Subway Profit Ranking! Of the 29 cities, 28 lost money

Financial vernacular

2024-05-24 11:48Posted in Guangdong real estate creators

Author: Yu Fei

01

29 cities, 28 loss-making

The loss of the subway is nothing new. Last year, however, was different.

Although most of them were losing money in previous years, there were always a few beautiful boys. For example, Shenzhen, which dominates the list of perennial profits, as well as Wuhan, Jinan and other cities.

Last year, according to the 29 cities that have released data sorted out by Jiemian News, if government subsidies are deducted, 28 of the actual profits are in the red.

Cartography: City Finance; Data: By metro company

As you can see from above:

First, if government subsidies are included, 26 of the 29 cities have positive profits, and only three have losses, such as Lanzhou, Shenyang, and Foshan, which are still losing money even if they have government subsidies.

Second, if government subsidies are deducted, 28 of the 29 city's subway companies and rail transit companies are losing money. Even Shenzhen, the king of subway profits, has not been spared.

This has never been done before. Moreover, combined with the past combing of this number, it will be found that the number of cities with subway losses is increasing year by year.

Of the 22 cities that released data in 2020, only 7 cities, Shenzhen, Wuhan, Nanchang, Jinan, Shenyang, Xiamen, and Lanzhou, had positive profits after deducting subsidies, while the remaining 15 cities all lost money.

Among the 24 cities that disclosed data in 2021, after deducting government subsidies, only Shenzhen, Wuhan, Nanchang, Jinan, and Guangzhou were positive, and the remaining 19 cities all lost money.

Of the 32 cities that disclosed data in 2022, only 5 cities, Wuhan, Shenzhen, Jinan, Shanghai, and Changzhou, had positive subway profits, while the remaining 27 were losing money.

Of the 29 cities that disclosed data in 2023, 28 lost money.

Third, Beijing has the largest subsidies and the largest losses.

Last year, the Beijing subway received a government subsidy of 25.34 billion yuan, and after deducting this subsidy, the profit loss reached 22.94 billion yuan.

In fact, in the data combed through the previous years of this number, it will be found that Beijing has always been the city with the largest subway subsidies and losses.

In 2021, the Beijing subway was subsidized by 21.466 billion yuan, deducting the subsidy loss of 19.012 billion yuan. In 2022, 26.286 billion yuan will be subsidized, and the loss will be 24.104 billion yuan after deducting subsidies.

02

Why are they all losing?

Why are the subways in various cities losing money? The answer is that operating costs are high.

We all know that the construction cost of the subway is high, but in fact, the operating cost is also high.

In terms of construction costs, according to the relevant person in charge of the National Development and Reform Commission, the average cost per kilometer of the subway is about 700 million yuan.

Specifically, the first phase of Nanjing Metro Line 2 (mainly underground) has a total length of 25.14km and a total cost of 12.835 billion yuan, 510 million yuan per kilometer. Hangzhou Metro Line 1 (mainly underground), with a total length of 47.97km, a total cost of 23.642 billion yuan, and 492 million yuan per kilometer. Beijing Metro Line 16 (all underground), with a total length of 49.8km, with an estimated total investment of 60 billion yuan, or 1.2 billion yuan per kilometer.

In the fourth phase of Chengdu rail transit planning, the construction cost per kilometer of the third phase of Line 18 is as high as 1.026 billion yuan, and the second phase of Line 8 is also close to 1 billion yuan/km.

In terms of operating costs, according to the "Report on Urban Rail Transit Development Strategy and the 14th Five-Year Plan" Development Ideas released by the Urban Rail Transit Association, the median operating cost of rail transit enterprises (excluding overhaul and renewal) in 2019 was 11.2615 million yuan/km, and the operating cost of rail transit enterprises in Beijing, Shanghai, Guangzhou and Shenzhen that entered the overhaul and renewal period exceeded 15 million yuan/km.

At the same time, the investment in the construction of urban rail transit is also very high, and the cost of one kilometer of subway is hundreds of millions of yuan. For example, the planned Fosuiguan intercity project in Guangdong Province costs an average of 948 million yuan per kilometer.

