Hong Kong-based New World Development (0017.HK) chief executive Adrian Cheng has tendered his resignation after a difficult year in which the company recorded a net loss of HK$19.7 billion ($2.53 billion) for the year to June. Current third generation leader of the family run business, Cheng will be replaced by Chief Operating Officer, Eric Ma.

Cheng said, “Finally, I spent a lot of time in thinking, I should contribute more in public services” and he show appreciation to his father for supporting his decision. He will become a non-executive vice chairman of New World and play a part in the strategic development of the K11 brand.

Challenges that have affected the company are, for instance, low demand for properties due to COVID-19 and a weak retail performance that has taken a long period. Since Cheng assumed the position of company chairman in 2020, New World has contracted its market capitalisation from $12 billion to roughly $2.7 billion at the time of writing and it currently has the highest debt to equity ratio among its Hong Kong counterparts at HK$199 billion.

In an attempt to improve its financials New World aims at having its capital expenditure below HK$15 billion in the 2025 fiscal year while also divesting from non-strategic assets worth HK$13 billion. Further, it is in negotiation process to divest the stake in Kai Tak Sports

Park. According to the field of management, it appears that during this transition of leadership in the company, to incorporate the professional management; this could help to develop a cultural change that is also coursed with balanced family interest.