MTR Corporation Limited Stock

Greetings, everyone, members of the press. I am Linda Choy, Corporate Affairs and Branding Director of MTRC. We welcome to the Annual Results 2025 press briefing. First of all, let me introduce the corporate representatives on stage. Seated in the middle is Ms. Jeny Yeung, the CEO. Next to her on the right are Mr. David Tang, Managing Director, Property and International business; and also Mr. Wilson Kwong, Hong Kong Transport Services Director. And on the left are Mr. Michael Fitzgerald, FD; and Mr. Carl Devlin, Capital Works Director; and also Mr. Sammy Wong, Chinese Mainland Business Director. We'll be using Chinese in the main today.

Ms. Jeny Yeung will be talking about the 2025 full year results. And after that, Michael will go through the financials. And then Ms. Jeny Yeung will come back and share the company's outlook and future developments. And she will also be speaking in English in summary. And today, we have simultaneous interpretation in Chinese and also in English. After that, we will have a Q&A session. Jeny, please.

Thank you, Linda. Ladies and gentlemen of the media, good afternoon to you. Welcome to the annual results 2025 for MTRC. And this year marks my first announcement of my corporation's results as CEO. I would like to thank the Board for entrusting me with this important responsibility and we'll continue to work with our teams to grow MTR's business, create opportunities and optimize value.

I will first present the corporation's 2025 performance and share our 2026 outlook. 2025 was a year full of challenges yet with progress. Recurrent business profit for the year exceeded HKD 5.6 billion, representing a year-on-year decline due to factors, including changes in travel patterns among the public and overall economic environment. With the dedicated efforts of the team, we continue to provide the people of Hong Kong with high-quality, efficient and reliable services in rail and property-related services.

In the past year, a number of new projects made good progress. Our 100th station, Kwu Tung Station on the East Rail Line is expected to be completed next year. We will drive forward the Northern Link project aiming to deliver the project as scheduled. Next, now MTR has always been committed to a customer-centric approach in providing quality services to the community. We'll continue to adopt advanced technologies, including AI to enhance both hardware and software systems and deliver more caring services. Railway operations remain our core business. Over the past year, we continue to provide reliable and efficient services.

Total local patronage was broadly comparable to 2024, exceeding 1.9 billion. Passenger journeys on time maintained at 99.9%, while customer service satisfaction had reached a record high since the rail merger. For cross-boundary services, the patronage to Lo Wu and Lok Ma Chau recorded over 8% growth. The patronage of the high-speed rail Hong Kong section exceeded 30 million last year, reaching a new annual record since commissioning and a year-on-year increase of over 16%. Direct access destinations from Hong Kong West Kowloon Station has now increased to 110.

After years of development, our HSR has achieved seamless connectivity with the national high-speed rail network and had become an indispensable mode of transport between Hong Kong and the Mainland, strengthening links with the GBA and major provinces and cities contributing to enhanced connectivity. In our malls, despite a challenging external environment and downward pressure on rents, near full occupancy was recorded throughout the year with strong footfall, reflecting business resilience. Shortly, Michael will go through the detailed performance of major business segments.

Let me start with the strategic level. Amid market competition and changes in travel and consumption patterns, we continue to address challenges proactively last year. In railway services, we leveraged the mega events economy by working with event organizers to bring activities into our stations to enhance overall passenger experience. We also partnered with popular IPs to launch crossover initiatives, transforming our railway into experiential and check-in spots. For malls, we leveraged our strong connection by engaging local participation through diverse events while continuously introducing new brands and optimizing tenant mix.

As post-pandemic changes have become the new normal, we continue to pursue innovation, strengthen revenue from recurrent businesses and enhance business sustainability. Beyond railway service, another key focus of ours is, of course, the advancement of our next -- of our 6 new railway projects, all of which made good progress in 2025. For instance, Kwu Tung Station on the East Rail Line was topped out last year with a target for commissioning next year. Tung Chung East station on Tung Chung Line extension was topped out in February with remaining works focusing on the tracks towards Tung Chung. For the Tuen Mun South extension, the project is located within a well-developed and densely populated community to release land for railway construction, certain community facilities required reprovisioning. The largest is the Tuen Mun swimming pool, which has been completed, and we are very pleased that the new pool is well received by the community.

