BEIJING - China Railway Group Ltd, one of China's leading heavy infrastructure companies, said Friday its net profit in 2011 fell 9.55 percent year-on-year to 6.69 billion yuan ($1.1 billion).

The Beijing-based company attributed its poor performance to the sluggish infrastructure building market in China, according to China Railway's annual report filed with the Shanghai Stock Exchange.

The company's business revenues dipped 2.75 percent year-on-year to 460.72 billion yuan, while its earnings per share stood at 0.31 yuan, down 11.43 percent from a year earlier.

Last year, China Railway signed new contracts worth 570.8 billion yuan, down 22.4 percent from the year before.

The company's accounts receivables rose 18.26 percent year-on-year to 96.34 billion yuan as owners of some projects ran short of funds and payment were delayed, according to the report.

The Chinese government decided to slow the development of high-speed rail and put speed limits on the existing express ways after a fatal high-speed train crash left 40 people dead in the eastern city of Wenzhou in July last year.
 

China’s CSR Zhuzhou Electric Locomotive will supply trains for the Ampang light rail transit line extension project.

The government has awarded a contract worth as much as RM530 million to China’s CSR Zhuzhou Electric Locomotive Co Ltd (CSR ZELC) to supply trains for the Ampang light rail transit (LRT) line extension project.

CSR ZELC received the letter of award to build and supply 20 sets of six-car light rail vehicles yesterday, sources said.

The trains are meant to service the existing LRT network and the new line to Putra Heights. The award comes at a time when Malaysia and China are strengthening their bilateral trade ties.

Trade between Malaysia and China rose by 42.8 per cent year-on-year to reach US$74.3 billion (RM227.7 billion) in 2010.

Sources close to the government said the award came amid plans by CSR ZELC to invest in a manufacturing plant in Batu Gajah, Perak.

It is learnt that CSR ZELC is planning to use Malaysia as a hub for its expansion into the Asean region. CSR ZELC is one of the major electric locomotive manufacturers in China and a subsidiary
of China South Locomotive & Rolling Stock Corp Ltd.

The Chinese company is not new to the Malaysian market. It has earlier secured a RM1.89 billion contract from the Transport Ministry to supply 38 sets of six-car trains for the national railway company Keretapi Tanah Melayu Bhd.

The purchase was part of the government project under the National Key Results Area programme to improve public transportation in the Klang Valley.

The tender for the supply of trains for the LRT extension project, which closed on December 12, 2011, attracted six bidders.

Their prices ranged from RM500 million to RM850 million. It is understood that CSR ZELC is the lowest bidder, beating Bombardier Transportation/Scomi Rail Bhd, Caf Spain/Tranz-i Sdn Bhd, China North Railway/EmRail Sdn Bhd, Rotem Korea/CMC Engineering Sdn Bhd and Romania Astra/Smh Rail Sdn Bhd.

U.S. China Mining Group reported solid profits of $7 million on $54 million in sales today. The Chinese coal mining company brought up concerns about China's railway system, however, noting that some sales decisions were based on who could move the coal instead of who could pay the most for it.

According to CEO Hongwen Li, U.S. China Mining in 2011 "produced more, brokered less, and had fewer customers. The tightened capacity for coal transportation by rail was one of the main reasons for our increased efforts in selling more coal extracted from our mines to certain customers who were able to book railway cargoes for delivery during 2011."

China has been pursuing an ambitious railway development program, and BCA Research says the nation's total track length has increased 50% since 1995. Railway usage is up even more, though, with passenger traffic doubling and freight increasing by 150%.

Until recently, railway building has been keeping up with the growing demand. Approvals for new railway projects were reduced in 2011, however, then halted completely as concerns rose about railway safety and China's overheating economy.

According to JP Morgan, China is now pushing forward with railway developments again, encouraging developers with cash and tax benefits. However, it may take some time to get the engine moving.

