Ge Long Hui·2025-08-16 19:52Core Viewpoint - Hong Kong MTR Corporation reported a mixed performance for the first half of 2025, with total revenue declining by 6.5% year-on-year to HKD 27.4 billion, while net profit attributable to shareholders increased by 27.5% to HKD 7.709 billion, driven by significant growth in property development profits [1] Group 1: Financial Performance - Total revenue for 1H25 was HKD 27.4 billion, a decrease of 6.5% year-on-year [1] - Net profit attributable to shareholders reached HKD 7.709 billion, up 27.5% year-on-year [1] - Regular business profit was HKD 3.391 billion, down 15.7% year-on-year, while property development profit surged to HKD 5.542 billion, an increase of 218.5% [1] - Fair value loss on investment properties amounted to HKD 1.224 billion, compared to a gain of HKD 0.28 billion in 1H24 [1] Group 2: Operational Insights - Hong Kong's rail operations generated revenue of HKD 11.5 billion, a year-on-year increase of 3.3%, but EBIT fell by 76% to HKD 0.98 billion due to rising employee costs and inflation [2] - The company plans to increase ticket prices by approximately 3% in the 2024/25 fiscal year, but will freeze prices in 2025/26, expecting ticket prices to remain stable in the second half of 2025 [2] - New rental agreements for station shops and malls saw declines of 7.0% and 7.8% respectively, reflecting a lag in retail recovery [3] Group 3: Property Development - Property development profits reached HKD 5.542 billion, primarily driven by projects in Ho Man Tin and South Island, with a significant year-on-year increase of 218.5% [4] - The private residential price index in Hong Kong showed signs of recovery, with a cumulative increase of 0.6% in the second quarter of 2025 [4] - The company anticipates a peak in capital expenditures, projecting HKD 140 billion for new railway projects from 2023 to 2034 [4] Group 4: Profit Forecast and Valuation - The company revised its net profit forecasts for 2025-2027 down by 11%, 3%, and 17% to HKD 18.1 billion, HKD 21 billion, and HKD 11 billion respectively [4] - The target price was adjusted to HKD 29.9 from HKD 31.9, based on a discounted cash flow (DCF) valuation and a capitalization rate for investment properties [4]