JP Morgan: Upgrades MTR CORPORATION (00066) rating to "overweight" with a significantly increased target price of 39 Hong Kong dollars.

JPMorgan Chase released a research report stating that MTR Corporation (00066) has seen a cumulative increase of about 11% in its stock price since the beginning of the year, still relatively lagging behind the real estate sector (up 19%), mainly due to its low Beta characteristics, and the market's focus on its property asset net asset value (NAV) discount. However, the bank has upgraded its rating from "neutral" to "buy", with a target price raised from HK$29 to HK$39. The bank believes that the market has overlooked Hong Kong MTR's unique dual role as an infrastructure operator and property developer, its rigorous balance sheet management and continuous reinvestment of operating cash flows provide the momentum for sustainable growth. Meanwhile, improvements in the residential market, the strong correlation between stock prices and property prices, and the strong demand from developers for land reserves all bring better bidding results and capital expenditure support to Hong Kong MTR. With the upcoming major catalyst of the second phase agreement of the Northern Link, coupled with a preference for debt rather than equity financing in its conservative capital structure, Hong Kong MTR is expected to be revalued.