Investment Rating - The investment rating for the company is maintained at "Buy" with a target price of HKD 35.20 [1]. Core Views - The company's revenue for the fiscal year 2025 was HKD 55.5 billion, a decrease of 7.6% year-on-year, and the net profit attributable to shareholders was HKD 14.7 billion, down 6.9% year-on-year, which was below Bloomberg consensus expectations of HKD 15.9 billion [1]. - The regular business profit decreased by 21.6% to HKD 5.65 billion, while property development profit increased by 8.0% to HKD 11.1 billion. The fair value loss on investment properties was HKD 2.06 billion [1]. - The company plans to distribute a final dividend of HKD 0.89, maintaining an annual total of HKD 1.31, corresponding to a dividend yield of 3.8% [1]. - The report anticipates that the recovery of the Hong Kong residential market and the peak of property handovers will support the "Buy" rating [1]. Revenue and Profit Analysis - The Hong Kong transport operations revenue increased by 2.5% year-on-year, but EBIT losses expanded to HKD 250 million due to rising employee costs and maintenance expenses [2]. - Revenue growth was observed across various lines: local railways (1.2%), cross-border services (6.6%), high-speed rail (3.7%), and airport express (6.4%) [2]. - The company is expected to raise fares by approximately 3% in 2024/25 but freeze prices in 2025/26, with local railway average fare increase limited to 1.7%, below the employee cost increase of 5.8% [2]. Property Development Insights - The property development segment continued to perform well, with net profit increasing by 8.0% to HKD 11.1 billion, driven by contributions from various projects [4]. - The report forecasts that the peak of property handovers will continue into 2026, with significant contributions expected from ongoing projects [4]. - The company has received approval for new property development projects, indicating a positive outlook for future contributions [4]. Earnings Forecast and Valuation - The forecast for net profit attributable to shareholders for 2026 and 2027 has been adjusted to HKD 19.7 billion and HKD 12.1 billion, respectively, reflecting a decrease of 6% and an increase of 9% [5]. - The target price has been adjusted to HKD 35.20 from the previous HKD 29.90, based on a division valuation method [5]. - The valuation for the Hong Kong railway segment is based on DCF with a WACC of 7.0% and a perpetual growth rate of 3% [5].

Investment Rating - The report maintains an "Accumulate" rating for the company with a target price of HKD 29.90 [1][5][32] Core Views - The company reported a revenue of HKD 27.4 billion for the first half of 2025, a decrease of 6.5% year-on-year, while the net profit attributable to shareholders was HKD 7.709 billion, an increase of 27.5% year-on-year. However, the recurring profit was below expectations at HKD 3.391 billion, down 15.7% year-on-year [1][5] - The property development segment is experiencing a harvest period, with profits from property development reaching HKD 5.542 billion, up 218.5% year-on-year, driven by the recovery of the Hong Kong property market [1][4] - The report highlights the challenges faced by the Hong Kong rail operations due to rising operational costs, with EBIT down 76% year-on-year despite a revenue increase of 3.3% [2][3] Summary by Sections Financial Performance - The company’s revenue for 1H25 was HKD 27.4 billion, a decrease of 6.5% year-on-year, while net profit attributable to shareholders was HKD 7.709 billion, an increase of 27.5% year-on-year. The recurring profit was HKD 3.391 billion, which was 9% lower than expectations [1][5] - The company plans to distribute an interim dividend of HKD 0.42 per share, unchanged from the previous year [1] Operational Insights - The Hong Kong rail operations generated revenue of HKD 11.5 billion in 1H25, up 3.3% year-on-year, but EBIT fell to HKD 0.98 billion, down 76% year-on-year due to increased employee costs and inflation [2] - The report notes that the new rental rates for shops in the Hong Kong stations continued to decline, with a drop of 7.0% year-on-year [3] Property Development - The property development segment recorded a net profit of HKD 5.542 billion, primarily from projects in the Whampoa area, with a significant increase attributed to a low base from the previous year [4] - The report indicates that the Hong Kong property market is showing signs of recovery, with a 0.6% increase in the private residential price index over three consecutive months [4] Profit Forecast and Valuation - The report adjusts the net profit forecasts for 2025-2027 downwards by 11%, 3%, and 17% to HKD 18.1 billion, HKD 21 billion, and HKD 11 billion respectively [5][31] - The valuation is based on a discounted cash flow (DCF) method with a WACC of 7.0% and a perpetual growth rate of 3%, leading to a target price of HKD 29.90 per share [5][32]