These operating expenses are mainly spent on labor costs, maintenance costs, energy consumption, maintenance costs, etc.

The high cost of construction and operation is the root cause of the loss of subways in most cities.

Therefore, the subway company simply relies on the revenue from ticket sales, which is completely unable to cover the cost.

Last year, the Guangzhou Metro had the highest ticket sales revenue, with 7.36 billion yuan. It is followed by Beijing, Shenzhen, Wuhan, Chengdu, Xi'an, Nanjing, Chongqing, Wuxi, and Changsha.

However, such high ticket collection by metro companies such as Guangzhou, Beijing, Shenzhen, and Wuhan still cannot hide the cost.

Before last year, the reason why Shenzhen was able to become the profit king of China's subway was because the more important identity of Shenzhen Metro was a real estate company.

Anyone who has been to Shenzhen knows that the underground business and above-ground property of Shenzhen Metro are the characteristics of Shenzhen.

In 2021, 9.571 billion yuan of Shenzhen's revenue of 16.4 billion yuan was obtained from the integrated development of the station and city, and the revenue from ticket sales of the subway was only 3.918 billion yuan. If you just buy tickets, you have to lose everything.

The same is true for the Wuhan Metro.

Wuhan Metro's 2022 annual report shows that the revenue of ticket revenue in 2022 was 3.127 billion yuan, compared with the input cost of 5.412 billion yuan, and the net profit was -2.285 billion yuan.

In the same way, no city's subway can make a profit by selling tickets alone. The reason why Wuhan was able to rank first in net profit is that it has adopted the same TOD model as Shenzhen.

The revenue of the primary development of Wuhan Metro resources was 5.394 billion yuan, the cost was 2.326 billion yuan, and the net profit reached 3.068 billion yuan, which made up for the loss caused by the ticket revenue business and brought a lot of profits.

In fact, Beijing Metro also has a land development business, but the income from the land development business cannot cover up the hole in its operating costs.

In 2023, the profits of Shenzhen and Wuhan will turn negative after deducting government subsidies, mainly because real estate is not profitable.

Last year, Shenzhen Metro's real estate-related income fell by 8.3 percent, and Wuhan Metro's fell by an astonishing 97.1 percent, with real estate-related income of only 180 million yuan. The real estate income of Nanjing, Qingdao and Nanning metro has declined to varying degrees.

03

It will be more and more difficult to get approved for the subway

It is precisely because of the high construction and operating costs that almost all urban subways are relying on financial subsidies to get by.

The loss is not terrible, after all, the subway and the city are one, and it is possible to lose the harvest of the east.

In other words, the subway itself is not profitable, but it brings convenience to people's livelihood and improves the efficiency of flow, and the economic benefits generated can make up for the loss of the subway itself.

In other words, as long as the economic benefits generated by the subway can compensate for the losses of the subway itself, the more the better for the big cities that can afford it.

However, in recent years, the macro environment has changed, and the problem of local debt has become prominent, which has made the finances of many cities stretched.

Therefore, as early as 2018, the National Development and Reform Commission raised the threshold for subway declaration.

The general public financial budget revenue of the city applying for the construction of the subway should be more than 30 billion yuan, the regional GDP should be more than 300 billion yuan, and the permanent population of the urban area should be more than 3 million. To guide the orderly development of light rail, the general public financial budget revenue of the city applying for the construction of light rail should be more than 15 billion yuan, the regional GDP should be more than 150 billion yuan, and the permanent population of the urban area should be more than 1.5 million. The initial passenger traffic intensity of the proposed subway and light rail lines shall not be less than 7,000 and 4,000 passengers per kilometer per day, respectively, and the long-term passenger flow scale will reach more than 30,000 passengers and more than 10,000 passengers in one-way peak hours, respectively.

Source: Official website of the State Council

That is to say, the city that declares the subway needs to meet the requirements of GDP of more than 300 billion yuan, fiscal revenue of more than 30 billion yuan, permanent population of urban area of more than 3 million, initial passenger transport intensity of not less than 7,000 person-times, and long-term passenger flow scale of more than 30,000 person-times per single peak hour.

