China Railway Group Ltd. slumped the most in six months in Hong Kong trading after the nation’s second-largest rail-builder said its President Bai Zhongren died in an accident.
China Railway dropped 4.1 percent, the most since July 3, to close at HK$3.75. Its bigger rival China Railway Construction Corp. fell 3.8 percent. The city’s benchmark index Hang Seng Index declined 0.6 percent.
The company, which built projects such as Qinghai-Tibet line, the world’s highest, said its operations remain normal as Chairman Li Changjin will assume Bai’s responsibilities before a new appointment, according to a statement to the Shanghai Stock Exchange yesterday. Bai fell from a building on Jan. 4, Wang Mengshu, a deputy chief engineer at the builder, said in a phone interview today.
“The market is concerned about the real reason for Bai’s death as the company didn’t clearly state it,” said Gary Wong, a Hong Kong-based analyst at Guotai Junan Securities Co.
Beijing-based China Railway declined to comment further on the incident, according to an e-mailed statement today by Hill+Knowlton Strategies, which handles the company’s media relations.
The company, which also constructed the Beijing-Shanghai high-speed link, posted a 47 percent jump in net income to 2.8 billion yuan ($463 million) in the quarter ended in September, according to data compiled by Bloomberg.
Infrastructure construction is the company’s biggest business, accounting for more than 80 percent of revenue as of end of June. China Railways’ other operations include manufacturing of engineering equipment and property development.
China Railway Corp, operator of the nation’s rail network, is the main customer of the builder. As of September end, trade and bills receivables of China Railway Group increased 23 percent to 116.5 billion yuan from a year earlier, the data show. The company may post a profit of 8.7 billion yuan in 2013, according to the average of 15 analyst estimates compiled by Bloomberg.
China’s former railway minister Liu Zhijun was given a suspended death sentence in July for abuse of power and taking bribes, as the Communist Party roots out graft that blossomed during the debt-fueled roll-out of the world’s biggest high-speed rail network.
The nation spent 663.8 billion yuan in railroad fixed-asset investment last year, rail operator China Railway Corp. said in a statement on the central government’s website today. That was 5.2 percent more than the 631 billion yuan invested a year earlier as the government pledged to build more rail networks, especially in China’s central and western regions.
The total length of rail network under operation reached 103,000 kilometers (64,000 miles), including 11,000 kilometers of high-speed rail, the longest in the world, according to the statement.