Investors should be on the lookout for companies like SGZH whose growth is being limited by lack of railway capacity. They may also want to keep an eye on Chinese railroad developers like the China Railway Construction Corp., which has been gaining on the Chinese exchanges after reporting profits March 30. China Railway does not trade in the U.S., but is a small part of the Guggenheim China Small Cap Index ETF ( HAO , quote ) and other exchange traded funds.
 

On Tuesday, Harsco Corporation (HSC) declared that it has won railway track maintenance equipment orders from South Korea, China and the UK. Valued at over $20 million, these orders are expected to be ready for delivery by the beginning of 2014.

The South Korean order came from Sampyo Engineering & Construction, part of Sampyo Group. The rail grinder equipment desired by the company shall cater to the track maintenance of the Korea Train Express Line connecting Osong, Gwangju and Mokpo. This new line is due for completion in 2015.

The Chinese order was from Ningbo Rail Transit Group Co. Ltd. to provide its first 30-stone grinders which would ameliorate the operational efficiency and output of the machines. This contract marks the entry of Harsco in Ningbo, the sea-port city of the Chinese Zhejiang province.

Orders pouring in from the UK are not a new venture as the company has been dealing with the United Kingdom for ten years now. These grinder orders are nothing but an extension of their previous ties to proliferate the supply of railway maintenance equipment across the entire region.

The global reputation and unblemished goodwill of Harsco helped it earn several multi-million dollar contracts over time. The last one was awarded by Alfa Acclai Group during the second week of March this year to provide steel mill services worth $55 million.

Harsco’s Rail segment has posted healthy results in the last quarter of 2011. While revenues surged 38% year over year to reach $82 million, operating margin increased to around 23% from 16% in the prior-year period.

The company averred that the strong results were primarily attributable to better shipment orders and high volume sales during the quarter. In addition, the various restructuring activities implemented by Harsco coupled with order wins make the company upbeat about yet another robust upcoming quarter in 2012.

However, Harsco’s competitors are no less progressive when it comes to achieving contract wins. On March 1, 2012, TMS International Corp. (TMS) declared that it has been awarded two steel mill service contracts of nearly $179 million.

We continue to maintain a long-term ‘Neutral’ recommendation on Harsco. Also, the company carries a Zacks #3 Rank, which translates into a short-term rating of ‘Hold’.
 

China Railway Erju Co., Ltd. (shse:600528) released its performance report of the first quarter of 2012 on April 4, showing its net profits attributable to parent company decreased by about 70% year on year to CNY 181.52 million. Impacted by slowing high-speed rail construction, the company saw construction operating revenue go down largely in the first quarter of 2012.
The company unveiled its annual report of 2011, showing its operating revenue rose 8.84% year on year to CNY 59.52 billion in 2011. Net profits hit CNY 523 million, down 46.44% year on year. The company said the railway construction market shrank rapidly in 2011, and it will meet more challenges this year as the situation keeps being gloomy.
 

BEIJING - A Chinese engineer recently defended the country's high-speed railway technology, dismissing safety concerns regarding the world's biggest high-speed rail network.

"China's current high-speed railway technology can prevent head-on and rear-end collisions," Wang Mengshu, chief engineer of the China Railway Tunnel Group, said during an interview with China Economic Weekly, a magazine affiliated with the state-run People's Daily newspaper.

China's high-speed railways have come under scrutiny in recent months following a deadly train collision that killed 40 people in east China last July.

Wang said management failures such as insufficient training for operators were the major safety problems.

"A lack of training left operators at a loss when faced with a possible accident," the engineer said.

Wang rejected suggestions that the railway network has expanded too fast, stating that the total length of China's railways adds up to 91,000 km, just a third of the total length in the US.

The engineer warned against halting high-speed railway construction, as it could cause significant job losses.

Railway construction has generated jobs for more than 6 million migrant workers and stimulated the growth of the steel, cement and other raw material sectors, according to Wang.

The government has set a goal of building 120,000 km of railways by 2020. Wang said that in order to meet the target, authorities must invest 600 billion yuan annually in railway construction.

