been and continues to be affected by changes in government policy relating to
domestic and cross- border duties on tobacco, wine and alcohol. Furthermore, as a significant portion of the revenue
of NWSH’s duty free business is dependent upon tourists and travellers, any changes in travel policies may cause
uneven fluctuations in NWSH’s revenue.
Construction & Transport
19. Factors such as general economic conditions, political and social stability, government investment plans, mortgage
and interest rates, inflation, demographic trends, consumer confidence, competition among competitors and
subcontractors, supply of suitably skilled labour and workforce in Hong Kong, and material safety incidents may
influence the performance and growth of NWSH’s construction business. An economic downturn and a downturn in
any of the industries NWSH serves in its construction business will generally lead to a decrease in the number of new
construction projects available to NWSH as well as delays in or cancellation of NWSH’s ongoing projects, which will in
turn adversely affect NWSH’s financial condition and operating results.
20. NWSH’s transport business could be affected by fluctuations in fuel costs, elasticity of fares, competition from other
means of transport, increasing difficulty in route development, labour shortage, adverse impacts from labour unions
and strikes, serious traffic accidents as well as bad weather and natural disasters. Fluctuation in fuel price, which is a
major cost component, will has a direct impact on NWSH’s transport business. Given the Hong Kong population’s
heavy reliance upon public transport, any fare increase proposals by NWSH to offset rising overheads and costs would
undoubtedly meet with strong public objection and negative publicity.
Strategic Investments
21. From time to time, NWSH invests in the stock and capital markets through investments in shares, private equity and
pre-IPO financing of companies in a variety of businesses and industries including, to date, (i) share registration and
company secretarial services; (ii) corporate finance, asset management and brokerage services; (iii) iron ore mining,
chrome mining and processing; and (iv) hydraulic loading and unloading systems, amongst others. Such investments
are affected by factors particular to the specific industries as well as external and global factors, including but not
limited to the performance of various global financial markets which are generally subject to economic conditions,
investment sentiment and fluctuations in interest rates, which are beyond NWSH’s control.