Plunge in MTR underlying profit
MTR Corporation - which posted a decline of nearly 24 per cent in underlying profit for the first-half of the year - could postpone the tender of two sites if market conditions deteriorate, a top executive said.
Thomas Ho Hang-kwong, MTR Corp's property director, said no decision had been made, but the medium and long-term outlook for the property market was not bright.
'A majority of our properties' proceeds have already been locked in, but the medium to long-term performance of the property market is under pressure,' he said. 'Subject to the [fluctuations] of the Hong Kong dollar and the extent of inflation, we will have to look further forward for some definite answer.'
The railway operator planned to seek tenders for two sites in Tai Wai and Tin Shui Wai before the end of the year, but this could be postponed, subject to market conditions.
On Tuesday, a government auction of a prime site for luxury housing in Sha Tin was sold for the opening bid of HK$5.5 billion - a price far below market estimates. However, Secretary for Development Carrie Lam Cheng Yuet-ngor said the offer price was acceptable, and it would not deter the government from tendering two more sites in Nam Cheong and Tsuen Wan West in the next four months.
While MTR Corp's net profit for the first half jumped 12.36 per cent to HK$8.05 billion, more than half of the profits were due to a surge in the revaluation of properties, which did not involve real monetary gain. Underlying profit of its core business fell from the previous year by 23.6 per cent to HK$4.37 billion, due to a sharp decline in property sales.
However, the year-end results could improve if the sales profit of a shopping mall in Tseung Kwan O and Festival City, a residential development in Tai Wai, can be booked for the second half of the year.
'It depends on whether we could obtain the occupation permits [for the developments] before the year ends,' MTR Corp's finance and business development director Lincoln Leung Kwok-kuen said. 97 per cent of 2,728 flats for the first two phases of Festival City were sold by late June.
Property sales contributed just HK$1.45 billion for the first half of the year - a 61 per cent plunge from a year ago. Earnings per share fell to 76 HK cents from HK$1, although MTR Corp will issue an interim dividend of 25 HK cents, up from 14 HK cents last year.
Outgoing chief executive Chow Chung-kong said MTR Corp would experience periods of strong growth ahead. 'While each quarter's performance could fluctuate, property sales remained strong and we have five new railway routes coming. Which will bring a whole new prospect, not just to our fare revenues, but also rental and advertising incomes on malls and shops of the new network,' he said.