However, the Ministry of Railways announced in December that it plans to invest 400 billion yuan in railway infrastructure construction in 2012, down from 469 billion yuan in 2011 and a marked decrease from over 700 billion yuan in 2010.
 

China has signed a contract to provide high-speed trains to Bangladesh in a deal that marks the first time for the export of China-made high-speed rail technology, the Beijing Times reports.

Under the contract, China CNR Corporation Limited will assemble 20 high-speed trains with a total of 60 cars for Bangladesh. The terms also require China to supply 20 network control systems, 40 traction inverters and 40 auxiliary inverters.

The deal is the first under which China will export its self-improved network control systems and traction inverters after a long period of innovation and improvements to high-speed train technology it originally imported. The move indicates that China is able to compete in the area of high-speed rail technology in the international arena.

Network control and traction systems are core high-speed train technologies. Traction systems determine a train's stability and carrying capacity, while network control systems direct the operation of the trains.

BEIJING - Shares of China CNR Corp, the country's second-largest train maker, gained after media reported that Bangladesh will purchase key high-speed rail technologies from the company's subsidiary.

As of 11 am, the company's stocks had climbed 0.97 percent to 4.15 yuan (66 cents) per share on the Shanghai Stock Exchange.

China CNR Corp's Dalian Electric Traction Research and Development Center will export traction inverters and network control systems to Bangladesh, according to the reports. This will be the first time for China to export its own traction and network control systems, which are key technologies of such trains, according to a Beijing Times article.

The contract contains 20 sets of high-speed rail network control systems, 40 sets of traction inverters and 40 sets of auxiliary inverters, the newspaper said without mentioning how much the contract is worth.

China CNR is scheduled to release its financial report on April 28. It said in January that it expected to see its net profit surge over 50 percent in 2011 from a year earlier, on China's booming railway and metro construction.

The profit estimate came despite the company's recall of a raft of trains after a deadly accident last summer.

On July 23 of 2011, a high-speed train slammed into a stalled train near the city of Wenzhou in the eastern province of Zhejiang, leaving 40 dead and 172 injured.

The company recalled 54 trains it supplied for the high-speed rail between Beijing and Shanghai three weeks later. All the trains resumed service in December after modifications and repeated tests, according to the Ministry of Railways.

Xinjiang Guanghui Industry Investment Group broke ground on a coal transportation project at the end of March, which will involve the construction of 624 kilometers of rail tracks, Bao Yujun, president of China Private Enterprises Association said, Global Times reported. This project marks the entrance of private capital into the railway industry. Experts claim that such move will lead to systematic reform of the industry. Considering the heavy financing burden, in recent years, voices encouraging private capital to enter the railway industry have grown louder, the newspaper said.
 

From its sprawling manufacturing base deep in China’s southwestern Hunan province, some 100 kilometers from where Mao was born, construction-machinery maker Sany Group plans to take on the world. While workers in blue overalls and yellow hard hats crawl over huge mobile hydraulic cranes and cement mixer trucks in a gleaming factory, Sany President Tang Xiuguo sits in his expansive office nearby, discussing the opening of Sany factories in Brazil, India, and Alabama, as well as the soon-to-be-completed $475 million acquisition of Germany’s Putzmeister, the world’s largest maker of cement pumps. The bespectacled Tang, one of four founders of the 22-year-old company, aims to lift overseas sales, now some 5 percent of its $16 billion revenue, to up to one-fifth of revenues within five years.

The phrase “Made in China” summons up images of cheap shoes, plastic toys, and electronics assembled in the vast factory complexes of Foxconn Technology Group (HNHPF). While China built its powerful export business—increasing 17 percent a year over the last three decades—on such light industry and electronics assembly, that is fast changing. Rising labor costs, up 15 percent annually since 2005, plus an appreciating currency, are putting new pressures on China’s cheap manufacturing model and driving textile, shoe, and apparel factories to close or relocate to Vietnam, Cambodia, or Bangladesh. “China’s share of the world’s low-end exports has started to fall. This reflects a shift by Chinese producers into sectors where margins are higher rather than a failure to compete,” wrote U.K.-based Capital Economics in a March 28 note.

