MTRC 0066

[winston]

DJ HK Govt To Sell MTR Shrs In 2011-12 To Ease Deficit - Report

HONG KONG (Dow Jones)--The Hong Kong government plans to sell shares in MTR Corp. (0066.HK) in 2011 and 2012 to ease a projected budget deficit in the next five years, the Hong Kong Economic Times reported Thursday, citing an unnamed government source.

The report said the government would increase its exceptional income by more than HK$10 billion in both 2011 and 2012 by selling shares in MTR. It decided against putting the assets up for sale before 2011 due to adverse market conditions, the paper reported.

[winston]

HK's MTRC 2008 underlying net profit down 4.5 pct

HONG KONG, March 10 (Reuters) - Hong Kong's subway operator and property developer MTR Corp (0066.HK) posted a 4.5 percent drop in underlying profit attributable to equity shareholders in 2008 as the global economic downturn weighed on housing demand.

MTRC, which runs the rail link between Guangzhou and Hong Kong and other transport operations in various cities in China, earned HK$8.18 billion in the year ended December, excluding investment property revaluation and related deferred tax. That compares with 2007 net profit of HK$8.6 billion or HK$1.54 per share.

Including investment property revaluation, net profit in 2008 stood at HK$8.28 billion, down sharply from HK$15.2 billion in the year earlier, company figures show.

The reported earnings per share were HK$1.45 before investment property revaluation and HK$1.47 after revaluation.

MTRC said profit on property development fell 43.8 percent to HK$4.67 billion in 2008 due to significant development profits booked in 2007.

The company said it hopes five new local rail projects on the drawing board and the Kowloon Southern Link project, when completed, would represent the most significant network expansion in its history and become a key contributor to its future growth.

"We are taking a cautious approach to 2009. Our rail business is by nature defensive. It is, however, sensitive to the level of unemployment," said chief executive officer C.K. Chow in the statement.

For full statement: here

Shares in MTR fell 37 percent last year, outperforming the 48 percent slide in Hong Kong's benchmark Hang Seng Index.

[winston]

DJ MARKET TALK:MTRC Set To Rise As FY Tops View,But Upside Capped

0831 [Dow Jones] MTRC (0066.HK) likely to rise, but recent high of HK$18.00 (hit Feb. 23) unlikely to be troubled vs stock closing +1.8% at HK$16.66 yesterday; in addition to anticipated broad market strength, rail operator's FY08 underlying net profit (excluding property revaluation loss of HK$146 million vs HK$8.01 billion gain last year) fell 4.5% on-year to HK$8.19 billion, but tops expectations.

While property development pretax profit fell 44% to HK$4.67 billion due to fewer property sales, pretax profit in rail business doubles to HK$5.33 billion, boosted by KCRC merger. Final DPS hiked by 9.7% to 34 HK cents, likely taken as slightly positive. Stock offers defensive position due to railway operation, but short-term upside likely capped due to sluggish outlook of local property market.

[winston]

Target prices slashed on MTR Corp by Mandy Lo

Analysts slashed the target price of MTR Corporation (0066) because of its gloomy earnings outlook affected by declining property incomes while a fare rise is questionable.

"Visibility for the property development business remains low," said Goldman Sachs analyst Simon Cheung. "There has been little update by developers on the timing of project launches for Tai Wai Maintenance Centre, Lake Silver and Lohas Park phase two."

Goldman Sachs cut the target price to HK$17.70 from HK$17.80 and forecast the net income of MTRC to slump 33 percent this year to HK$5.59 billion.

"We are cautious on the property segment in Hong Kong, and we expect MTRC's property income to drop to HK$1 billion to HK$2 billion yearly in 2009 to 2011, from HK$4.7 billion in 2008," said Morgan Stanley analyst Praveen Choudhary. Target price for the railway firm was cut to HK$15.30 from HK$16.40.

Choudhary expects a 2.1 percent fare rise starting from July, based on the December inflation of 2.1 percent and expected wage increase of 2 percent in the fourth quarter last year.

Citi analyst Anil Daswani cut profit forecast by 30.5 percent to HK$4.59 billion from HK$6.6 billion as MTRC is expected to delay property presales at Wu Kai Sha station into 2010 and may cut flat prices by up to 30 percent to boost sales.

Daswani estimates the fare adjustment mechanism is currently at minus 1.6 percent and that the MTRC could raise ticket prices from July but the company may not do so.

"We believe such a maneuver will be politically very difficult in the current environment and think it remains another potential pitfall in first-half 2009," said Daswani. Citi reduced the target price by 12 percent to HK$15 from HK$17.

JPMorgan slashed the target price of MTRC by 44 percent to HK$15 from HK$27 as it expects the railway earnings will not be able to offset the deteriorating property income.

