China Railway Construction Jumps Most in Six Weeks

China Railway Construction Corp. (1186), the world’s biggest listed heavy-construction company, rose the most in six weeks in Hong Kong trading after announcing contracts worth a combined 21.5 billion yuan ($3.2 billion).

The builder gained 3.4 percent to close at HK$10.48, the biggest gain since July 6. The company won contracts for nine railroad projects in China, it said in a statement yesterday.

The railway builder is likely to boost earnings 26 percent a year through 2012 as it pushes into new markets overseas, Morgan Stanley said today. China, which overtook Japan in the second quarter to be the world’s second biggest economy, will also spend 700 billion yuan building high-speed railroads across the nation this year to meet transport demand.

China Railway Construction “is leveraging its global edge and strong balance sheet to accelerate its diversification,” Kate Zhu, an analyst at Morgan Stanley in Hong Kong, said in a report as she began coverage with an “overweight” rating.

The builder will likely report a 50 percent jump in first- half earnings, she said.

“We expect near-term catalysts from upbeat interim results,” she said. The company is pushing into overseas engineering and construction projects, as well as more capital- intense infrastructure operations, property and overseas mining, she said.

In Shanghai, the company rose 1.4 percent to close at 7.53 yuan. The builder is due to report first-half earnings on Aug. 30, according to data compiled by Bloomberg.

--Li Xiaowei. Editors: Garry Smith, Neil Denslow

To contact Bloomberg News staff for this story: Li Xiaowei in Beijing at Xli12@bloomberg.net.

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net.

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