Chairman favours 25pc MTR share sell-off to fund cheaper fares
Frederick Ma says sale could create HK60 billion investment fund which could generate HK$2b/year, assuming an annual return of 3pc
More shares in MTR should be offered to the public, the proceeds from which could create a fund to help subsidise train fares, according to company’s chairman
The government still hold 76 per cent of the MTR, which Frederick Ma Si-hang says should be lower.
“If the government sold 25 per cent of the company, it could raise HK60 billion which could be used as an investment fund that might generate HK$2 billion every year, assuming an annual return at 3 per cent,” he said.
“This will also increase the public float or free float level of MTR, and allow more Hong Kong people to hold shares in the business, which is essentially a transportation company that belongs to the public.”
He said such a sell off would still leave the government as the major shareholder, with 51 per cent.
Formerly wholly owned by the Hong Kong government, the company held an IPO in 2000, selling 24 per of the stock to the public.
It offered shares to Hong Kong residents at a discounted HK$8.8 while international investors need to pay HK$9.38 per share. Its share price hit record a high of HK$47.45 on May 17, this year.
Over the year’s the shares have been fantastic earners, with total returns including dividends and bonus shares to retail shareholders rising 735 per cent over those 16.5 years since flotation, or 13.7 per cent per year. For international investors, it is 13.3 per cent per year. The Hang Seng Index delivered a total return of 6.1 per cent per year during the same period.
At one time, MTR was Hong Kong’s most widely held stock with 460,000 individual small shareholders registered, but that’s been cut now to just over 200,000 shareholders.
“The listing has helped increase the transparency and corporate governance of the company and we can also hire more talent easily,” he said.
Some lawmakers have called on the government to buy back all the shares in MTR to better control fare levels, which Ma vehemently opposes.
“The MTR was never aimed at making only maximum profits,” he said. “We collect fares that are reasonable.”