A key milestone among the new railway projects was the signing of the project agreement for Northern Link Part 1. Preparatory works for construction have commenced alongside integrated planning for the Northern Link mainline and Spur Line. The target is for synchronized opening of both the main and spur lines connecting to the new Huanggang port no later than 2034 to support the development of the Northern Metropolis. The recently announced Hong Kong railway standards will also facilitate the advancement of the Northern Link project.

Last year, under the principle of think ahead, stay ahead, the corporation highlighted the need to make early preparations for investments exceeding HKD 100 billion across multiple projects. During the year, we undertook a number of financing initiatives in Hong Kong and overseas capital markets to prepare for the substantial funding requirements for the major projects in the coming year. We'll continue to prudently plan our funding needs in accordance with the progress of new project agreements.

In 2025, we recorded a one-off property profit, mainly arising from profit recognition under the rail plus property model for Tung Chung Line and South Island Line. Property development profit is one-off in nature and is often recognized later than the commencement of new railway lines. Such profit is used to subsidize rail construction, investment, asset maintenance, renewal, enabling the provision of high-quality, reliable and affordable services without reliance on public finances.

We are currently developing 9 property projects, which will provide approximately 8,000 housing units, ensuring a steady supply to the Hong Kong housing market. Last year, we successfully awarded the Tuen Mun A16 Station Package One project. In 2025, we celebrated the 45th anniversary of our railway property development. Telford Gardens and Telford Plaza in Kowloon Bay, our headquarters, demonstrating our commitment to building communities and growing alongside them. As a Hong Kong rooted and internationally recognized brand, we continue to expand steadily in the Chinese Mainland and overseas.

In the Mainland, Beijing Metro Line 17 and Shenzhen Metro Line 13 Phase 1 commenced full-line service by the end of last year. And as new growth drivers, we successfully expanded station commercial businesses in Chengdu, Zhengzhou, Xi'an and Guangzhou, leveraging our expertise in station retail to unlock consumption potential in partnership with metro operators in the Mainland. Internationally, following the opening of the Melbourne Metro Tunnel operated by us in Australia at the end of last year, which significantly enhanced public transport accessibility. Train frequency was increased in early February this year, receiving very positive public response.

For Semi Metro, since the opening of the cross-harbor section in August 2024, cumulative patronage has exceeded 100 million passenger journeys, reflecting strong performance.

I will now pass the time over to Michael, our FD, to talk about our financial performance.

Our recurrent businesses recorded a profit for 2025 of HKD 5.7 billion. This lower level of profit compared to last year was partly due to one-off items such as our sharing of an impairment relating to Hangzhou Line 1 and to rental concessions granted to certain tenants in Hong Kong. Property development profit increased to HKD 11 billion. Including property development profit, underlying business profit was therefore HKD 16.7 billion. Together with changes in the fair value measurement of our investment properties, total net profit attributable to shareholders for the year was HKD 14.7 billion.

In Hong Kong transport operations, our EBIT loss was HKD 254 million. Cross-boundary and high-speed rail services were boosted by the increasing 2-way flow of travelers between Hong Kong and the Chinese Mainland. However, this was offset by increased operating costs and higher depreciation as well as by revenue lost through bad weather. Our station commercial EBIT decreased by 3%, mainly due to negative rental reversion and to lower telecommunications revenue. The EBIT of our property rental and management business decreased by 8%, mainly due to negative rental reversion and to the one-off write-down of unamortized rental concessions.

