Benefiting from the country's massive push to build railroads under its 4-trillion-yuan stimulus package, China Railway Group said yesterday that it has won 11 construction contracts worth a total of 22.65 billion yuan through its various subsidiaries.
The country's biggest railway and highway builder said the value of the contracts amounted to 12.55 percent of its 2007 revenue.
Two of its subsidiaries won contracts to build a railway within Southeast China's Yunnan province, which is valued at 4.63 billion yuan, the single biggest order among the 11 contracts, the railway builder said.
The company also won a contract to build a passenger-only express railway between Nanjing, the capital city of East China's Jiangsu province and Hangzhou, capital city of East China's Zhejiang Province, with a value of 4.54 billion yuan.
The railway builder also booked orders to build a metro line in Beijing and highway projects in Zhejiang province.
The new orders and contracts the company has announced this year has amounted to 93.2 billion yuan so far, according to Guoyuan Securities Co.
The company, analysts say, is likely to be one of the biggest beneficiaries of China's push to build more railroads in the coming years and the country's massive infrastructure boom as a result of the economic stimulus efforts.
"The stream of orders and the railway building boom and the stimulus package is expected to see the company's revenue growing by at least 25 percent in the coming years," Guoyuan said, giving it a "prudent recommendation" rating.
China would spend 5 trillion yuan until 2020 to build 41,000 km of new railways as it aims to reduce congestion and meet the rising demand.
"As the country has been stepping up its push to build more infrastructure projects since the fourth quarter of 2008, railway building is now moving toward a golden period," Donghai Securities said in a research note.
China Railway Group is going to benefit greatly in this boom, analysts said.
"As the industry leader, China Railway Group will find this a bonanza," Donghai Securities said, giving a "buy" rating on the company.
China Railway said earlier that its 2008 net profit is estimated to drop more than 50 percent, mainly due to an exchange loss last year.
The company made a net profit of 3.16 billion yuan in 2007.
The railway builder had deposited its Hong Kong listing proceeds in foreign currencies in overseas banks and may suffer a loss of around 3.5 billion yuan due to exchange rate fluctuations last year.
Source:China Daily
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