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Denise Tsang

MTR Corp is expected to report a profit rise of 4 per cent to 17.2 per cent for the first half.

The corporation will announce its interim results on Thursday.

Growth estimates from four brokerages indicate a net profit of between HK$1.4 billion and HK$1.58 billion against HK$1.35 billion a year earlier.

The wide range of estimates is due largely to a key variable  - property development income, or so-called deferred income.

Analysts said the property contribution was virtually unpredictable, due to the corporation's limited disclosure.

There was no dispute its core rail operation would see marginal profit growth.

The analysts agreed that the driving force of the rail operation's profit growth would be significant cost savings from operations and financing.

At the top end of the profit forecast is Merrill Lynch.

Analyst Gary Chiu forecast a net profit of HK$1.58 billion, including a 26.3 per cent jump in property contribution to HK$1.04 billion.

Mr Chiu believed most of the property income would come from the first phase of the Caribbean Coast at Tung Chung Station and the Sorrento first phase at Kowloon Station.

HSBC Securities' Maurien Yau estimated income from property development would jump 27 per cent to HK$1.05 billion.

She forecast an interim profit of HK$1.5 billion.

Ms Yau's forecast for income from property included Caribbean Coast's first phase, Park Avenue and Central Park apartments at Olympic station and the Sorrento first phase.

DBS Securities analyst Winnie Chiu expects property income to come in at HK$852 million.

Her profit forecast of HK$1.4 billion was at the bottom of the range.

'The industry outlook remains uninspiring amid slow growth in patronage and a deflationary environment,' she said.

The first half saw flat growth in rail operations.

Passenger numbers on the four urban lines climbed a year on year 0.5 per cent.

The Airport Express service performed the worst, with passenger numbers down 12 per cent as the impact of the September 11 attacks in the US continued to bite.

Mr Chiu said rail operations, including advertising and rental at stations, was expected to generate a 2.8 per cent increase in net profit contributions to HK$539 million.

He attributed the growth to stringent cost control and reduced interest expenses stemming from the low-interest environment.



Property brightens MTR Corp forecast