Zhi Tong Cai Jing·2025-11-07 07:53Core Viewpoint - UBS has set a target price of HKD 24 for MTR Corporation (00066) and assigned a "Sell" rating, reflecting concerns over the company's long-term prospects despite a positive short-term reaction to recent bidding results [1] Group 1: Project Details - MTR Corporation announced that the contract for the first phase of the Tuen Mun District 16 station property development project has been awarded to Sun Hung Kai Properties (00016) [1] - The total gross floor area of the project is 601,000 square feet, expected to provide approximately 1,280 residential units [1] - The total investment for the project is HKD 6 billion, translating to a land price of about HKD 9,983 per square foot [1] Group 2: Financial Projections - Assuming the average selling price reaches the current level of similar projects in the area, specifically the Lung Mun project at HKD 12,750 per square foot, the overall development gross margin is estimated to be around 22% [1] - After profit sharing with MTR, the actual development profit margin for Sun Hung Kai Properties is approximately 15% [1] Group 3: Market Comparisons - The estimated overall land cost is about HKD 4,300 per square foot, which is 12% higher than the price paid by Sino Land (00083) for a similar project in August, but still 23% lower than initial estimates [1] - This indicates that the commercial returns from the Tuen Mun South Extension project are lower than initially expected [1] Group 4: Long-term Outlook - UBS anticipates a positive market reaction to the bidding results, but remains cautious about MTR's long-term outlook due to significant capital expenditure requirements and rising interest expenses associated with new railway projects [1] - Additionally, the attractiveness of land reserves outside the Tuen Mun South Line, such as Tung Chung East, Siu O Wan, and North District, is considered low [1]