报告名称：MTR Corp(00066.HK)Further Delay in Express Rail Link
报告类型：港股研究
报告日期：2015-07-02
研究机构：摩根士丹利
股票名称：港铁公司
股票代码：00066
页数：5
简介：Target completion date now 3Q18; estimate of project cost has risen19%: MTRC announced its latest estimates for the completion of Express RailLink on June 30, 2015. The company currently estimates that the project willbe completed in the third quarter of 2018, which includes a six-monthcontingency period. The total estimated cost of the project has risen further,from HK$71.5bn to HK$85.3bn, which includes contingency (a sum of HK$2.1billion according to government press release).
Critical scrutiny of review results is forthcoming... According to thetranscript of remarks by the Secretary for Transport and Housing, theHighways Department, assisted by its monitoring and verification consultant,will critically scrutinise MTRC's review results.
as is a detailed explanation of the assessment: MTRC's CEO and ProjectsDirector have been requested to attend the regular meeting of the LegislativeCouncil Subcommittee on Matters Relating to Railways, to be held on July 3, toexplain their latest assessment in detail.
Our insights:
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For analyst certification and other important disclosures,refer to the Disclosure Section, located at the end of thisreport.
An a lysts emp lo yed b y n o n -U .S. a ffilia tes a re n o t reg istered w ith F INR A, ma yn o t b e a sso cia ted p erso n s o f th e memb er a n d ma y n o t b e su b ject to NASD /NYSErestrictio n s o n co mmu n ica tio n s w ith a su b ject co mp a n y, p u b lic a p p ea ra n ces a n dtra d in g secu rities h eld b y a resea rch a n a lyst a cco u n t.Stock performance following previous announcements of Express RailLink delays/cost overruns has been mixed. It underperformed the HSIfollowing the announcement in April/May 2014 but outperformedfollowing the announcement in August 2014.
We maintain our view that because this line is under the serviceconcession model, MTRC will not bear the extra construction cost. But, weestimate the company may incur extra internal costs that the governmentprobably won’t cover of HK$2.4bn in total in 2016-18 (~HK$800mn peryear) owing to the project delay.
In a worst-case scenario, MTRC may need to return the projectmanagement fee it receives under the Entrustment Agreement (HK$4.6bnin total, of which it had received HK$3.3bn as of the end of 2014).
Therefore, based on our estimates, the financial impact could be betweenHK$2.4bn and HK$7.0bn. This implies 1-3% of our NAV estimate.
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