MTR Corporation Limited (66) Earnings Call Transcript & Summary

Friends of the media, I am Linda Choy, Corporate Affairs and Branding Director. First of all, I would want to welcome you all to the MTR Corporation Annual Results 2024 Press Conference. Let me introduce the management on stage. Seated in the middle we have the CEO, Dr. Jacob Kam. And on his right are the Managing Director, Hong Kong Transport Services, Ms. Jeny Yeung; Operations and Innovation Director, Dr. Tony Lee; and on Dr. Jacob Kam's left are Mr. Michael Fitzgerald, Finance Director; Property and International Business Director, Mr. David Tang; and Capital Works Director, Mr. Carl Devlin. We will be conducting the press conference mainly in Chinese. First of all, Dr. Kam will succinctly go through the MTR Corporation's 2024 full year performance, and then Michael, the Finance Director, will give us a briefing on the financials. And Dr. Kam will then come back again to share the company's outlook. Lastly, we will have Q&A. We will try to answer the questions in our limited time, and you're able to ask your questions in any language. First of all, Dr. Kam.

Thank you. Greetings, everyone. Good afternoon. Welcome to the MTR Corporation's Annual Results 2024 Press Conference. 2024 marks a significant milestone of the 45th anniversary of our company's service commencement. Over the past 45 years, we have actively contributed to the construction and development of Hong Kong, fostering growth while overcoming numerous challenges along the way. We have grown alongside the community, moving forward together. The year was remarkable. In response to the new normal under the -- after the pandemic, the corporation has continued to diversify our business and manage finances prudently to ensure financial stability. We enhance existing railway services and advance new railway projects to support Hong Kong's future development, and we have also initiated comprehensive work on future financing strategies and project management to ensure our investment of HKD 100 billion in new projects achieve maximum efficiency in resource utilization, project management and financial arrangements. I will highlight a few key points from our last year's performance. Our railway operations and services, the total local patronage exceeded HKD 1.9 billion last year. Our heavy rail network in Hong Kong maintained world-class levels of 99.9% in both train service delivery and passenger journeys on time. Revenue from local railway services, including heavy rail, light rail and the Airport Express as well as cross-boundary railway services recorded year-on-year increase. However, patronage for cross-boundary railway services and the Airport Express has yet to fully return to pre-pandemic levels. We believe this is due to the increase in cross-boundary checkpoints, intense competition from other modes of transport, changes in travel patterns and the composition of inbound travelers. The high-speed rail Hong Kong section has continued to grow, with patronage surpassing 26 million last year under the coordination of the corporation, Mainland and the Hong Kong government. The services of high-speed rail Hong Kong section have been continuously enhanced last year. Colocation arrangement provides convenience for our passengers. We have expanded our direct access destinations from Hong Kong West Kowloon station to 93 Mainland stations, further strengthening connectivity between Hong Kong and Mainland cities, serving as a crucial link. In addition to business and family visits, we have closely collaborated with tourism industry to promote high-speed rail travel as a new trend. Last year, sleeper trains were introduced connecting Hong Kong to Beijing and Shanghai. The innovative Flexi-trip arrangement and multi-ride tickets provide passengers with greater flexibility in trip planning. Railway is a mass transit transportation providing our city with efficient, reliable and environmentally friendly travel option. Our network serves over 5 million passenger trips every day. We're committed to enhancing the travel experience for our passengers serving the public, maintaining our competitiveness as public transport provider. In recent years, we have actively adopted innovation technology to promote smart mobility, offering more caring, personalized services while catering to the diverse needs of our passengers. Our property business, a Rail plus Property integrated development model, entered a harvest phase in 2024 with multiple property development projects above operating railway lines progressing steadily and being booked in phases throughout the year. We collaborated with developers to contribute approximately 10,000 units to Hong Kong's housing market last year, demonstrating the effectiveness of Rail plus Property model. Revenue from property development serves as funding sources for the substantial expenses of railway construction as well as long-term maintenance, repairs and asset renewal. We will remain committed to optimizing resources, strengthening financial position, expanding the network, enhancing services and fostering sustainable development. For new property projects, we awarded the Tung Chung East Station Package 1 property development. In our mall business, the SOUTHSIDE at Wong Chuk Hang Station celebrated the first anniversary serving the community from last December, providing comprehensive living amenities to our community. While the retail sector faces challenges under the new normal, we'll continue to leverage the advantage of the mall's connection to stations and roll out innovative marketing campaigns, optimizing tenant mix to drive foot traffic and consumer spending. We have launched several new railway projects in '23 and '24, namely Kwu Tung Station on the East Rail Line, Oyster Bay Station, Tung Chung Line Extension, Tuen Mun South Extension, Hung Shui Kiu Station on the Tuen Ma Line, and each of these 5 projects present a unique technical and project management challenges with a total construction cost reaching HKD 100 billion. The projects are not only investment in the corporation's future developments, but also investment in Hong Kong's future. Upon completion, these projects will elevate our business in Hong Kong to new levels. Building new railways from design, construction to maintenance requires substantial investments. In addition to HKD 100 billion in investment, the company has also allocated HKD 65 billion over 5 years for asset maintenance and upgrades. We have undergone many development cycles in the past and have always maintained a forward-looking approach to meet our financial needs. The corporation has maintained a stable financial position, including cash flow and gearing ratio. We'll adhere to "think ahead, stay ahead" principle to get prepared for further funding needs, optimizing resource allocation and enhanced efficiency. Enhancing the efficiency of new railway project management is one of our key focuses. The MTR team possesses extensive project management experience incorporating more innovative technologies into project management. The construction phase of new railway projects is expected to provide over 20,000 related job opportunities, driving the local economy and promoting industry development. Many new railway projects involve construction work on operational railway lines, including the modification and construction of tracks and other railway facilities and the construction of new stations, adding complexity and challenges to the projects. Our team will conduct detailed planning and work closely with the operations team to minimize impact on existing railway service. Our Mainland China and international businesses have grown steadily. In