Railroads News
- China Railway up 69% on debut
Date: 4-Dec-2007 Sources: (People's Daily)
China Railway Group Ltd, the world's third-biggest construction company, surged 69 percent on its Shanghai trading debut yesterday on optimism the nation's growing transport demand will spur earnings.
The stock climbed to 8.09 yuan at the close of trading, compared with an initial public offer price of 4.80 yuan, valuing the company at 141 billion yuan.
China Railway sold shares on the mainland and in Hong Kong to raise funds for equipment, capacity expansion and technology upgrades as China spends 5.05 trillion yuan on transportation through 2010. The country will lengthen its rail network by almost a third through 2020 to move more people and goods.
'The current share price reflects the potential of the company,' Tony Zheng, who manages the equivalent of $790 million at Bank of Communications Schroeders Fund Management Co in Shanghai, said by phone yesterday. 'Railway investment will be huge in the next few years in China, and this will give the company huge opportunities to expand its market share.'
China Railway, Asia's biggest construction company, raised 22.4 billion yuan in the Shanghai offering and another HK$19.2 billion in a Hong Kong IPO, people with direct knowledge of the sales said on November 22 and November 30.
The company, established in September, is the publicly traded unit of China Railway Engineering Corp, the world's third-largest construction company by contract value last year, according to a draft of the company's share-sale documents.
China, with 78,000 km of rail, has the world's third-longest railway after the US and Russia. Its projected spending on railways in the five years to 2010 is more than triple that of the previous five years, according to the share- sale documents.
Railway builders and operators will need to raise as much as 1 trillion yuan from capital markets through the sale of stock or debt to fund the expansion, Cao Yuanzheng, chief economist at share-sale arranger BOCI International Holdings Ltd, said on April 18.
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