MTR juggernaut rolls past Octopus scandal

PUBLISHED : Friday, 04 March, 2011, 12:00am
UPDATED : Friday, 04 March, 2011, 12:00am

MTR saw underlying profit jump 18.5 per cent to HK$8.66 billion last year as a revived economy boosted almost all fronts of its core operations except Octopus cards - whose contribution to MTR's net profit fell by 15.4 per cent to HK$126 million owing to the data-privacy scandal.

Octopus Holdings, in which MTR is the major shareholder, donated HK$44 million to charity last year, to redeem itself for earnings made by selling cardholders' personal data.

The expense is a one-off, and the drop in the smart-card issuer's contribution was negligible given strong profit growth from train fares, property sales, station retail outlet rental and advertising.

MTR will tender out four more sites that are expected to put more than 11,000 flats into the market in the coming year. Last year, sales at developments including Le Prestige at Lohas Park, Fo Tan's Palazzo and Wu Kai Sha's Lake Silver contributed HK$4.03 billion in profit.

'We plan to tender out the Tai Wai station site and the smaller Tin Shui Wai sites in the first half of the year, while in the second half of the year we may tender out the sites at Nam Cheong station and Tsuen Wan West, of which we only act as agent for the government,' said MTR's chief executive Chow Chung-kong, who retires on December 31.

MTR withdrew a tender for the HK$33 billion Nam Cheong station residential project last May because of a poor response, but property director Thomas Ho said they did not expect any withdrawal at this stage.

Chow said the company would 'follow market demand' in choosing what flats to build on the two sites they owned - Tai Wai and Tin Shui Wai - instead of the small flats catering to first-time home buyers, as advised by the government.

Fare income from domestic and cross-border train services jumped 8.5 per cent and 6.9 per cent year on year to HK$8.67 billion and HK$2.49 billion respectively, increasing its market share in the public transport market to 44.3 per cent.

The rise mainly stemmed from a fare increase of 2.05 per cent in June, and a gain in the number of longer journeys. The city's only rail operator stands a good chance of imposing another raise again under a fare adjustment mechanism, given spiralling inflation and wage levels.

Contributions from rail services outside Hong Kong were slimmer as most of the projects - including the Beijing Line 4 and Shenzhen Line 4 were still in initial operations.

However, Chow said the Beijing line may start generating profit next year while the latter will be in the black in two years. Its second phase opens in the middle of this year.

Station commercial operations and rail-related business rose 11.6 per cent to HK$3.72 billion, mainly because of a heavy rebound in advertising income.

Under the merger agreement with the Kowloon-Canton Raily Corp, the MTR will have to start paying a full year of variable annual payment next year to the KCRC - a profit-sharing premium on top of a fixed yearly HK$750 million service concession payment.