<P><FONT size=5>中银国际-地铁公司-盈利调整</FONT></P>
<P><FONT size=5>-070314-English 2页</FONT></P>
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<P><FONT size=5>Better-than-expected earnings for 2006. MTR Corporation<BR>announced that its 2006 net profits dropped 8.2% YoY to HK$7.76bn.<BR>Underlying earnings, excluding revaluation surplus and related<BR>deferred tax, fell 2.9% YoY to HK$5.96bn, but still 8% above our<BR>forecast of HK$5.5bn due to a higher-than-expected contribution from<BR>property development. We remain positive on MTRC due to the<BR>potential NAV enhancement from its pending merger with the<BR>Kowloon-Canton Railway Corporation (KCRC). In view of the<BR>higher-than-expected earnings from property development, we have<BR>revised up our NAV estimates by 2% to HK$26.4 per share. In addition,<BR>we have raised our target price slightly to HK$23.80 from HK$23.50,<BR>based on a discount of 10% to its NAV per share, which includes the<BR>merger effect and future Hong Kong projects.</FONT></P>