MTR Corp's earnings hit 14.1% to HKD7.3b

Here's why analyst is quite impressed.

In a report, Moody's Investors Service says the MTR Corporation Limited's (MTRC) 1H 2013 results were in line with Moody's expectations, and will not immediately impact its Aa1 issuer and senior unsecured ratings.

The ratings outlook remains stable.

"MTRC's operating performance in the first half of the year was solid and its credit metrics were strong," says Ivan Chung, a Moody's Vice President and Senior Credit Officer.

"While the company's progressive expansion into markets outside its home base of Hong Kong, notably China, will present certain risks, we expect it to continue managing its expansion prudently," adds Chung.

In 1H 2013, total revenue and EBITDA reached HKD19.2 billion and HKD7.3 billion respectively, up 12.0% and 14.1% year-on-year.

Its Hong Kong-based businesses -- train services, as well as commercial property rental and management -- contributed 63% of total revenue, and accounted for over 93% of EBITDA.

In terms of credit metrics, the MTRC recorded low leverage and strong interest coverage. As of June 30 2013, the company's total debt to capital was 21% and for the 12 months ending June 2013 adjusted debt to EBITDA was 2.2x.

At the same time, EBITDA interest coverage was over 10 times. These financial metrics are appropriate for the company's ratings.

Moody's recognizes MTRC's good track record in managing rail plus property development projects in Hong Kong.

Moody's also notes that the company is leveraging its expertise on similar projects in China, which will enhance its profitability.