In our Chinese Mainland and international businesses, as expected, the contribution was affected by the anticipated operating losses arising from the opening of the initial section of Shenzhen Metro Line 13 Phase 1 as well as by our share of the impairment loss in respect of Hangzhou Metro Line 1. The group's financial position remains robust, and our net debt-to-equity ratio stands at the healthy level of 22.5%. We have continued with our prudent approach of realizing diversified sources of external funding. As such, we arranged a total of over USD 10 billion equivalent of external funding in 2025, including the issuance of U.S. dollar bonds, perpetual capital securities and a syndicated green loan from a group of 57 banks in Hong Kong.

In January 2026, we priced an Australian dollar green bond being the largest green bond ever issued by any corporate in Australian dollars. These transactions garnered strong interest from both local and international institutional investors, demonstrating the confidence that global markets have in MTR, the crucial role MTR plays in the development of Hong Kong's infrastructure and the company's reputation for prudent financial management and robust planning. In terms of funding cost, funding raised in currencies other than Hong Kong dollars is always swapped back to Hong Kong dollars, meaning that MTR pays Hong Kong dollar interest rates. This has helped us to keep average funding costs under control. For 2025, our average borrowing cost was 3.5%, 0.2 percentage points lower than last year. And by the end of the year, the average maturity of our debt portfolio had been extended to be over 9 years.

With that, I will now hand back to Jeny to present our outlook.

Thank you, Michael. After taking into full account the corporation's financial position and future capital requirements, the Board has proposed a final ordinary dividend of HKD 0.89 per share, bringing the total ordinary dividend for the year to HKD 1.31 per share. Amid a changing global economic landscape, evolving local travel and consumption patterns and the corporation's peak construction phase for new railway project. Challenges remain, but so do substantial opportunities. Looking ahead, we'll focus on new railway construction, ensure service quality, advance core strength, develop new growth drivers and reinforce the sustainability of financial management.

To ensure reliable, efficient and safe railway services, asset renewal and maintenance remain crucial. Since 2023, the corporation has committed HKD 65 billion over 5 years for railway asset renewal. As at the end of last year, approximately HKD 47 billion have been invested to ensure railway system and technology remained up to date. We are progressively replacing the signaling system on urban lines. The new signaling system, together with new trains will deliver an enhanced passenger experience. We'll also continue to leverage technology to enhance customer experience, including the introductions of virtual service ambassador, AI Tracy at more stations and further strengthening customer flow and more strategies.

The MTR will further harness innovative technologies, particularly AI and big data analysis to enhance competitiveness and optimize cost efficiency. Last year, under the government's low-altitude economy regulatory sandbox framework, we participated in a next-gen drone inspection of tracks to enhance maintenance efficiency. We'll also explore the use of autonomous vehicles for station connections and accelerate the installations of electric vehicle charging facilities at car parks to support smart mobility and sustainable development.

As mentioned earlier, our team is progressing 6 new railway projects, adopting new approaches and technologies such as extensive use of prefabrications to help manage cost and construction time lines. These large-scale projects are not only investment in Hong Kong's future, but also in the corporation's future growth. From 2027 to 2034, more than 20 new stations will be completed across new railway projects, significantly enhancing connectivities across district with new communities developing in tandem.

At the government's invitation, we have commenced detailed planning and design for the South Island Line West, which will adopt a smart and green mass transit system. The railway line will provide convenient transport services to the Western and Southern District of Hong Kong Island, further enhancing connectivity within the 2 districts and across the MTR network. We are actively supporting the government to carry out a detailed technical assessment for the construction of Pak Shek Kok station beyond Hong Kong. MTR continues to expand station commercial businesses in Chinese Mainland cities. And earlier this year, we partnered with CRRC Corporation Limited to secure a major contract for the Sydney Metro West project. We will continue to pursue such work. We'll also pursue business opportunities in Hong Kong, the Chinese Mainland and overseas, laying a solid foundation for long-term sustainable growth.

In anticipation of substantial investment requirement, we will undertake a series of financing initiatives just like last year. And subject to our work, we expect to book property development profits from LOHAS Park Package 13, THE SOUTHSIDE Package 6 and the Yau Tong Ventilation Building project. And to continue booking profit from Tai Wai Stations project, THE SOUTHSIDE Package 5 and LOHAS Park Package 12.

