by winston » Tue Aug 05, 2008 10:58 pm
Not vested.
MTR First-Half Profit Rises 15% on Hong Kong Property
By Kelvin Wong and Mark Lee
Aug. 5 (Bloomberg) -- MTR Corp., Hong Kong's subway operator, boosted first-half profit 15 percent after a combination with the city's other railway company helped increase its real-estate holdings and passenger numbers.
Net income rose to HK$4.69 billion ($601 million), or 83 cents a share, from HK$4.07 billion, or 73 cents, a year earlier, the company said in a stock exchange statement today. Sales rose 76 percent to HK$8.5 billion.
MTR sold more tickets after taking over the network of commuter railroad operator Kowloon-Canton Railway Corp. in December. The tie-up also boosted MTR's real estate profit by expanding available development rights by 54 percent and investment-property floor area by 22 percent.
``The merger brought much extra fare revenue,'' said Kenny Tang, associate director at Tung Tai Securities Ltd., before the earnings announcement. ``In the long run, things look good for them, even on the property side, as they've gotten all this cheap land from the merger.''
Underlying profit, which excludes property revaluation gains, rose 33 percent to HK$2.7 billion. Operating profit, before depreciation and amortization, from railways and associated businesses rose 72 percent to HK$4.8 billion.
Property Sales
Profit from property developments fell to HK$348 million in the first half from HK$1.7 billion, as it booked fewer sales. The company expects to book the revenue from its Capitol and Palazzo projects in the second half, Chief Executive Officer Chow Chung Kong told reporters in the city today. Hong Kong developers book all sales from a development when the project is completed.
The train operator has dropped 15 percent this year in Hong Kong trading, compared with a 21 percent decline for the benchmark Hang Seng Index. The stock dropped 1 percent to HK$24.35 in Hong Kong today, before the earnings were announced.
MTR, which also operates the city's Airport Express train and bus services, moved 721.2 million passengers in the first half. That's 66 percent more than it handled on its own a year earlier, and a 4 percent rise from MTR and KCR's combined tally.
Today's results are the first full set from the combined company. MTR took over the operations of city-owned KCR last year under a government-led tie-up. It subsequently cut fares by as much as 35 percent.
The tie-up cut MTR's profit margin because the KCR lines are less profitable, Finance Director Lincoln Leong said at the press conference. Profitability may shrink further in the second half, Leong said, without elaboration.
Higher Dividends?
MTR, 76 percent owned by the Hong Kong government, will pay a first-half dividend of 14 Hong Kong cents, unchanged from a year earlier. The company will consider increasing dividends when it reports full-year earnings, it said.
The railway operator has expanded outside Hong Kong to reduce its reliance on its home market. In November, its venture with Laing Rail began operating five commuter rail lines in the Greater London area under a seven-year contract.
In China, the company is building a Beijing metro line, due to enter service about the end of 2009. It's also seeking approval for a subway project in Shenzhen, the Chinese city neighboring Hong Kong.
The company is also working on plans for six new lines in Hong Kong, with a total length of about 60 kilometers (37 miles).
It's all about "how much you made when you were right" & "how little you lost when you were wrong"