66 Results | MTR: Retail opening this year is better, hopes to continue shopping mall rental rate of around 100% momentum, will prudently assess the situation before launching land

MTR Corporation (00066) Last year, property rental income decreased by 6.7% year-on-year. MTR’s Executive Director - Property and International Business, Deng Zhi-hui, stated that retail market conditions remained challenging last year, with significant changes in consumption patterns among Hong Kong residents and travelers. However, the retail sector started off better this year, with an increase in travelers and a notable rise in local spending in January. MTR will continue to focus on a people-oriented tenant mix despite challenges. Last year, the mall occupancy rate was about 100%, reflecting tenant satisfaction with doing business in their malls. They hope this momentum will continue this year.

MTR’s newly leased mall rents fell by 9.5% last year. Deng Zhi-hui mentioned that certain retail segments still faced difficulties, so MTR provided rent assistance to tenants. He emphasized that this was a one-time provision, and excluding this, overall leasing performance was close to the market average.

Hoping for steady property development income

MTR’s annual property development profits fluctuate significantly. Deng Zhi-hui said that the timing of recognizing property development income depends on many factors, including construction progress, sales progress, and when occupation permits are obtained. The group will do its best to plan and hopes to recognize income steadily from a financial perspective.

He also indicated that MTR has many future property development projects. They will assess market conditions and demand, as well as overall land supply, to introduce land in an orderly manner. This year, MTR aims to launch the second phase of Kam Sheung Road Station and the second phase of the Tuen Mun Station Area 16 development project.

MTR will choose different financing methods based on market conditions

MTR is advancing six new railway projects. MTR’s Chief Financial Officer, Michael Fong, said that market-based financing is standard practice. The company will consider market conditions and choose different financing options, but the key is to have diversified funding channels to support new projects.

Market concerns about fare adjustments. MTR CEO Yang Mei-chan emphasized that MTR’s fare adjustment mechanism is transparent and open, linked to economic conditions and citizens’ affordability. Whether fares will be adjusted this year depends on the salary data to be announced at the end of March. Over the past nine years, fares have been frozen for five years, reflecting that the adjustment mechanism responds to the overall economy. Regarding the accumulated fare increases of over 3% in the past, she stressed that fare adjustments will consider changes in median household income as a cap.

Regarding the widening loss in MTR Hong Kong operations last year, Yang Mei-chan explained that intense competition, adverse weather, and rising costs all contributed. They will put more effort into their rail operations in the future.

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