Mainland China, the initial section of Shenzhen Metro Line 13 Phase 1 connecting to Shenzhen Bay Checkpoint commenced passenger service in December last year. The remaining sections of Shenzhen Metro Line 13, Beijing Metro Line 17 are under construction as planned. We continue to advance our station commercial business in Chengdu and expanding to Zhengzhou. Additionally, we are exploring opportunities in other cities. For overseas businesses, the Sydney Metro M1 Metro Northwest and Bankstown Line City section across Sydney Harbor was opened last August. Our concession for Melbourne's Metropolitan rail service has been extended to November 2027. We continue to pursue railway and transit-oriented development opportunities in Mainland China, including the GBA and overseas. As a low-carbon public transport provider, our company actively implements and incorporates our ESG vision across our businesses to demonstrate our commitment to being a green transportation provider and caring company. We have strived to implement measures to reduce carbon emissions, and we launched our first electric bus last year, and we plan to introduce at least 30 electric buses by the end of 2026. We are pleased that the Science Based Targets initiative, SBTi, organization has approved our targets for our railway and property businesses in Hong Kong to cut about half of our greenhouse gas emissions by 2030, supporting our long-term goal of achieving carbon neutrality by 2050, promoting a green future. We are committed to incorporating green designs and features into our new railway and property development projects. We made our debut public issuance of offshore Renminbi Green Bond last year. This not only supports the integration of low carbon and green elements into our operations and new railway projects, but also paves the way for further financing initiatives. For 45 years, MTR has grown alongside Hong Kong, providing safe, reliable and efficient railway services. We continuously expanded our railway network, promoting developing communities, growing together with the Hong Kong people. Last year, we organized a series of celebratory activities to celebrate our 45th year of connecting the people in Hong Kong. MTR is closely connected with the lives of the Hong Kong people and will continue to provide high-quality railway services. After taking into full account of 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. Ladies and gentlemen, 2024 marked the 45th anniversary of MTR service commencement. Over the past 45 years, we have grown with the community and overcome numerous challenges together. Last year, all our major businesses continued to develop steadily. The launch of several new railway projects since 2023 has ushered in a new era of railway investment with HKD 100 billion committed to expansion. These projects will not only extend MTR's network coverage, but also foster community development, serving as a key driver of future business growth. To support these initiatives, we have started comprehensive work on future financing strategies, project management and modification works within the existing network. I will highlight a few key points from last year's performance. In our railway operations and services, the total patronage in Hong Kong exceeded HKD 1.9 billion last year. Our heavy rail network maintained world-class performance levels of 99.9% in both train service delivery and passenger journeys on time. We recorded year-on-year growth in revenue from both domestic and cross-boundary railway services. However, patronage for both cross-boundary services and the Airport Express has yet to fully return to pre-pandemic levels. The High Speed Rail Hong Kong section has shown strong growth, with patronage surpassing 26 million last year. Through the colocation arrangement, we have expanded our direct access destinations to 93 Mainland stations, further strengthening connectivity between Hong Kong and Mainland cities. The introduction of sleeper train service to Beijing and Shanghai, along with Flexi-trip and Multi-ride Tickets has improved travel convenience. We also continue to enhance passenger experience through innovation and technology to provide more inclusive and convenient travel service for passengers with different needs. In our property business, we continued to progress residential property projects last year with property development profits booked from projects on several previously constructed railways. Through the Rail plus Property development model, we are collaborating with developers to contribute approximately 10,000 residential units to Hong Kong's housing market. The Rail plus Property model continues to provide key funding sources for ongoing railway construction, maintenance and asset renewal. We have awarded Tung Chung East Station Package 1, and in our mall businesses, THE SOUTHSIDE at Wong Chuk Station celebrated its first anniversary of serving the community last December. While the retail sector faces challenges under the new normal, we are implementing innovative marketing campaigns and optimizing tenant mix to drive foot traffic and consumption and consumer spending. As mentioned earlier, the corporation has launched 5 new railway projects since 2023, namely Kwu Tung Station on the East Rail Line, Oyster Bay Station, the Tung Chung Line Extension, the Tuen Mun South Extension and Hung Shui Kiu Station on the Tuen Ma Line. Each of these projects presents unique technical and project management challenges, with a total construction cost reaching HKD 100 billion. Upon completion, these projects will expand our businesses in Hong Kong. Additionally, the corporation has also planned to invest HKD 65 billion over 5 years for asset renewal and maintenance. Throughout multiple development cycles over the past 45 years, the corporation has always maintained forward-looking financial planning. We'll continue to plan for future funding needs by taking a comprehensive assessment of our needs and seizing opportunities to continue creating value for our shareholders and stakeholders. The new railway projects are expected to create over 20,000 related job opportunities. Our engineering team is implementing detailed planning to minimize impacts on existing railway services during construction. In Mainland China, the initial section of Shenzhen Metro Line 13 Phase 1 commenced passenger service in December 2024. We expanded our station commercial businesses from Chengdu to Zhengzhou. In our overseas businesses, we opened the Sydney Metro M1 Line City section across Sydney Harbor last August. Our concession for Melbourne's Metropolitan Rail service has been extended to November 2027. We continue to pursue railway and transit-oriented development opportunities in Mainland China, including the Greater Bay Area and overseas. As a low-carbon transport provider, we remain committed to our environmental, social and governance ESG vision. Last year, we launched our first electric bus, and we continue to incorporate green designs and features into our new railway and property development projects. We made our debut public issuance of green bonds in the offshore RMB market last year. This not only supports the integration of low carbon and green elements into our operations and new railway projects, but also paves the way for further financing initiatives. For 45 years, MTR has grown alongside Hong Kong, providing safe, reliable and efficient railway services while developing communities for Hong Kong people. Last year, we organized a series of celebratory activities to connect with community. 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. I will now pass to Michael to report some of our financial highlights.

