Hong Kong MTR Corp’s recurrent business rebounds with rail giant posting HK$2.4 billion in profits, despite net falling 11.7 per cent to HK$4.2 billion
- CEO Jacob Kam says corporation is cautiously optimistic about its business outlook
- He says domestic rail services have reached more than 90 per cent of pre-pandemic levels
The firm’s strong showing came despite an 11.7 per cent fall in net profit to HK$4.17 billion between January and June this year, which included a sharp drop in earnings from property development.
CEO Jacob Kam Chak-pui on Thursday said the corporation was cautiously optimistic about its business outlook.
“The pandemic has mostly subsided, but we need to contend with other uncertainties such as high global inflation and interest rates,” he said.
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Kam noted that domestic rail services had returned to more than 90 per cent of pre-pandemic levels following the city reopening its border with mainland China in January.
“Cross-boundary services have been restored to 60 per cent to 70 per cent of pre-Covid-19 business levels, while the high-speed rail [business] has also fared better than during pre-pandemic levels … We are cautiously optimistic about achieving continued growth in ridership,” he said.
The MTR Corp in 2020 lost money for the first time since its listing two decades ago and posted a deficit of HK$4.8 billion as it staggered under the double whammy of the 2019 social unrest and the economic havoc caused by Covid-19.
But the city’s sole rail operator bounced back earlier this year after cross-border travel between Hong Kong and the mainland, including the high-speed rail link, fully resumed after three years of Covid-19 restrictions.
The company’s overall revenue jumped 19.7 per cent year on year in the first half to HK$27.6 billion.
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Earnings from property development slumped 90.6 per cent to HK$732 million in the six-month period. The company recorded a HK$1.02 billion gain from fair value measurement of investment properties including the Southside shopping centre in Southern district in the first half against a HK$2.37 billion loss in the same period last year.
Recurrent operations cover transport services, railway station commercial businesses, property rental and management business, as well as mainland and international railway services.
The firm’s transport operations improved, with losses reduced to HK$774 million in the first half from HK$2.77 billion over the same period last year. Revenue from transport operations surged 60 per cent to HK$9.34 billion.
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Earnings from commercial operations in stations rose 64 per cent year on year to HK$1.79 billion, on the back of the resumption of cross-boundary rail services.
Business is expected to continue to gain traction after high-speed rail short-haul services to Guangzhou and Shenzhen resumed in January and long-haul destinations got back on track in April.
The MTR Corp revealed plans in January to invest HK$65 billion over the next five years on maintenance of railway assets.
It also promised to make better use of innovation and technology to improve standards after a string of incidents led to fines and service disruptions.
Kam added that the rail firm would continue to explore opportunities on the mainland and overseas to grow “MTR’s prominence on the global stage”.
“Our business strategy on the part of mainland China and international business is to continue to grow business in this area, of course with a prudent approach. And we will seek to achieve a reasonable commercial rate of return for any investment that we make,” Kam said.
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Last month, the MTR Corp signed a memorandum of understanding with the Malaysian government on a rapid transit project linking Johor Bahru and Singapore, in a bid to leverage its experience in “rail plus property” developments.
Legislator Gary Zhang Xinyu, a former MTR operations manager, said the company should remain committed to investing in local talent, maintaining a good standard of service and delivering projects on time and within budget.
Hiring more workers should be a priority, he said, noting the shortfall had reached nearly 20 per cent.
“Hong Kong’s development hinges on the effective delivery of infrastructure projects. With the MTR now carrying out several new railway projects, it is important for the rail firm to deliver the projects on time and within budget,” he said.
“In the past the MTR has run into many incidents, leading to the loss of public confidence in the firm. As the firm now is gripped by a serious staff shortage, it should introduce more measures to resolve this problem so as to maintain a good standard of service.”
The company’s directors recommended keeping the interim dividend unchanged at 42 HK cents per share.