Chinese-built ships, for example, dominated the global market with a 41 percent share last year, well ahead of South Korea and Japan, according to London-based shipping services company Clarksons. Data from the International Trade Centre, a joint agency of the United Nations and the World Trade Organization, also show strong gains in China’s global share of the markets for railway locomotives and wagons, machinery, and industrial boilers. In construction machinery, Sany’s specialty, three Chinese companies (Sany included) now rank in the top ten globally. Many of the new exporters are producing from inland China, rather than the coast, the traditional region for manufacturing.

Overall, the portion of China’s exports made up by heavy industry, about two-thirds of which is machinery, has grown from 29 percent in 2001 to 38.7 percent last year, surpassing light industry and electronics, according to Beijing-based economics consultants GK Dragonomics. “They are making different products with higher technology, things they can charge more money for,” says Andrew Batson, GK Dragonomics’ research director, who estimates that the new industries can help lift China’s share of global exports from 10 percent now to 15 percent by 2020. “The typical Chinese exporter is not a shoe factory in Guangdong anymore. Instead it is some kind of equipment or machinery maker.”

The Chinese makers of this machinery are targeting India, South America, and the Middle East, as Europe, still China’s largest export market, struggles with its debt crisis. Europe, the U.S., and Japan accounted for 48 percent of China’s total exports last year, down from 56.1 percent in 2003, with developing countries now taking the majority, says Louis Kuijs, an economist at the Hong Kong-based Fung Global Institute. “We have an advantage because our technology and our products level are more suitable for these countries,” says Sany’s Tang. “And our price is a bit lower than other international brands.”

Policy makers have made upgrading industry a national priority. Equipment manufacturing, shipbuilding, and cars are among the industries slated to receive $2.5 billion from the government this year to improve technology and product quality. Mergers and acquisitions inside China and overseas are also being encouraged. Says Shao Ning, vice minister of the powerful State-Owned Assets Supervision and Administration Commission of the State Council: “Our position is we support Chinese companies investing abroad.”

While China’s new manufacturers are not competing in developed markets yet, already they are challenging Caterpillar (CAT), Siemens (SI), General Electric (GE), and other established equipment makers in places like South America and Russia. China’s construction-machinery industry is expected to overtake Japan’s and Germany’s soon, making it the world’s second-largest exporter in the category, behind the U.S.

Winning market share in the U.S. and Europe could take years, in part because of concerns over Chinese quality (the crash of a Chinese-built high-speed train in Zhejiang province in July hurt China’s reputation as a manufacturer). Sany says it spent $240 million last year upgrading its factories, including the installation of welding robots. As Sany expands overseas, it aims to improve its products to match the quality achieved by its newest acquisition, Germany’s Putzmeister, which will share engineering know-how and suppliers with its Chinese parent. Says Tang, “We know that ‘Made in China’ doesn’t have a great reputation. We want to change this through selling high-quality products.”
 

BISHKEK, Kyrgyzstan — The Kyrgyz government is pushing to speed the construction of a trans-Asia railway, but the massive foreign investment needed to build Kyrgyzstan’s stretch of the project has sparked a heated debate over the price the Central Asian nation would pay for the funding.

Lawmakers and analysts say the $2 billion-plus, 166-mile China-Kyrgyzstan-Uzbekistan railway project would provide this landlocked former Soviet republic access to seaports in China, as well as produce $200 million annually in transit fees.

In addition, the Ministry of Transport says that building the railway would create 20,000 jobs, and that 2,700 Kyrgyz workers would be employed on the railway once it becomes operational. It would carry an annual cargo of 15 million tons and up to 250,000 passengers.

But this small, mountainous country is struggling with its national debt, and likely cannot collect enough public revenue to fund its share of the project.

