MTR to take HK$3 b hit over project delays
Decline in property development business prompts the corporation to seek rail-related opportunities outside HK as interim profit rises 28.5pc
MTR Corp said it would absorb the HK$3 billion cost overrun on the delayed West Island and South Island lines as the firm unveiled a 28.5 per cent rise in first-half earnings to HK$7.9 billion.
However, profit from property development stumbled 54.6 per cent from a year earlier to HK$203 million.
The city's sole rail operator's first-half operations were overshadowed by the announcements of delays in its new rail projects in Hong Kong, in particular the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link.
MTR said in the results announcement that delay of the West Island Line and South Island Line projects would incur additional costs of HK$3 billion. It said at the press briefing that the two lines were owned by the company.
Compared to the whole project, the magnitude of cost overrun is not huge
"Compared to the whole project, the magnitude of cost overrun is not huge, but the entrustment agreement of the Sha Tin-Central Link and the Express Rail Link might lead to problems if negligence were found," said Jonas Kan, an analyst at Daiwa Securities.
The cost estimate for the West Island Line project was adjusted upwards by HK$1.3 billion to HK$18.5 billion, while that of the South Island Line was raised by HK$1.7 billion to HK$15.2 billion, the results statement said.