Thank you, Jacob. Recurrent businesses in Hong Kong recorded a profit of $6 billion, mainly attributable to the ongoing gradual recovery in patronage. This recovery was particularly strong in the first couple of months of the year, but did moderate thereafter, especially during holiday periods. Recurrent businesses outside Hong Kong recorded a profit of $1.2 billion. This improvement over 2023 was mainly due to our successful exit from 2 loss-making franchises in Sweden, for which provisions had already been made in 2023. Property development profit after tax was $10.3 billion, a reflection of there being several property projects reaching completion during 2024. Our property profits, which are more significant in some years than in others, are a vital part of our ability to finance our long-term investment in long-term projects. They show the Rail plus Property model in action. Property development profits linked to railway project investments made several years prior by MTR helped to set us up for the next phase of our growth story. Including property development profit, underlying business profit was therefore $17.5 billion. Together with changes in fair value measurement of our investment property, total net profit attributable to shareholders for the year was $15.8 billion. The group's financial position remains robust. This is a good starting point for the challenges of our significant program of investment and growth, both in terms of new projects and in terms of ongoing asset replacement and upgrades. As at the end of December 2024, the combined total of our available cash balances and undrawn committed facilities was close to $50 billion. Our net debt-to-equity ratio remained at the healthy level of 31.6%, which will help us to attract the necessary funding in the coming years of investment and growth. I now turn to the profits of our various business segments. In Hong Kong, the EBIT loss from Hong Kong transport operations was reduced to only $63 million compared to a loss of $1.1 billion last year. This improvement was principally due to the ongoing gradual recovery in patronage, partly offset by increased operating expenses, higher depreciation and the higher variable annual payment to KCRC. Our station commercial EBIT decreased slightly by 0.5%, tempered by the negative rental reversions for station kiosks owing to the challenging operating environment. The EBIT of the property rental and management business increased by 4.3%, mainly due to the additional contributions from our new shopping malls, The Wai and THE SOUTHSIDE. This was partly offset by continued negative rental reversion, a result of the challenged retail market and changing consumption patterns. Performance of the international business was steady, with the improvement in profitability primarily driven by the changes in our Swedish business. In terms of our consolidated balance sheet, total assets increased by $21 billion to $367 billion, mainly due to the additions to railway construction, renewals and upgrades. Total liabilities increased by $14 billion to $181 billion, largely on account of the net drawdown of loans. As such, total equity increased by $7 billion to $186 billion. As for our consolidated cash flows, our operating activities generated $18.5 billion of net cash inflow. Net receipts from property development were $1.7 billion. After including $22.8 billion of CapEx and other items, our net cash outflow before financing was $2.5 billion. Finally, after net debt drawdown, dividend payments and others, the net increase in cash was $5.5 billion. With regard to our financing and credit position, total group borrowings increased by $18.1 billion to $77.6 billion. This is on a gross basis. Net borrowings increased by only $12 billion. Our average borrowing cost for 2024 was 3.7%, 0.2 percentage points higher than that in 2023, but still low by historic standards and in absolute terms. We continue to enjoy access to the capital markets at a competitive cost. The corporation arranged around $30 billion of financing in 2024, with maturities ranging from 2 to 30 years. Around $7 billion of the financing was arranged under our sustainable finance framework, including the public issuance of a green offshore renminbi bond. This market-leading and award-winning transaction contains 2 tranches: a RMB 3 billion 10-year tranche with a coupon rate of 2.75% per annum and a RMB 1.5 billion 30-year tranche with a coupon rate of 3.05% per annum. A number of bank loans were arranged with sustainability-linked clauses, whereby the corporation will enjoy a modest economic benefit if pre-agreed environmental KPIs are achieved at specific observation times. As at the balance sheet date, more than 70% of our borrowing was on a fixed rate basis, an approach that has helped to mitigate the adverse impact of interest rate hikes in recent years. MTR's interest cover ratio stood at a solid 15.1x. Our CEO has just mentioned CapEx for new railway projects of over $100 billion and our 5-year asset renewal and maintenance commitment of over $65 billion. Turning now to focus specifically on the total CapEx forecast for the next 3 years, the total CapEx from 2025 to 2027 is estimated to be $90.8 billion, of which 46% or $42 billion will be used for Hong Kong railway maintenance CapEx. This is higher than in previous years, mainly because several railway maintenance and asset replacement projects are taking place at the same time, including for train, signaling and power system projects. 37% will be used for new Hong Kong railway projects, including Oyster Bay Station, Tung Chung Line Extension, Kwu Tung Station, Tuen Mun South Extension and Hung Shui Kiu Station. 14% will be allocated to the Hong Kong property business, while the remaining 3% is for Mainland China and overseas investments. With that, I now hand back to Jacob to present our outlook.

