00:00The market still seems a bit disappointed by these news.
00:02Overall, this seems to be 2025, a year of falling revenue, falling also net profit.
00:09Beyond just the headlines, how would you characterize the year?
00:11Right. I would like to talk a bit more about the drop in the recurring revenue or the earning.
00:16In fact, there were a few one-off, like the Hangzhou line impairment,
00:21as well as some past rental concession write-off,
00:25as well as contributed to some extent by the backwater last year.
00:30And those alone accounted for $700 million.
00:33But I think if we look at the fundamentals, I would still believe the company is very strong.
00:37For example, the occupancy rate for our shopping mall, as well as our station shops,
00:42achieved almost 100%, representing demand of the assets.
00:47And also, in fact, our patronage record growth,
00:51both in terms of both in the cross-boundary Longwood-Log Marchal,
00:56which record about 8% growth, and our high-speed station.
01:00It's recording 16%.
01:02The domestic is almost flat.
01:04So we see a lot of very healthy and strong fundamentals.
01:08And we are, in fact, seeing more stabilization in the past few months.
01:12With the rental reversion pressure, I would say, stabilizing,
01:16alongside with the economy, which is in Hong Kong also stabilizing a bit.
01:22Yeah, I almost forgot that we had a series of black rains almost one after the other last year,
01:27which I think was the weather issue.
01:29Obviously, we don't know what the weather is going to be like this year.
01:31But what is the current outlook for recurring revenue this year compared to last year,
01:37if you strip out the one-offs?
01:38Right.
01:38We expect it to be, as I said, cautiously optimistic.
01:43As we see in the first two months of our cross-boundary travel,
01:46which has been a growth area, actually continue to show very strong growth
01:51in percentages as much as what I just described for the last year, and even more.
01:56And then, as I said, in the shopping malls and the station rental,
02:02we are, in fact, seeing in some pocket of trades, in fact, recording quite good growth
02:08and also stabilizing, as I said.
02:11And with the high occupancy in both our station shops and our shopping malls,
02:17we believe the rental income will be able to perform steadily this year.
02:22So there are pretty few factors that seem to be pointing to a better direction this year.
02:29It's been a very interesting 2026, to say the least.
02:34I don't think we would be, last year, thinking about we would be talking about Iran
02:38and the oil price shock that we're seeing.
02:40In terms of the impact on MTR, do you see this inflationary sort of impact
02:46on either property development or even fares overall?
02:50And are you able to, or are you going to have to pass on those costs to your consumers?
02:56For our fares, we are regulated under a fare adjustment mechanism,
03:00which is quite reflective of the economic condition and affordability of the public.
03:06So I think the public can be rest assured that that is something that is regulated.
03:10But for the light DE instability in the rest of the world,
03:17at the moment, we do not see direct impact.
03:20But for sure, the increase in oil price eventually will translate into some cost increase.
03:25So the company is actually anticipating and also managing that carefully.
03:30And we do not see much impact at the moment, but we are monitoring that very closely.
03:36Do you have initial estimates of what the cost impact likely will be?
03:40On the energy side, of course.
03:42We are currently estimating the impact, but hopefully that will not be much impact on the company,
03:49given that we are a very green form of transport.
03:54Of course, the electricity is one form of cost,
03:56but we have a lot of other areas that is relatively stable in terms of costing.
04:04I guess the market is also a bit concerned about, you know, the government,
04:07according to the latest budget, was pressing for more sort of this launch of multiple mega railway development projects, right?
04:15The newest discussion has been on Western Rail to Sengen.
04:18You also have the South Island Line West.
04:22It does bring questions about what this means for, you know, MTR's free cash flow,
04:26your balance sheets, even dividend growth.
04:28How do you respond to some of the investor concerns now?
04:31In fact, the Rail Plus property, or sometimes we call it the Rail Plus community model,
04:37is a very successful model in funding railway.
04:40It enables the company to build railway plus the community around the station
04:45without the need of a public finance.
