Huatai Securities: Lowering Hong Kong Railway's target price to HK$29.9 while maintaining a "buy" rating

Huatai Securities released a research report pointing out that MTR Corporation's revenue in the first half of the year was HK$27.4 billion, a decrease of 6.5% year-on-year; net profit attributable to equity holders was HK$7.709 billion, an increase of 27.5% year-on-year, but about 9% lower than the bank's forecast, mainly due to operating profit lower than expected. In terms of fares, MTR will increase prices in the 2024/2025 fiscal year, resulting in a year-on-year increase of about 3% in ticket prices in the first half of this year. The bank considers the recovery of the Hong Kong property market and the peak period of project completion for the company, maintaining a "hold" rating. Taking into account the rising operating costs of Hong Kong rail operations and fair value losses on investment properties, Huatai Securities has lowered its net profit forecasts for MTR for the years 2025 to 2027 by 11%, 3%, and 17% respectively, to HK$18.1 billion, HK$21 billion, and HK$11 billion. Based on the sum-of-the-parts valuation method, the target price has been lowered from HK$31.9 to HK$29.9.