Railway investment and operating expenditure are long term and recurring, while property profits are one-off and they fluctuate year-by-year. So we'll prudently plan for future cash flow needs and strengthened project and financial management. On top of that, we'll flexibly deploy financing to cope with construction peak period. Environmental, social and governance is at the heart of MTR's long-term strategy. Hong Kong is our home. So we will continue to create values for our stakeholders and we'll continue to support our communities. We have provided different fare concessions. We have several actions to benefit the community while the community benefit has exceeded HKD 15 billion.

We have been optimizing different services. And last year, in our light rail, we have already launched the cat/dog carrying scheme fostering a more inclusive travel environment. On the environmental front, we have set internationally recognized carbon reduction target to foster a greener future. We have been deeply committed to our communities. Through partnership with different institutions, we have worked hard to nurture young people. When in need, we will respond to the society's needs. Like last year, we provide direct financial and service support to the affected families at the Tai Po Wang Fuk Court, helping them to overcome difficulties.

Looking ahead in 2026 with the gradual recovery of global economy, we are cautiously optimistic to our outlook. In the next 12 months, subject to market conditions, we expect to tender Kam Sheung Road Station Phase 2 and Tuen Mun A16 Station Package 2. Finally and most importantly, our success is built on the dedication and professionalism of our team. Work continues to provide employees with career development platforms, enabling them to serve Hong Kong with commitment and confidence. We'll continue to move forward with Hong Kong, supporting the city's development and serve the need of the community. Thank you.

2025 was a challenging yet progressive year. Our recurring business profit exceeded HKD 5.6 billion, representing a year-on-year decline. Throughout the year, our teams continue to deliver safe, reliable and efficient railway and property-related service to Hong Kong. We also made good progress across multiple new railway projects. MTR's 100th station, Kwu Tung Station on the East Rail Line is expected to be completed next year. The cooperation will drive forward the Northern Link, aiming to deliver the project as scheduled.

Railway operations remain our core and local patronage exceeds 1.9 billion. Passenger journeys on time were maintained at 99.9% and customer service satisfaction reached a new high after post-rail merger. Patronage for cross-boundary service to Lo Wu and Lok Ma Chau record over 8% growth, while the patronage of the high-speed rail record a 16% growth. And the number of direct access destinations from Hong Kong West Kowloon station has now increased to 110. The high-speed rail is now a vital transport link between Hong Kong and the Chinese Mainland. Our shopping malls, despite a challenging retail environment, record near full occupancy, demonstrating business resilience. And in response to evolving travel and consumption patterns change, both our stations and malls actively enhance customer experience through marketing initiatives, collaboration with mega events and IP themed organizations activities. And the corporation will continue to strengthen recurring revenue and enhance business sustainability.

Another major focus of the corporation is the advancement of 6 new railway projects, of which made good progress in the year. Kwu Tung Station is targeted for commissioning next year. A key milestone among new railway projects was the signing of the project agreement for the Northern Link Part 1. Preparatory works for construction commenced alongside integrated planning for both the mainline and the spur line targeting the commissioning of both lines no later than 2034 to support the Northern metropolis development. And under the think ahead, stay ahead principle, we have made early preparations for railway investments exceeding HKD 100 billion.

The corporation undertook financing initiatives in both Hong Kong and overseas capital markets to prudently prepare for the substantial funding requirement. And in 2025, the corporation's property profits mainly arose from property developments under the rail plus property model. Property development profit is one-off in nature and is used to subsidize railway construction, maintenance and asset renewal, supporting high-quality railway services without reliance on public finance. We are currently developing 9 residential property projects, providing around 8,000 units to Hong Kong's housing market last year. And last year, we successfully tendered the Tuen Mun A16 Station Package 1 project.

