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  • Aug 1, 2014
  • Updated: 2:07am
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Train makers set sights on 38.4b yuan tenders

CSR and CNR await orders from Beijing for at least 300 more sets of high-speed trains

PUBLISHED : Friday, 09 November, 2012, 12:00am
UPDATED : Friday, 09 November, 2012, 3:59am

The mainland may issue at least 38.4 billion yuan (HK$47.6 billion) worth of high-speed train tenders within the next two months, ending a more than a year-long hiatus following a fatal crash.

The government will probably seek bids for between 300 and 400 train sets, according to Citigroup analyst Paul Gong, who met people at the nation's two major train makers.

Jefferies Group and Everbright Securities made similar predictions.

A train set comprises eight or 16 carriages.

A buying revival would be a boost for CSR Corp and China CNR, the country's two big train makers, whose shares are yet to recover following the train disaster in July last year.

The government may resume orders as it steps up railway building as part of wider plans to stoke economic growth.

"This is obviously great news for Chinese train makers," Gong said. "The order will help to remove concerns that the country may shift its focus from high-speed trains after the fatal crash."

The dual-listed CSR yesterday closed unchanged at 4.48 yuan in Shanghai, the second best performer on the Shanghai Stock Exchange 50 A Share Index, and gained 0.3 per cent to HK$6.35 in Hong Kong. China CNR fell 0.7 per cent to 4.02 yuan, while the Shanghai Composite Index dropped 1.6 per cent.

CSR said it had made preparations for possible tenders. China CNR said it expected demand for more high-speed trains as new lines opened.

The Beijing-based companies both said they did not know when the Ministry of Railways would issue its next tender. Calls to the ministry went unanswered.

No high-speed train tenders have been placed since last year's crash near the eastern city of Wenzhou, which killed 40 people. An official report into the accident said it was caused by mismanagement and design flaws in a signalling system.

Construction slowed after the disaster amid safety concerns and because the ministry was struggling to sell bonds to finance work.

The yield gap between its one-year notes and government debt has fallen to 126.6 basis points, about half the figure in October last year, according to Chinabond data, as state support eases concerns about its debts.

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