Foreign tracks

Thursday, September 02, 2010

China Railway Group (0390) said it is seeking work overseas although domestic infrastructure construction remains the major source of revenue growth.

The group saw a 25-percent growth in revenue from infrastructure construction, a segment accounting for 86 percent of overall income.

Despite robust returns from property development, the firm's gross profit margin fell to 15.5 percent in the first half of 2010, from 25 percent in the same period last year.

"Cost of land increased in the period. And we had some commercial development projects with lower margin. It brought the overall margin down," said vice president Li Jiansheng.

China's biggest construction firm said it has started building several portions of its 470-kilometer US$7.5 billion (HK$58.5 billion) rail project in Venezuela. The rest of the project, which will be used mostly to carry coal, is undergoing environmental assessment.

The group expects overseas contracts to reach 370 billion yuan this year. In July and August alone, it has signed up to 100 billion yuan worth of overseas deals. It is also in the early stages of discussions with South African developers about building the first high-speed rail line in Africa.

It booked a first-half profit of 3.29 billion yuan, up 6 percent from a year ago. But deducting foreign exchange losses, net profit jumped 45 percent to 3.49 billion yuan.

China Railway Group closed 0.88 percent lower at HK$5.61. TONY LIAW

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