Thank you, Michael. The corporation upholds the missions to keep cities moving, contributing to Hong Kong's development over the years. We continuously strive for excellence in our businesses, upgrade railway assets and leverage innovative technologies to enhance passengers' travel experience and operational experiences -- efficiencies, while providing high-quality railway services to the public. On property development, subject to the construction and sales progress, we expect to book property development profits from the SOUTHSIDE Package 3 and 5 Ho Man Tin Station Package 1 and 2 and LOHAS Park Package 12. We'll also leverage the strategic locations of our malls to draw foot traffic and drive the local economy. While revenue from the property development is one-off and fluctuates year-by-year due to the railway completion cycle, our railway investment and operation expenses are constant and long term, requiring advance planning and effective resource allocation. Given the uncertainty in the pace of global economic recovery and interest rate trends and changes in travel and consumption patterns, we, like other enterprises in Hong Kong, are facing the challenges of the new normal. We'll continue to leverage our railway expertise to pursue strategic development opportunities in Mainland China, including the Greater Bay Area. We'll explore opportunities in other Mainland cities through our experience in station commercial business and diversify our business portfolio. Moreover, the corporation continues to seek opportunities in international markets. The corporation is embarking on a new milestone, investing HKD 100 billion to develop multiple new railway projects. Our future railway networks will continue to expand, fostering community development and benefiting more citizens. Through these strategic investments in railway infrastructure, the corporation is committed to Go Beyond Boundaries building the future of Hong Kong. We remain steadfast in our commitment to overcome the challenges while pursuing new opportunities. We'll adhere to the "think ahead and stay ahead" principle and develop comprehensive strategies and financial plans that drive future growth. All initiatives will be implemented throughout the considerations. Finally, I would like to express my sincere gratitude to every colleague for their unwavering dedication and tireless effort. The MTR team, whether in Hong Kong or other cities, continues to serve the public with professionalism and commitment. Together we'll continue to keep cities moving and keep Hong Kong moving. Thank you.