Prime Minister Omurbek Babanov has suggested forming a consortium or joint venture to attract funding from private investors, and analysts note that the most likely funding source is China, which would have much to gain from the project as one of the world’s largest exporters.

Yet some are wary of the price Kyrgyzstan will pay for the investment to improve its woefully inadequate transportation infrastructure.

Suspicions and doubt

“Past experience shows that Chinese loans normally come with Chinese labor as well, which means that the job opportunities created by the project may not be [beneficial for] Kyrgyzstan,” said Lilit Gevorgyan, an analyst at IHS Global Insight in London.

“Also it is unclear how big Kyrgyzstan’s share in profits generated by the rails operations in the future would be if they fail to contribute significantly to its construction,” Ms. Gevorgyan said.

In August, then-Prime Minister Almazbek Atambayev publicly admonished Minister of Natural Resources Zamirbek Esenamanov for suggesting in an interview with local media that the government could attract foreign investors by offering up Kyrgyzstan’s natural resources.

“I did not sign such an order, and never will,” said Mr. Atambayev, who now is president. “Of course we need the railroad but not this way, not according to this scheme.”

Nonetheless, many locals remain skeptical, noting that Mr. Atambayev has said he hopes to see the completion of the project during his tenure as president.

“Our government is not trustworthy, not at all since it says one thing today and completely another thing tomorrow,” said Kubat Toksobaev, a businessman from the Issyk-Kul region in northeast Kyrgyzstan.

“I think that Kyrgyzstan can develop without the Chinese railway, it has lots of potential. The Kyrgyz authorities lie to people. The facts are clear: The railway is being built to export our natural resources,” Mr. Toksobaev said.

Though impoverished, Kyrgyzstan holds significant deposits of gold, uranium, and rare earth metals and minerals that are critical in the manufacture of flat-screen televisions, cellphone batteries and other high-tech goods.

A section of new railway in central Hebei province that sank last week has got villagers and railway workers talking about its safety.

Some 7.2 km of track built to form part of the Wuhan-Yichang Railway sank on March 9 after rain battered the area, maintenance workers at the scene said.

"I doubt if the railway is safe since they have rebuilt the section again and again," said 75-year-old Zou Liurong from the Xingfu village.

The rails and sleepers in question have been removed from the site, in Haokou town in the city of Qianjiang.

"We are looking forward to the operation of the railway but have no idea of the problem. We do not know whether it is serious," said Dai Zhongxiao, a villager from the small settlement of Nanwan.

"Last year, we reinforced part of the track and this time we are pinning up the whole subsiding section," said a worker at the scene.

"We discovered the problem during the evaluation phase. Up to 3 mm of sinkage a month is considered normal, but many points of the track had sunken by more than that," said Sun Shengjie, deputy general manager of the China Railway 12th Bureau Group, responsible for the construction of the line.

Excessive sinking can lead to derailment, said experts on traffic engineering design.

Workers at the scene said the ground where the sinking section is located used to be a lake which dried up.

Building a viaduct can solve the problem, said Wang Mengshu, member of Chinese Academy of Engineering.

"They planned to build a viaduct on this section but it was changed into subgrade to save costs," said a contractor of the construction project on condition of anonymity.

But a source with the owner of the railway, Huhanrong Railway Hubei Co.Ltd, denied the statement.

It is still not clear that the design, the construction, or the construction supervision should be blamed, said Sun Shengjie.

We have invited experts to investigate the cause of the settlement, said Wang Zujian, director of the leadership office of Hubei provincial railway construction.

The 291-km-long Wuhan-Yichang Railway which is an important part of the Huhanrong high-speed railway from Shanghai to Chengdu will benefit 36 million people living in Jianghan Plain upon completion as the area at the middle reaches of the Yangtze River has never before had a trunk railway.

The Wuhan-Yichang Railway is expected to open in May. The sinking part has already undergone test runs.

According to relevant regulations, the rebuilt section of the Wuhan-Yichang Railway should undergo a series of procedures including evaluation of experts, dynamic testing inspections, and safety assessment before being put into operation.
 