In addition, according to the reply of the Weifang Municipal Transportation Bureau to citizens' questions last year, it can also be learned that the current National Development and Reform Commission still does not accept the first round of construction planning of general prefecture-level cities.

In other words, cities that have not yet opened a subway or are under construction will have a chance to declare in the future.

This also means that the subway has entered the era of stock.

Cartography: City Finance; Data: Metro or rail transit groups in each city

Moreover, in the past few years, even if some core cities have applied for a new round of subway planning, some lines have been cut because the passenger flow intensity is not up to standard.

Typical cities such as Shenzhen, Hangzhou, Chengdu and so on.

Last year, Shenzhen was approved for the fifth phase of the subway plan, and 9 lines were approved.

Compared with the previous public version, 4 lines have been cut. The four lines that were cut were:

the first phase of Line 18 connecting Bao'an Shajing and Guangming; the first phase of Line 21 through the central part of Longgang District; Prepare to connect with the northern extension of Line 11 connecting Dongguan Chang'an and Dongguan Line 3; Contact Pinghu Center, Dongguan Fenggang and Longgang Center Line 10 East Extension.

The fourth phase of the Hangzhou Metro plan approved by the National Development and Reform Commission in November 2022 includes nine projects, including the second phase of Line 3, the third phase of Line 4, the second phase of Line 9, the second phase of Line 10, the third phase of Line 10, the first phase of Line 12, the first phase of Line 15, the first phase of Line 18, and the Wuchang parking lot of Line 5, with a total length of 152.9 kilometers.

Compared with the 299.8 kilometers announced in the first edition, it has been reduced by 146.9 kilometers, which is equivalent to being cut by nearly half.

Compared with the projects announced in the first version of the EIA, the following reductions have been made:

West extension of Line 2: It was originally planned to be Bottle Kiln Station - Liangzhu Station (not included).

West extension of Line 5: It was originally planned as Nanhu East Station - Zhijiang Laboratory Station.

South extension of Line 6: It was originally planned as Guihua West Road Station - Lingyang Road.

South extension of Line 10: The original plan was to be Suoqian Station - Zhejiang University Station (not included).

Line 11: It was originally planned as Jiren Road Station - Convention and Exhibition Center Station.

Line 13: It was originally planned as Xitacun Station - Songjiawan Road Station.

Line 14: Originally planned as Baijiayuan Road Station-Chongxian North Station.

Line 21: Originally planned as Medical Port Town Station - Yangjiaqiao Station.

Chengdu, cut more fiercely. In the "Chengdu Urban Rail Transit Network Planning and Optimization Plan" released by Chengdu in mid-2021, 19 of the original 55 lines were cut. Although 19 lines were added later, in the expression, these 19 lines are classified as long-term planning.

In addition, Harbin's subway and planning, because the debt indicators were not up to standard, were returned.

Qingdao's Line 14 was also called to stop.

Therefore, cities that have not yet built subways have basically no hope of being approved. If the subway city declares again, there will also be passenger flow restrictions and the line will be compressed.

This is indeed difficult for trillion-dollar cities such as Yantai and Quanzhou.

Of course, although some cities are not qualified themselves, they can enjoy the extension dividend of core cities in the era of metropolitan areas.

For example, in Ezhou, Hubei Province, as early as 2021, the third phase of the Gedian section of Wuhan Metro Line 11 was put into operation, connecting Wuhan and Ezhou, and making Ezhou also enter the subway era.

The subway between Guangzhou and Foshan has long been interconnected.

At present, there are three subway interconnections, namely Guangzhou-Foshan Metro (Foshan Metro Line 1), Foshan Metro Line 2 and Guangzhou Metro Line 7.

According to the plan of Guangdong Province, there will be 18 subway lines between Guangzhou and Foshan in the future.

Shanghai Metro Line 11 has long been extended to Kunshan, Suzhou, and Huaqiao, Guangming Road, and Zhaofeng Road are all in Jiangsu.

Beijing Metro Line 22 is extended to Langfang and will open in 2025.

The above are all based on the extension of core city dividends, and they do not have their own declaration qualifications.

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Personal opinion, for reference only