Thank you, Dr. Kam. Next, we will be answering your questions. If you want to raise a question, would you please raise your hand? And would you please introduce your name and the organization you represent before you ask your question. In the front, the lady there, please.

We see for property profits, it is a record high for you, but you also mentioned that there will be a lot of rail projects which will take up a lot of CapEx. My question is, do you have the confidence to face up to that challenge? What is the source of your confidence and what are your strategies? And also, how should the people at large understand that?

Well, thank you for the question. As I've mentioned just now, we are going into some of the property developments, and we are actually in the harvest phase for the property development. But at the same time, we are at a peak of investments because we have to invest into new railway projects. Because our business is a long-term business. So we have always been doing long-term planning, detailed planning, and we have always been prudent in our management of our finances. So we will always be keeping true to our principle of thinking ahead, staying ahead in managing our finances. If you look at our property development income, it is one-off and it fluctuates year-on-year. But at the same time, for investment peaks in the next 10 years or so, that will be our period where we will have to make very detailed planning. And we can see that for our R&P model, it can provide a very long-term resource to support our railway development. [indiscernible]

To be urgently in need of reinventing its business model to fund its rail projects and asset upgrade of over HKD 165 billion, do you have any plans to issue bonds to fund the projects? And if yes, what will be the details and the amounts? If no, how are you going to raise funds for these projects?

Thank you. The Rail plus Property model has been in use for a long time as not only as a source of funding, but it also generates the patronage or additional patronage to support the railway as well as allowing us to help Hong Kong's city development. So it has multiple uses. It also, of course, enhances the housing supply over the years. And with this model, we have gone through different cycles of development. We have cycles of heavy investment. We have also cycles of steady operations. The model has proved to be useful in many different occasions. That will remain our major financing model. But based on that, we also have to manage the cash flow demand going forward. There are different means of managing the financing. Of course, bond is a common method used by many companies, including ourselves, which will continue. But the key point is that for us to plan forward, the cash flow demand will differ on a year-to-year basis, and we have to manage our finance prudently, and there will be different means to be deployed at the right time as the demands require.

My question goes, this year we have a satisfactory property development profit. So coming up in the new financial year, what will be the situations? How about your new launch and the booking? What is the progress? And also, the second question goes, the reversions. The rental rate might be challenging to you, but still, do you see any positive trends? Can you see that the reversion rates coming steady and stable? And other question is also in relation to the operations of railway. Of course, you have recurrent income that is quite significant. However, In the long term, you need to handle the expenditure in relation to railway as well. So how about any elaborations on the financing means? Do you have any flexible ways to deal with your asset?

