MTR’s Core Operation on Track; But Shares Overvalued.
We maintain our fair value estimate of HKD 37.00 per share for narrow moat-rated MTR, as both the company’s rail operation and continued retail sales recovery in Hong Kong were as expected. We think the company’s recent announcement about the budget overrun of Shatin-Central Line has little impact on the company’s balance sheet and earnings outlook, as the construction cost is borne by the Hong Kong government under the entrustment agreement. We maintain our recurring net profit forecast of HKD ...MTR is a railway operator. Co. operates a rail-based transportation system in Hong Kong, comprising Domestic and Cross-boundary services, an Airport Express railway and a light rail system. Co. also provides intercity services to and from the Mainland of China as well as a small bus operation in Hong Kong offering convenient feeder services. Co.'s segments include: Hong Kong transport operations; Hong Kong station commercial businesses; Hong Kong property rental and management businesses; Hong Kong property development; railway, property rental and management businesses outside Hong Kong; Mainland of China property development; and other businesses.
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