Guangshen Railway buys line from parent

PUBLISHED : Saturday, 30 June, 2007, 12:00am
UPDATED : Saturday, 30 June, 2007, 12:00am

Hong Kong-listed Guangshen Railway, the largest railway operator in the southern mainland, has completed its 10.14 billion yuan purchase of assets from its parent, Guangzhou Railway Group.

Shares in the Guangshen company gained 1.97 per cent to close at HK$6.22 yesterday after the announcement. They hit as high as HK$6.33 in morning trade.

Guangshen Railway has made an upfront payment of 5.3 billion yuan for the deal, with the remainder due in 15 days.

The company raised 10.4 billion yuan last year by selling A shares on the Shanghai stock exchange, and had expected that the purchase would cost between 9.24 billion yuan and 11.29 billion yuan.

The deal was first announced a year ago. A subsidiary of Guangzhou Railway, Yangcheng General Railway, which owns the line from Guangzhou to Pingshi, was included.

The acquisition will boost Guangshen's lineage to 481.2km from 152km, according to the firm's annual report.

The mainland aims to spend 1.5 trillion yuan laying 17,000km of rail track for eventual coverage of 90,000km, upgrading and expanding its rail network by 2010.

Sources said earlier Beijing might inject assets into key railway firms as a way of testing a wider re-organisation of the country's rail system.

Guangshen Railway last year recorded underlying profit of 772 million yuan, up 19.5 per cent year on year. Passenger transport turnover was 2.8 billion yuan, up 12 per cent, while turnover from cargo transport rose 6.29 per cent to 625 million yuan.