BRAZIL: The first of 30 electric multiple-units which CNR Changchun is supplying for Rio de Janeiro suburban services was officially launched by Carlos José Cunha, President of operating concessionaire SuperVia, state Deputy Governor Luiz Fernando Pezão and Secretary of Transport Julio Lopes on March 20.

'The first journey on a Chinese train is an important moment, because it reflects the new standard of excellence that SuperVia intends to offer', said Cunha. 

The new trains are part of an R$2·4bn upgrading of the 225 km suburban rail network. An R$40m operations control centre was brought into use in January, and Silve Freire station which closed in the 1960s was reopened in March. 

Using World Bank support, the state government signed the US$165m contract for the 1 600 mm gauge EMUs with a consortium of China National Machinery Import & Export Corp and CNR Changchun Railway Vehicles in June 2009. 

The four-car 3 kV DC units have stainless steel bodies, air-conditioning, CCTV, passenger information systems, and capacity for 1 300 passengers. CNR Changchun says they are the first Chinese EMUs to enter service in South America. 

All are expected to be in use by September. The state government is currently procuring a further 60 EMUs which would replace older stock by 2014.

•Under a separate contract CNR Changchun is supplying 19 six-car trains to Metrô Rio. These are scheduled to enter service in time for the FIFA World Cup in 2014. The first vehicles were shipped from China at the end of March, and five trains are expected to arrive in Brazil by May, according to Metrô Rio Engineering Director Jóubert Flores.
 

The Democratic People's Republic of the Korea (DPRK) and Russia will reopen a cross-border railway in October after four years of renovation, the official news agency KCNA reported Monday.

The railway linking the DPRK's northeastern port city of Rajin to Russia's Far Eastern border town of Khassan will start cargo train services from October, Kim Chang Sik, the department director of the DPRK Ministry of Railways, was quoted as saying.

The laying of railroad and renovation of railway stations, tunnels and communications facilities were now under way, he said.

The 54-km-long railway, built under the Moscow Declaration signed between the two countries in August 2001, will have a capacity of handling at least 100,000 containers a year, he said.

The railway, serving as an international container transport line linking Northeast Asia with Europe, will help boost the two countries' economic cooperation, said the official.

Renovation work of the railway, which extends to the Trans-Siberian Railway, began in October 2008.

Rajin, situated on the western side of the Tumen River, is part of Rason, the DRPK's northeastern free trade zone, while Khasan, lying near Lake Khasan and the Tumen River, is the only Russian settlement on the border with the DPRK.

The Rason zone, formerly known as the Rajin-Sonbong Economic Special Zone, was established by the DPRK in 1991 to boost economic growth through foreign investment.

The Himachal Pradesh Assembly today adopted a private member' resolution urging the Centre to convert the Pathankot-Jogindernagar meter gauge railway line into broad-gauge and extend it to Leh via Kullu and Manali. Replying on the resolution moved by BJP's Vipin Parmar, Chief Minister P K Dhumal said that the Centre has recognised the strategic importance of Bhanupali-Bilaspur and Kullu- Manali-Leh railway line, but none of the two projects had been sanctioned. Dhumal said that he had repeatedly written to the Centre about the activities of China along Himachal Pradesh's border, but no effective steps were taken to strengthen and expand the infrastructure along the border. The chief minister said that in a letter recently sent to Planning Commission Deputy Chairman Montek Singh Ahluwalia, he had requested him for extending at least one railway line upto Leh but sufficient funds were not allocated in the Budget. Dhumal regretted that despite assurance given by Prime Minister Manmohan Singh to commission the Nangal-Talwara rail line by 2008, it has not been completed till now and only Rs 10 crore was provided in this year's Budget as against estimated expenditure of Rs 376 crore. A committee of Railways recently visited Pathankot- Jogindernagar rail line, but it put a condition that the state would have to bear 33 per cent cost of the project, he said.