04:48And it also enables the company to generate a recurring income
04:52after the line is open and after, you know, properties and developments around the stations are built.
04:58That we believe will continue to be one of the growth and success factors of the MTR.
05:03And even for like this year, we're actually recording a very handsome property development income of $11 billion.
05:10And although the underlying represent a slight drop over last year,
05:15but we are still talking about quite a record high profit, underlying profit of over $15 billion.
05:21It tells to the strength of the model because some of this income are from the sale of properties that
05:26we have in the past.
05:27And also, like this year, more near term, in the pipeline, we are having 8,000 units in nine property
05:35sites that will be sold this year.
05:36And we are also tendering out, you know, a few big property sites in the coming year,
05:43adding fuel to the long-term growth of the company and, of course, for Hong Kong as well.
05:48I'm actually curious to get your views because of 8,000.
05:50And, you know, there's a lot of talk about the recovery in home prices, which I'll get to in a
05:53moment.
05:54But suffice to say, the model of sort of rail plus one, do you think that is – are you
06:00worried at all over the financial –
06:02the feasibility of you being able to fund all the multiple expansion projects right now?
06:08Does that model hold up amidst the current expansion plan?
06:11It looks quite major, actually, which is a good thing.
06:14MTL has all along have a very solid and prudent financial management.
06:18So, in anticipation of the over 100 billion of new projects that we are currently building,
06:26in fact, we have already launched a series of initiatives, financial instruments to help us to fund the cash flow.
06:33Okay.
06:33Right?
06:34And at different juncture, when we need more, definitely, of course, we will have to raise more cash flow.
06:39And the company also will, of course, look into our situation in terms of entering into further new projects,
06:46whether the company will have the capability, I mean, and the capacity to handle them financially.
06:51In terms of the rebound in residential property, I think we're starting to see the beginnings of that.
06:57What is your assessment, and do you think commercial property is the next to follow?
07:01Right.
07:03Actually, we are seeing – last year has been the first half.
07:06We see the revaluation of the property portfolio that we have.
07:11We saw, of course, a decline, understandably.
07:14But actually, in the second half, we are already seeing a stabilisation or narrowing the devaluation.
07:20And in terms of commercial, MTL is not holding a big commercial portfolio.
07:25So, for us, it's relatively insignificant compared with the malls and the investment properties that we hold.
07:32The outlook for the non-Hong Kong part of the business this year?
07:36The outlook, actually, in Australia is very positive.
07:41We have just one big contract in Sydney, the Sydney Metro West, which is actually an over 20 years contract.
07:48And we are partnering with CLRC and TCT, two Chinese companies, and that is a very substantial contract.
07:55And apart from that, we are actually running the rest of the metro line of the majority of the metro
08:02line of Sydney.
08:03So, we have other two major contracts, and we have actually also just tendered a bit in the property development
08:12in Parametta in Sydney.
08:14So, I believe in Sydney, we are actually having quite a very deep and wide business.
08:20And so, in Melbourne, and in Melbourne, we have just been pre-qualified for the MR5, the whole Melbourne Metro
08:27train commuter network.
08:29That is another, we are the incumbent, but the contract is up for renewal.
08:34So, we have just been pre-qualified.
08:36And we are going to put in all our effort to bid for that.
08:40So, Australia, we are doing well and expanding.
08:43And in mainland, on the other hand, we just opened two new lines last year.
08:47And I think that also somehow, of course, because they are still new, affect the profitability, right?
08:54Because patronage needs some time to build up in our network, real network.
08:58And we are starting station commercial revenue, station commercial collaboration with the local metros.
09:06It's very much welcome because they will help them to improve their non-fair revenue on top of their fare.
09:12So, we are already now working with Chongqing, with Xi'an, and with Guangzhou, and with Hangzhou.
09:20They are actually very much welcome, joining them to develop their station shops in their stations.
09:27So, a lot is going on, a lot is happening.
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