A lawmaker and former MTR engineer on Wednesday welcomed a move to link the rail operator's fares to its property development profits, but cautioned that consumers should not expect fares to go down.

Speaking on RTHK's Hong Kong Today programme, Gary Zhang said the revised fare adjustment mechanism, approved by the Executive Council a day earlier, still did not give enough weight to the company's profitability. Under the formula, a deduction of 0.6 to 0.8 percent will be applied to any fare increase depending on property development profits in Hong Kong.

"I think the direction is correct to link the profits of the MTR company to the fare increases, but the percentage is too low," Zhang told RTHK's Samantha Butler. "If the percentage could be set at 0.6 percent to 1.2 percent that would be more reasonable.

"That means, if you look at past data, where MTR is making a HK$10 billion profit in a particular year, we're talking about approximately 50 percent discount to the total fare increase calculated from the formula."

The formula will still consider factors such as the inflation rate and a wage index of transport workers.

Zhang said fares were still likely to go up later this year, despite the changes and a raft of fare reductions offered by the MTR Corporation.

The lawmaker said it would also be more reasonable to include profits from other operations in the calculation, adding: "We know MTR is making a huge amount of money from its rental business, from its shopping malls and that's a very significant amount, and also from its overseas operations."

He also said an increase to the penalty for disruption on the railway was welcome, and he praised the decision to increase the penalties for incidents that happen in peak hours.

He predicted that the fare reductions would cost the corporation no more than about HK$50 million.

Last year, the railway giant recorded a net profit of HK$10.4 billion from property development, 12 percent up from 2021. The corporation is listed on the stock exchange but is majority owned by the government.