China Trainmakers’ High-Speed Rail Orders Total $7.3 Billion
CSR Corp. (1766) and China CNR (601299) Corp., the nation’s two biggest trainmakers, won bids for 258 bullet trains worth as much as 44.3 billion yuan ($7.3 billion) as China’s high-speed rail network opens new lines.
CSR estimated it won bids totaling 25.9 billion yuan to make 83 bullet trains with maximum speeds of 350 kilometers per hour (217 miles per hour) and 78 trains with maximum speeds of 250 kph for state-owned China Railway Corp., it said in an e-mailed statement late yesterday, citing calculations based on previous bidding prices.
The purchase is the second large order placed this year by China Railway, operator of the nation’s train network, as it builds more railroads to help boost the economy. It started a trial run of a new line linking the cities of Xiamen in Fujian province and Shenzhen in Guangdong province earlier this month.
“Demand for bullet trains will remain strong next year as China opens more new lines,” said Xu Minle, a Shanghai-based analyst at Bank of China International Ltd. He said the amount of the order was in line with his expectations.
China CNR may receive an order worth 18.4 billion yuan, CSR said, based on the same calculation. The final value is decided by China Railway, which only gave train order numbers in its statement on the bids yesterday. Two telephone calls to China CNR’s press office in Beijing went unanswered today.
CSR, which builds high-speed trains on its own and in a venture with Bombardier Inc. (BBD/B), closed unchanged at HK$7.22 as of close in Hong Kong. China CNR dropped 0.5 percent to 5.68 yuan in Shanghai.
The order signals solid growth next year for CSR, with earnings per share expanding 20 percent year-on-year, Mizuho Securities Asia Ltd. analysts led by Ole Hui said in a note today.
China Railway also started a 257-kilometer line connecting Tianjin city and Qinhuangdao in Hebei province on Dec. 1, bringing total high-speed rail lines to 10,000 kilometers, according to a China National Radio report on that day. It may open as many as seven new high-speed railways in December alone, according to an International Finance News report on Dec. 2, citing unidentified people close to China Railway. China Railway in August said it would spend more than 50 billion yuan on large-scale train purchases, ending a hiatus in place since a 2011 high-speed train crash that killed 40 people.
The country is putting about 5,500 kilometers of railway lines into operation this year, bringing the total length to 100,000 kilometers, Xinhua reported in August.
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