High-speed rail to post 1st profit within 2 years

By Tim Culpan, Bloomberg

Taiwan High Speed Rail Corp., operator of the bullet train along Taiwan’s western technology corridor, said it will become profitable for the first time in 2009 as it attracts more passengers.

The company will break even on a cashflow basis next year and post net income for the first time in the first half of 2009, Robert Hung, chief financial officer of the Taipei-based company said at a briefing with the Taiwan Foreign Correspondents’ Club yesterday. Taiwan High Speed Rail’s NT$489 billion link between the northern city of Taipei and Kaohsiung, 345 kilometers to the south, began operations Jan. 5, more than 16 months behind schedule. Business passengers are using the train to travel to work at the island’s science parks which form the hub of Taiwan’s technology industry.

The company will sign a deal with a foreign financial services firm within three months to jointly develop property around its station in Hsinchu, northern Taiwan, the first step in its plan to build hotels and other facilities on 30 hectares of land it owns along the route, Nita Ing, chairwoman of Taiwan High Speed Rail said yesterday without providing details

“We do have someone. We’ll put up the land, and they’ll put up the money,” she said. The partners will set up a new 50-50 venture to manage the Hsinchu property with four other stations to follow the same business model, she said.

Taiwan High Speed Rail won a tender 11 years ago to build and operate the line, and is required to return operation of the project to the government in 2033 with the surrounding land to be handed back in 2057.

Shares, which currently trade on Taiwan’s Gretai Securities Market, will transfer to the main Taiwan Stock Exchange next year “depending on the market,” Ing said. The company posted sales of NT$9.19 billion for the first nine months of this year.

The company currently operates 91 services per day which are about half-full. It will almost double services to 176 trips a day by March, Ing said.