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Cedar Hops On The Chengdu Express

Inside Wall Street


A subway in China? For New York's Cedar Group, the planned metro system is the route to sure success. Cedar's newly acquired division, Dominion Bridge, an old-line Montreal construction and engineering company, recently won initial contracts to design and build a subway for Chengdu, the capital of Si-

chuan, a province with 110 million people. For a company that has been in the red, Cedar will see "explosive earnings and revenues this year," says investment adviser Tom Fendrich.

He estimates Cedar will earn 30 cents a share this year on revenues of $170 million, and $1.50 next year on sales of $400 million. Fendrich believes that Cedar's stock, now trading at 5, will hit 12 to 15 by yearend. The recently signed letters of intent on $715 million worth of contracts in China "is very significant for Cedar," he says.

Plans call for building and operating a $50 million light-rail and subway system and an $80 million hydro-power storage station. Cedar also won an initial contract to build an $85 million, 50-kilometer expressway. The projects will be joint ventures between Dominion Bridge, which will own 70%, and the city and three state-owned corporations. Several Canadian agencies, including International Export Development Corp., will help finance the projects, scheduled to start in the fall. Fendrich says Cedar Chairman and CEO Michel Marengere is currently in Indonesia to negotiate $400 million contract.

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