March 3 (Bloomberg) -- MTR Corp., Hong Kong’s subway operator that gets revenue from sales of apartments above its stations, said 2010 underlying profit rose 19 percent, as the city’s economic growth boosted home sales and fare revenue.
Underlying profit, which excludes property valuation gains or losses, climbed to HK$8.7 billion ($1.1 billion) for the year ended Dec. 31, according to a statement to the Hong Kong stock exchange. Net income rose to HK$12.5 billion from HK$9.9 billion a year earlier. The average estimate of nine analysts Bloomberg surveyed was HK$8.9 billion.
Earnings at MTR were boosted by a more than 60 percent surge in Hong Kong’s real estate prices since the beginning of 2009. MTR, one of the biggest owners of the city’s unoccupied residential sites, said earnings from property development rose 14 percent to HK$4 billion after selling more homes in projects including Le Prestige at LOHAS Park and the Palazzo in Fo Tan.
“Growth in our recurrent businesses in Hong Kong was strong,” MTR said in the statement. “In spite of some uncertainties, global economic recovery should continue in 2011.”
The company sells land to developers for a cut of the profit. With the city’s developers booking earnings from the sale of homes before they are completed, MTR was able to recognize its share.
About 75 percent of property profit came from the Le Prestige development, MTR Chief Executive Officer Chow Chung Kong told reporters in Hong Kong today after the earnings. Le Prestige, the New Territories, is jointly developed with Cheung Kong (Holdings) Ltd.
The stock fell 0.5 percent to HK$28.65 at the close in Hong Kong, before the earnings were released. The shares have gained 1.2 percent this year, compared with a 0.4 percent advance in the benchmark Hang Seng Index.
MTR’s revenue climbed 57 percent to HK$29.5 billion. The company, 76 percent owned by the Hong Kong government, will tender five sites this year on which 11,000 residential flats can be built, Chow said.
MTR’s income from the company’s railway operations rose to HK$12.5 billion from HK$11.5 billion a year earlier, the company said. Five railway links in Hong Kong are under way, Chow said.
The railway operator has expanded outside Hong Kong to reduce its reliance on its home market. In 2009 it led a group that won the contract to operate the suburban rail network in Melbourne, Australia’s second-biggest city. It also won a contract to maintain two of Shenyang Metro Group Co.’s lines in the northeastern Chinese city.
The company proposed a final dividend of 45 Hong Kong cents a share, bringing the total payout for the year to 59 cents, up from 52 cents a year ago.
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