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China Railway Construction bags 6.23b yuan order

By Zheng Lifei (China Daily)
Updated: 2009-04-09 07:46

China Railway Construction Corp said yesterday that it had won contracts worth 6.23 billion yuan for a rail project in East China, the latest mega order the company has won this year from the country's frantic rail building boom.

The country's second biggest railway and expressway builder said its subsidiaries have won an order to build part of a passenger-only express rail between Shanghai and Hangzhou, capital city of East China's Zhejiang province.

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The value of the contracts is equivalent to 3.51 percent of the company's 2007 revenue under the Chinese accounting standards, the Shanghai-listed builder said in a stock exchange filing.

This is the latest mammoth contract the railway builder bagged this year.

Last month, the company announced that its subsidiaries had won contracts worth 28.12 billion yuan for rail construction in the country.

And it also won a part of a $1.8-billion light rail project in Saudi Arabia to build 450 km of high-speed rail linking the Red Sea port city of Jeddah to Mecca and Medina - Islam's two holiest sites.

The government has said it would spend 5 trillion yuan until 2020 to add another 41,000 km long railway to its existing rail network to ease its congestion and meet rising freight and passenger demand.

Railway and infrastructure builders like China Railway Construction Corp and its archrival China Railway Group, analysts say, will stand to benefit enormously from the country's railway building push and the infrastructure construction boom under its 4-trillion yuan economic stimulus package.

"Considering the macroeconomic policy and national and regional economy development, the railway, light rail, hydropower and water facilities construction are relatively steady segments in the construction sector," Aijian Securities said in a research note.

"And, railway and urban light rail construction, in particular, are expected to experience explosive growth in the next few years," the note added.

China Railway Construction Corp has bagged 70.5 billion yuan worth of contracts and orders so far this year, according to calculations by TX Investment Consulting Co.

The research firm said the company was likely to chalk up 263 billion yuan in revenue this year, up 25 percent, giving a "buy" rating on the company.

China Railway Group, the country's biggest railway builder and China Railway Construction's archrival, has so far booked 93.2 billion yuan worth contracts and orders this year, according to data complied by Guoyuan Securities.

Goldman Sachs yesterday gave a "buy" rating on China Railway Construction Crop and set a target price of 10.89 yuan for its Shanghai-listed shares and HK$12.31 for its Hong Kong-listed shares.

The company's Shanghai-listed shares declined 1.15 percent to close at 9.46 yuan yesterday.