More to come at CRCC after 6.6b yuan profit

PUBLISHED : Wednesday, 28 April, 2010, 12:00am
UPDATED : Wednesday, 28 April, 2010, 12:00am

State-owned rail builder China Railway Construction Corp (CRCC), which posted an 81 per cent gain in net profit to 6.6 billion yuan (HK$7.49 billion) last year, expects to reap more profit from the domestic real estate market and overseas mining projects.

The leading rail construction company posted record revenue of 344.98 billion yuan, up 57.2 per cent from a year earlier. The growth momentum remains strong in the first quarter this year as its net profit rose 47 per cent to 1.4 billion yuan and revenue increased nearly 40 per cent to 70.29 billion yuan.

Despite the economic downturn, the company is a beneficiary of Beijing's stimulus measures, which include speeding up the construction of high-speed railway network across the country. Currently, about 60 per cent of the high-speed railways in the country are built by CRCC.

The construction sector remained as the dominant revenue contributor for the company that generated 314.94 billion yuan last year while the survey, design and consultancy sector gained 7.34 billion yuan. However, gross margin dropped to 6.54 per cent from 7.2 per cent in 2008, which the company said was mainly because the fast expansion in the market had affected operating efficiency.

Li Guorui (pictured), chairman of CRCC, said the company would keep improving and diversifying its business structure.

As one of the 16 state-owned enterprises recently singled out by the central government as being allowed to maintain businesses in the property market, the company is more ambitious than ever with its real estate development projects.

'Our property business will get into a fast-growing stage from this year,' said Li. 'We do believe that it will become an increasingly important contributor to both our revenue and gross profit in future.'

He added that the company currently operated more than 30 projects in 20 mainland cities. Over the past half-year, it sold out 910,000 square metres of properties with turnover of about 5.78 billion yuan.