MTRC profit surges on back of property boom

MTR Corp recorded a 77 percent year-on-year jump in net profit in the first half of the year to HK$4.73 billion and raised the interim dividend by 68 percent to 42 HK cents, thanks to profit from property development.

While recurrent business posted a HK$678 million loss for the period from a profit of HK$912 million a year ago, net income from MTRC's real-estate segment surged by 152.7 percent to HK$7.79 billion, the railway operator said in a filing yesterday.

It also made an impairment provision of HK$962 million for Shenzhen Metro Line 4 from no fare increase since its operation in 2010.

Revenue for the period rose 3.2 percent to HK$23 billion.

The Hong Kong property portfolio contributed HK$7.75 billion in profit, which was mainly derived from proceeds from Lohas Park Phase 10, the first two phases of The Southside, and sales of inventory units from various development projects.

Property rental revenue decreased 8.5 percent to HK$2.19 billion in the first half, which was the result of rental concessions provided to tenants as well as negative rental reversions.

There are five projects ready to be put on the market, providing about 4,500 homes, and the first phases of both the Tung Chung East station site and Oyster Bay/Siu Ho Wan property development are expected to be tendered out in the coming 12 months. They offer 2,600 flats combined.

MTRC said it will invest HK$100 billion in new railway projects - mostly extensions of existing lines - and the Oyster Bay development, chief executive Jacob Kam Chak-pui said at a news conference yesterday.

As property sales have ups and downs in the different development stages, the firm hopes the city will successfully fight against the pandemic as soon as possible so that fare revenue - its major source of stable recurrent income - can return to normal, Kam said.

Turnover from Hong Kong transport operations fell 3.1 percent to HK$5.8 billion, leading to a loss before interest and finance charges and after the variable annual payment of HK$2.78 billion amid the SAR's worst Covid outbreak.

During the six months, patronage for domestic transport services slipped by 11.7 percent, but the MTRC said the number has now returned to that before Covid's fifth wave hit.

Despite the heavy losses from this segment, it said the fare adjustments will be based on the existing mechanism and the next review is expected to begin in the second half and conclude in the first half next year with effect from June or July 2023.

aiden.he@singtaonewscorp.com