As I've mentioned just now, for property development projects, there were some projects which are in the harvest phase. For example, coming for Wong Chuk Hang, there are 2 phases which will be booked. Ho Man Tin, there are 2 phases to be booked and also in LOHAS Park station, there will be more. As for our -- whether it is for the commercial shops or the shopping malls that we have, so for station shops and also our shopping malls, we see that there is a new normal. And also, we are adjusting our trade mix, that is our tenant mix. And also in providing services, we provide a variety of services to improve the experience of our patrons. For example, we will be promoting culture and heritage. And hopefully, this will also encourage more traffic as well as spending. As for finances, we are in a long-term business. Rail is a decades-long business. So we always have long-term financial planning. So we will continue to do so, to be prudent in our long-term financial planning. There are many ways of going about financing at different times. For example, we will have different needs for cash flows. And according to our different needs and demands, we will be using the appropriate means in keeping with the market to provide the financing. At the back there, the lady, please?

[indiscernible] Commercial Press. How do you see this year's property market in Hong Kong this year? As some people have mentioned, there -- it seems that for the tendering process, some developers are being very tricky. And it seems the entire atmosphere is very much in the doldrums. So how do you see the property market? First of all, in bidding for land parcels? And what about the property price trends?

What I can say is that in the properties, the top MTR stations, they are quite popular. First, we have superior geographic locations, which connects to the railway. It facilitates travel. So -- and also, it usually have primed malls associated with that. So usually, our properties when launched to market are quite well received. Any other supplements from David?

Thank you, Dr. Kam. I think the property market this year is really associated with supply and also the market confidence. In recent days, the financial markets are quite prosperous. Maybe our economies will recover this year and next year. So with the recovery of the economy in the future, I believe the property markets will also become more stable and solid.

I can see that the profit has more than doubled, but the dividend remains the same. Could you please share more about your dividend policy in the future? Can shareholders expect a slower growth of dividend payout? And also, could you please update more about the supply of land and property? The two questions.

Okay. And again, this year, as you can see, our property development profit indeed is higher, mainly because we are in the harvest stage of our property development project, which is associated to previous railway project. However, such kind of property development profits are one-off and fluctuate every year. However, what we are faced with is the peak of investment. So in terms of resource allocations, we need to be prudent. And the Board has also taken into account our business positions and also cash position, cash need in the future and also the general market trend as well as economic development. So we have decided to maintain the same dividend payout. Regards to our property development, I would like to have David again.

In the next 12 months, in terms of supply in Tung Chung East Station and also in the Tuen Mun station, on top of that, we have Package 1. We will be able to offer 2,200 units in terms of residential sales. In terms of sales of the property, it really depends on the construction progress and the sales progress. And also, you can see at top of Wong Chuk Hang and also LOHAS Park and also Yau Tong, we have several programs that we'll be able to launch in the next 12 years, which will reach about 5,000 units.

My first question goes -- my first question is in relation to railway. There are many accidents in relation to railway [indiscernible] to reduce the accident rate. And also my third question is in relation to land. We have HKD 100 billion of commitment -- dollars of commitment for railway. Could you please tell me more about the process and the use of the capital?

How should I reply to your question? Maybe in English. Of our train service, our reliability performance is actually among the very best in the world. But of course, railway is made up of hundreds of thousands of components. They all have to work together to ensure safe and reliable service. Therefore, by nature of the business, there will be incidents from time to time. But overall, I think our principle is to continue to provide safe, reliable and convenient services to all of our customers. And even during an incident, we have maintained service throughout, or at least we do our best to do so. In terms of the HKD 100 billion investment for the new railways, we are in a harvesting period from the previous property development projects in terms of profit, but we are also facing an investment peak, a peak demand on cash for investment. So we are going through a very -- we're going into a period that require particularly prudent financial management. And this is what we are experienced in doing, we are able to do, and we will continue to do.

In your performance, you have mentioned that revenue is growing year-on-year, but then there is HKD 165 billion in terms of financial outlay for the future. And will there be financing needs? And should we be confident in the MTR's finances? And also in your performance and your report, you talk about promoting consumption up North, but at the same time, you see this performance in the local shops. How do you balance the two?

As you can see that from our presentations, our profit was quite to our satisfaction and our financial positions are healthy in terms of our borrowing cost, and our profits, you can see, are stable. And you can also see that our property development projects are in the harvesting phase and also our previous railway projects have been completed and also in the harvest stage. However, we are also faced with an investment peak in the future. In the last 4 decades, we have been through different cycles of investment in some stable operational phases as well. And through our prudent financial management and also the R+P model, we are able to maintain a sustainable financial position. So we will continue to leverage our experience and expertise to manage our finance in a professional manner. In terms of our new normal, including going up in the North for consumptions. But at the same time, we can see more inbound tourism to Hong Kong with a different mix. I believe this is 2-way. This is a 2-way integration. So in terms of our mall and railway services, we need to be aligned with these new trends to be better.

