MTR’s 2.4% Dividend Yield Makes It Less Attractive

We maintain our fair value estimate of HKD 37 per share for MTR ahead of the company’s interim results, as both the company’s stable rail operation and continued retail sales recovery in Hong Kong were expected. We still expect the city’s rail network expansion to drive a stronger 4% patronage growth rate in 2017, which should also provide solid support to the company’s retail business. We also maintain our assumption of a low-single-digit rental reversion at MTR’s retail assets, helpe...