The corporation celebrated the 45th anniversary of its first rail property developments, Telford Gardens and Telford Plaza, highlighting MTR's growth alongside the community. And beyond Hong Kong, MTR continues to expand steadily. In the Chinese Mainland, Beijing Metro Line 17 and Shenzhen Metro Line 13 Phase 1 commenced full-line service by the end of last year. We have also expanded station commercial businesses in several cities by leveraging station retail expertise in Hong Kong.

Internationally, the Melbourne Metro tunnel opened last year with much increased train frequency in February this year. And in Sydney, the Sydney Metro has recorded more than 100 million passenger trips since the cross-harbor session opened in August 2024. And after taking into full account the corporation's financial position and future capital requirements, the MTR Board has proposed a final ordinary dividend of HKD 0.89 per share, bringing the total ordinary dividend for the year to HKD 1.31 per share.

Looking ahead, 2026 will be a year of both challenges and opportunities as we enter a peak period for railway construction amid changing economic conditions. The corporation will focus on strengthening its core capabilities, developing new growth drivers and reinforcing the sustainability of its financial management.

Railway asset renewal and maintenance remain crucial to delivering reliable, efficient and safe service to our passengers. And since 2023, the corporation has committed $65 billion over 5 years to railway asset renewals and maintenance, ensuring railway systems and technologies swing up to date. And we are progressively replacing our signaling systems on the urban lines with new systems. The new signaling system, together with new trains will enhance travel experience for our passengers. Service enhancement leveraging on technology will continue, including the introduction of more virtual service ambassadors, AI Tracy at more stations.

The corporation will also leverage innovation technology to enhance competitiveness and cost efficiency. Worth mentioning is we participated in a drone track inspection pilot project to enhance maintenance efficiency and will also explore autonomous vehicles for station connections and accelerate the installation of electric vehicle charging facilities at car parks to support smart mobility and sustainability. We are progressing 6 new railway projects. Our teams are applying new approaches and technologies to manage cost and construction time lines.

At the government's invitation, we have commenced detailed planning and design for the South Island Line West. The project will adopt a smart and green mass transit system, enhancing rail connectivity across Hong Kong Island and the whole MTR network. We're also participating in the detailed technical study of the Pak Shek Kok Station. And beyond Hong Kong, we're expanding station commercial businesses in various Chinese mainland cities. In addition, in partnership with CRRC, we successfully won a major contract for the Sydney Metro West project. We'll continue to explore business opportunities in Hong Kong and outside.

In anticipation of significant capital requirements, we will continue to deploy different financial initiatives. And subject to construction and sales progress, we expect to book property development profit from LOHAS Park Package 13, THE SOUTHSIDE Package 6, Yau Tong Ventilation Building project. And we'll continue to book profit from Tai Wai Station project, LOHAS Park Package 12 and then THE SOUTHSIDE Package 5. And railway investment and operating expenditures are recurring and long term, while the property development revenue is one-off, we'll prudently plan for future financial needs.

MTR is committed to creating value for our shareholders, including our government. We also continue to allocate resources to support community developments, including the provision of fare concessions. Last year, the total value of initiatives and community benefits provided by the corporation exceed HKD 15 billion. And to promote inclusiveness, we launched the cat and dog carrying scheme on the light rail last year. And to foster a greener future, the corporation has set internationally recognized carbon reduction targets for its railway operations and investment properties in Hong Kong.

We also support new development through long-term partnerships and respond swiftly when the community is in need, including providing financial and service support to families affected by the Tai Po fire last year. And looking ahead for 2026, Hong Kong's economy is anticipated to be stabilizing. The corporation remains cautiously optimistic. And subject to market conditions, we expect to tender Kam Sheung Road Station Phase 2 and Tuen Mun A16 Station package 2 in the coming 12 months or so.

Finally, the corporation's success is built on the dedication and professionalism of our colleagues. We'll continue to provide supportive development platforms for our employees, enabling them to serve Hong Kong with commitment and confidence. MTR will continue to move forward with Hong Kong, supporting the city's development and serving the needs of the community. Thank you.