My question goes, you have left gearing ratio above 31%. This is rather low. And you also mentioned in the future there will be financial needs. So would the gearing ratios go up significantly, maybe above 50%? And also, does it affect your dividend payout in the future? Just now you also mentioned that this year you will not have as many property development profit booked compared to 2024. However, will that have a significant drop in '25 or even '26? If yes, in international and China Mainland business, will you see any help? Meaning, the diversification of your revenue, will that help with your reductions in property development profit?

Well, let me talk about finances overall. We will be going into a peak phase for investment. And at the same time, for our property projects, it is a harvest phase. But of course, for property, it is one-off. And after booking, you have to wait for the next one. And next year, we will have 4 to 5 projects which will likely be booked. The Board had decided on the dividend, and I'm sure all listed companies will have similar considerations, and that is considering the cash position, investment needs, the operation of the company and also the general outlook of the future economy, et cetera. And of course, we'll have to balance the expectations of shareholders' returns. And after balancing and analyzing all the elements, there will be a decision, and the Board of our company likewise has done so. Now as for Mainland and international businesses, we see that there is a steady increase. And for instance, last year their contribution was 10%, depending on whether you include property development revenues. We see that for our business, it is in a stable growth. And for the Mainland, for example, for station commerce development, it will provide us with more diversified source of revenue.

Thank you, Dr. Kam. Now because of time, we'll have two more questions. The lady in the front, please.

Specifically, the following question, again, on financing. Now, just now Dr. Kam said that there is a common method. There are different ways of financing. And for the short time selling off assets or injection from shareholder capital, would those be options for you? And also for the HKD 165 billion projection, how much of it is cash in hand or is already -- there are planned financial sources for it?

Well, first of all, for cash flow needs, we will have a 10- to 12-year projection in our existing renewal -- existing railway renewal, et cetera. All these will happen within this period. But this is not a smooth line. For every year, it differs in terms of our expenses. So these cash flow needs, we will use different ways to satisfy them and to finance for them or to manage our cash flow demand and the cash flow supply. Just now, you mentioned 2 methods. At present, we do not have plans to go above them.

Just now, Dr. Kam said that the company has available a number of different financing means. What are some of your priorities for these means, please? As for the Northern Link you are discussing with the government, for the future development mode, will you be considering other cooperating parties so you're not just going it alone for MTR, so that you will be lowering the CapEx pressure? And also for the station operation EBIT, it is narrowing last year. So for the next few years, do you see it turning black? And also for leasing, we see the extension of leases. There is a lowering of lease terms. So will you be trying to increase the lease income through certain means? Will this reversal trend be reversed, please?

Well, that's a wide-ranging range of questions. So first, I believe we have different means of financing. However, the choice will be down to the prevailing market situations and our cash flow. So it really depends on the situations. We will work with the markets to launch our financing. In terms of the Northern Link, the first phase is Kwu Tung station. It has been in full swing now, the constructions of Kwu Tung Station. And also in terms of the prework, the advance work of the main lines is also undergoing. We are doing a detailed planning for such a Northern Link. And also in terms of the Spur Lines, Spur Lines are also in the planning stage. In this process, we are in close communication with the government. And to your questions in relation to finding partners, let me put it this way. For the world, including China Mainland and Hong Kong, when we talked about invest constructions or operate railways, we have different situations, including sole investment and joint ventures. These are all very common. In terms of operations of railway, yes, of course, we -- in terms of the railway operations, we want to turn around the EBIT, of course. But we also have the one-off provisions this year, so it could be negative. In terms of the rental rate, as we mentioned in the presentations, we are faced with the new normal of tourism and shopping. We need to work with the new market trends. And also, we want to have a new trend mix. We also want some promotions and activities in relation to cultural tourism to increase our attractiveness. If we can't attract more traffic, then of course, with better business, we'll have better reversion rate.

Thank you very much, Dr. Kam. This is the conclusion of our annual result announcement. Thank you very much for your presence. [Statements in English on this transcript were spoken by an interpreter present on the live call.]