Zhongtong Finance APP learned that Goldman Sachs has released a research report stating that it maintains a "buy" rating on MTR Corporation (00066) and raises the target price from HKD 32.5 to HKD 33.9. The company's mid-term core net profit increased by 83% year-on-year to 5.8 billion yuan, exceeding the bank's forecast of 4.8 billion yuan. In addition to the increase in property development profits, performance was also boosted by better-than-expected recovery in Hong Kong operations, with Hong Kong operating profit in the first half of 2019 reaching 77%.

The report pointed out that MTR's net debt-to-equity ratio increased by about 1 percentage point to 27.5% compared to the end of last year. MTR's net debt ratio, which accounts for about 50% of the capital expenditure based on the characteristics of the company's business cash flow, is still safe. If the annual operating cash flow of 15 billion yuan and the receivables or pre-received payments of 15 billion yuan from developers are calculated, two-thirds of the planned capital expenditure of nearly 90 billion yuan can be filled, and the remaining one-third will increase the company's net debt ratio to slightly higher than 40%.

The bank believes that the company's balance sheet is still healthy and does not affect its ability to maintain dividend payments. MTR has also adjusted its negotiation strategy with the government and real estate developers. Goldman Sachs still believes in the stability of the company's income flow and believes it is worth giving a premium compared to Hong Kong developers. A dividend yield of 5.1% is not expensive compared to other Hong Kong utilities stocks.