Its consultancy division is expected to generate $600m in revenue by 2006 MTR Corp (MTRC) is eyeing a possible listing for its consultancy business, which it expects to generate $600 million in revenue in the next three years. Marketing and business development manager Jeny Yeung Mei-chun said yesterday that an increasing number of foreign firms was tapping the corporation for its experience in both rail and non-rail operations. Consultancy services are among the few bright spots in MTRC's non-fare operations, boosting the rail operator's profits amid the lacklustre performance of its advertising, commercial leasing and telecommunications businesses. 'The consultancy services are growing so fast we hope one day there will be a separate listing for the business,' Ms Yeung told the South China Morning Post yesterday. Set up in 1998, MTRC's consultancy services division has executed more than 300 contracts in about 20 cities such as Shanghai, Shenzhen, Beijing, Singapore, Bangkok, New Delhi, Taipei, London, Manchester and New York. Ms Yeung said revenue from the consultancy services would snowball to about $600 million in the three years to 2006 from $63 million last year, based on contracts on hand. She said MTRC was advising clients on planning, building, operating and maintaining rail systems, operating a property development-based model to finance rail investment and diversifying into rail-related businesses to maximise profitability of rail lines. While welcoming MTRC's efforts to expand its income sources, analysts said it was ironic the viability of its financing model had been called into question. 'The company's property development component is tricky,' HSBC Securities analyst Maurien Yau said. 'The property-based model is under challenge due to the poor economy. If the model is placed in the right perimeter such as a healthy economy, the model should theoretically work.' The listing idea for the consultancy business arises from the government's desire to squeeze land supply by MTRC and fellow rail operator Kowloon-Canton Railway Corp to restore prosperity to the battered property sector. Ms Yeung said MTRC's advertising income declined in the first half this year as advertisers further tightened their belts in Hong Kong's fifth year of deflation. To boost its advertising income, MTRC was doubling the size of 6,000 advertising panels along station escalators at a cost of about $10 million and offering space on station floors, train bodies and audio advertising, she said. More retailing space would be offered to boost rentals at train stations such as Kowloon Bay, Wan Chai, Central and Prince Edward. Another candidate for a separate listing is MTRC subsidiary Octopus Cards. Last week, former MTRC chairman and chief executive Jack So Chak-kwong said it was not the right time to take the subsidiary public because it had potential for further growth. TRAVELLING FURTHER Consultancy services contributed $63 million to MTRC's revenue last year An increasing number of foreign firms is tapping the corporation's experience in both rail and non-rail operations
