Hong Kong’s MTR Sees Profit Drop 21% to $1B on Development Income Collapse

Hong Kong’s MTR Corporation reported a 20.8 percent drop in attributable profit to HK$7.8 billion ($1 billion) for 2023 as the listed operator of mass transit systems recognised less income from property development projects.

Profit from property development plunged 80 percent last year to HK$2.1 billion, MTR said Thursday in a filing with the Hong Kong stock exchange. Development profit was derived mainly from initial profit from the 11th phase of Lohas Park in Tseung Kwan O and residual profits from various completed projects.

The HK$8.4 billion decrease in development profit was from a high base of HK$10.5 billion recorded in 2022, as profits from three development projects were recognised that year, MTR said.

Last year saw a series of aborted land tenders, including MTR’s withdrawal of a tender for the Oyster Bay project in northern Lantau island and the company’s failure to attract any bids for a residential and retail project at Tung Chung East station near the international airport.

“Given the uncertainties in the global economy and interest rate trends, as well as the Hong Kong government’s cancellation of special stamp duty, buyer’s stamp duty and new residential stamp duty for residential properties in February 2024, we are closely monitoring market conditions and reviewing our programme for the tendering of property development projects,” MTR CEO Jacob Kam said.

Cross-Border Recovery

MTR booked a gain on fair-value measurement of investment properties totalling HK$1.4 billion, versus a loss of HK$810 million in 2022. The gain was largely due to initial recognition of The Southside mall at Wong Chuk Hang station.

Full-year revenue rose 19.2 percent to HK$57 billion, with the reopening of the mainland border and removal of COVID curbs boosting Hong Kong patronage by 24.9 percent to 1.9 billion riders.

Revenue from Hong Kong station commercial business, including advertising and retail sales, surged 66.3 percent to HK$5.1 billion as duty-free business resumed after the reopening of cross-boundary stations in early 2023.

“Patronage of our cross-boundary service has yet to return to pre-pandemic levels, although we are still encouraged by the service’s ongoing recovery,” Kam said.

Green Bond Listing

MTR last week listed HK$1 billion in 4.2 percent green fixed-rate bonds due in March 2034 as part of a $10 billion debt issuance programme.

Proceeds of the bond issue will be used for general corporate purposes such as working capital, refinancing and the repayment of existing debt, the company said.

With nearly three-quarters of its HKEX-listed shares held by the Hong Kong government, MTR operates the city’s rapid transit rail systems and others in mainland China, Macau, Australia and Europe, in addition to developing and managing properties in Hong Kong and mainland China.