[winston]

DJ MARKET TALK: DB Cuts MTRC Target To HK$16.90 From HK$17.10

1233 [Dow Jones] STOCK CALL: Deutsche Bank cuts MTR Corp. (0066.HK) target to HK$16.90 from HK$17.10 on worse-than-expected FY08 results. Lowers FY09 and FY10 EPS by 19% and 6%, respectively. on unpromising outlook.

"As its patronage is negatively correlated with unemployment rate, MTRC is likely to see a slight decline of passenger traffic despite the opening of two new stations later in 2009. Given the declining wage index, the company is unlikely to adjust fares in FY09 and its property development profit share should decline as sales prices plummet." Keeps Hold, believes the stock is fairly valued. Stock off 0.2% at HK$16.82.

[winston]

DJ MARKET TALK: MTRC May Catch Up After Lagging HK Ppties -Daiwa

1017 [Dow Jones] STOCK CALL: MTR Corp. (0066.HK) has room to catch up after stock price lagged behind other Hong Kong developers since March, Daiwa says. Says stock offers credible alternative to developers on significant exposure to HK residential-property market, but with notably lower risk.

Expects railway, related EBITDA to top HK$10 billion/year by 2010, with pipeline of new projects to sustain recurrent-earnings growth, boding well for ability to raise dividends, reinvest; adds, China investments have shown notable progress in recent months. Says valuation still attractive, stock trading at 40.1% discount to SOTP estimate of HK$31.77, level offers residential-property exposure for free. Keeps at Buy, target at HK$23.00. Shares down 1.3% at HK$19.32; HSI down 4.0%.

[winston]

Am still watching this one. Valuation is rich too..

DJ MARKET TALK: Goldman Hikes MTRC Target By 25% To HK$21.10

1356 [Dow Jones] STOCK CALL: Goldman Sachs raises MTRC (0066.HK) target price to HK$21.10 vs HK$17.70 after raising NAV estimate by 7% to HK$22.20, also applies mid-cycle NAV discount of 5% vs 15% previously due to improved outlook of HK's macro environment/property market.

Says if stripping out rail operations, property assets trade at 7% discount to NAV, in line with HK property developers; if also strips out investment properties from market cap, 22 million sq ft landbank in HK valued at HK$1,398 psf, also reasonable, thus Neutral call kept. Stock down 1.4% at HK$21.10 midday.

[winston]

Not vested.

DJ MARKET TALK: MTRC Offers Credible Property Option, Buy - Daiwa

0744 [Dow Jones] MTRC (0066.HK) may play some more catch-up to major HK developers in short term, with Daiwa saying most developers' share prices reached fair value while MTRC remains undervalued among big caps.

Thinks MTRC "offers a credible property option," while there are solid prospects for sustained growth of railway, related earnings. "We believe continued progress of its China rail-business investments and the group's credible exposure to the property market bode well for its share-price performance to catch up with those of the other property developers,"

Daiwa says; keeps Buy call, HK$23.00 target price. Stock ended +2.2% at HK$21.00 yesterday.

[winston]

DJ MARKET TALK: Citi Upgrades MTR Corp To Buy, Ups Target 76.7%

0700 [Dow Jones] STOCK CALL: Citigroup upgrades MTR Corp. (0066.HK) to Buy from Sell on view utility-like rail operator will benefit from recent upsurge in HK property volumes, prices. "The stock has underperformed the HSI in the recent rally by 15%, but we expect its timely launch of Wu Kai Sha to be well received, and view the property development asset as an in-the-money call option at current prices."

Says believes company can meet or beat house's expectation of 50% pre-sales at project in 2009; adds, will almost inevitably sell this property at better prices than house's initial forecast. Raises target price to HK$26.50 from HK$15.00 as moves to mid-cycle valuations; increases 2009-11 earnings estimates by 22%-28% in line with latest property prices. Shares ended Wednesday +5.5% at HK$22.90

[winston]

Just starting coverage ? Sleeping all this while ?

DJ MARKET TALK: Nomura Starts MTR Corp At Buy, Target HK$27.55

1443 [Dow Jones] STOCK CALL: Nomura starts MTR (0066.HK) at Buy with target HK$27.55. Says, MTR has distinctive business model, combining railway with property, offering solid cash-flow profile, which is defensive during adverse market conditions; also leverages property market upside.

"What further differentiates MTR is that, as a land supplier, it can choose to share the profits with property developers, but without sharing the losses." Adds, company should also benefit from rising inflation expectations, which might lead to higher property prices, better likelihood of rail fare hikes. Stock flat at HK$23.15; HSI down 2.4%.