MRT news: Profit is very possible, just follow MTR Hong Kong

MTR news: Profit is very possible, just follow MTR Hong Kong

Can TODs drive MRT Corp to become profitable?

I was at the Malaysia Land Conference 2024 (image below, where I was the chairperson) when a speaker shared about Transit Oriented Development. (TOD). These days, many developments are being branded as TOD. In my own definition, TOD simply means everyone staying there should take the public transport. TODs should be maximised in terms of the number of units and minimised in terms of the number of car park spaces because that’s not the purpose of the TOD in the first place.

If we have many TODs, does it mean more people will take the public transport like the MRT and therefore the ticket sales revenue will increase and thus the MRT Corp will become very profitable? If this is the case, then we should just keep launching TODs? Actually, there is NO WAY that MRT Corp will be profitable by relying on ticket sales alone yeah. As of now, it’s still suffering losses as reported recently and caused an uproar.

Meanwhile… the MTR Corp in Hong Kong’s net profit declines to HK$7.78 (RM4.64) billion in 2023

Article in thestandard.com.hk MTR Corporation’s (0066) net profit declined 21 percent to HK$7.78 billion in 2023 from a year earlier as gains from property development slumped.

Profit from property development plunged 80 percent to only HK$2.08 billion last year, as earnings from Hong Kong recorded the same percentage fall to HK$2.04 billion and those from mainland China slid 28 percent to HK$48 million.

Profit from recurrent businesses reached HK$4.3 billion versus HK$157 million in pandemic-hit 2022, on the back of the recovery of local economic activities and the resumption of cross-boundary services with the mainland.

The recovery also drove up total revenue last year by 19.2 percent to nearly HK$57 billion. Read the full article here: Article in thestandard.com.hk

RM4.64 billion profits! Let’s aim for RM1 billion, maybe?

MTR did NOT earn their profits from ticket sales yeah. If they have just that, it would also report losses because public transport is a public service. We cannot reduce the maintenance just because we have lower ticket sales. We cannot choose not to increase the number of services to cater to more users simply because we do not have enough ticket sales revenue. We also could not stop the service simply because the company was suffering losses. This is why ticket sales is NOT the solution.

The solution is “recurrent business.” How MRT Corp should also own the shops on which the stations are built, get it working well and then rent it out to the highest bidder. How MRT Corp could have lands which belong to them being developed into office towers which is within walking distance and thus providing a win-win solution to everyone.

Companies have an office space near MRT, people could take public transport and MRT Corp to have recurring rental incomes. There are a lot of things we can learn from how MTR Hong Kong has become so profitable. It’s time that these profits come to MRT Corp which provides a service to Malaysians and not just to the private developers who profits from owning all the land surrounding the MRT stations.

More advertising revenues would help as well. More branding of stations could help. Think of having more functions in MRT stations maybe? Basically, get a team which solely focused just on this and keep making it better year after year. I wish MRT Corp all the best because this is for us Malaysians and also for tax payers. Remember, when they suffer losses, someone has to take up the bill yeah.

Please share with people you care.

Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER). 

Alternatively, Follow me on Telegram here.

Please LIKE kopiandproperty.com FB page to get daily updates about the property market beyond kopiandproperty.com articles.