High assets and high liabilities come together in front of the subway company. On May 23rd, # Beijing Metro's total assets exceeded 800 billion # and # Beijing Metro needs to pay 14.9 billion yuan in interest per year # both made it to Weibo's local hot search, thus attracting attention to the issue of subway profitability. However, it is not only Beijing Metro that has such a situation, among which the asset liability ratio of Lanzhou Rail Transit in 2022 reached 82.63%. Beijing Business Daily reporters have also noticed that subway systems in various regions are more or less dependent on government subsidies, which reflects the current difficulty of subway systems in breaking even. The subway has the attribute of urban public service, which is a necessary support for "low-carbon" travel and solving urban diseases. However, the high investment and long return period in subway construction are also practical issues. The discussion on the profitability of the subway aims to find a replicable model that can shorten the investment return cycle of the subway, reduce the burden of government investment, and also better serve the citizens. Industry insiders suggest that cities in mainland China can learn from the successful experience of MTR and develop TOD models to reduce their dependence on government subsidies. In addition, subway construction generates excellent and scarce assets. Despite current losses, in the long run, its value cannot be solely considered based on narrow benefits or profitability. The development of the high debt common problem subway is closely related to the financial situation of the subway company. According to data, the parent company of Beijing Metro, Beijing Infrastructure Investment Co., Ltd. (hereinafter referred to as "Beijing Investment"), has the largest asset size, exceeding 800 billion yuan in 2022, and has a debt of 533.8 billion yuan, with an asset liability ratio of 65%. At the same time, due to its high debt, Beijing Metro has to pay a large amount of interest every year. In 2022, the interest expense of Beijing Investment was 14.938 billion yuan. According to media reports, a total of 44 cities across the country have opened rail transit operating in subway mode. Except for some companies whose financial reports are not publicly disclosed, there are currently 30 rail transit companies whose financial reports for 2022 can be queried. It is worth noting that among these 30 companies, high asset liability ratios are not uncommon. Among them, in 2022, the total assets of Shenzhen Metro were 661.6 billion yuan, ranking second, and the total liabilities were 350 billion yuan, also ranking second. In terms of asset liability ratio, the highest is Lanzhou Rail Transit, which is the only enterprise with a ratio exceeding 80%. The asset liability ratio of Lanzhou Rail Transit in 2021 was 80.79%, compared to 82.63% in 2022, an increase of 1.84 percentage points. Under high liabilities, the interest expenses of subway companies are also not low. Taking 2022 as an example, in addition to Beijing Investment, Chengdu Rail Transit has an interest expense of 6.871 billion yuan, Hangzhou Metro has paid an interest expense of 4.442 billion yuan, and Chongqing Rail Transit has an interest expense of 4.29 billion yuan. An Guangyong, the Credit Management Committee of the All Union Mergers and Acquisitions Association, introduced to reporters from Beijing Business Daily that a relatively high asset liability ratio means that a considerable portion of assets are supported by debt financing. At the same time, high interest rates mean that the subway company needs to pay a large amount of interest as the cost of debt, indicating that the subway company is facing significant financial pressure during its operation and also reflecting its operational status
Edit：Hou Wenzhe Responsible editor：WeiZe
Source：BeiJIng Business Dairy
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