MTR Corp. (66), Hong Kong’s subway operator that gets income from real estate projects, said first- half underlying profit declined 5.7 percent as it earned a smaller profit from apartment sales in the city.
Underlying profit, which excludes investment property revaluations and deferred tax, fell to HK$4.12 billion ($531 million) in the six months ended June 30, from HK$4.4 billion a year earlier, the company said in a statement to the Hong Kong stock exchange today.
Earnings at MTR, one of Hong Kong’s biggest owners of unoccupied residential sites, have been hurt as a slowdown in the Chinese economy damped demand for apartments in the city where home prices have gained more than 80 percent since early 2009. At least three sites sold by the government this year have fetched less than surveyors’ estimates.
Income from property development decreased to HK$627 million from HK$1.45 billion after MTR booked sales at projects including Festival City, a development above a railway station in the city’s north, the company said.
Domestic passenger traffic increased 4.5 percent while fare revenue recorded 8.2 percent growth in Hong Kong. The company is also expanding its railway businesses in other Chinese cities including Beijing and Shenzhen.
MTR shares were unchanged at HK$27.65 at the close of Hong Kong trading before the earnings were announced. The shares have advanced 9.9 percent this year compared with a 9 percent gain in the benchmark Hang Seng Index (HSI), which includes MTR.
The subway operator, 77 percent owned by the government, sells land to developers for a cut of the profit. With the city’s developers booking earnings from the sale of uncompleted homes, MTR was able to recognize its share.
Profit also was affected by a 4.6 percent increase in total operating costs to $10.6 billion as expenses at its Hong Kong transport operations increased.
MTR said it will put up for tender at least three sites over the next six months: Long Ping, Tai Wai and Tin Shui Wai.
Cheung Kong (Holdings) Ltd., the developer controlled by billionaire Li Ka-shing, said Aug. 10 that it paid HK$9.63 billion for a site atop Tsuen Wan West railway station in the northwest sold by MTR.
MTR will pay a first-half dividend of 25 Hong Kong cents per share, unchanged from a year earlier.
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