IT appears that the bullish sentiment on China's infrastructure plays will be sustained in the near term.
With the prices of some quality infrastructure plays such as Jinqiao and Outer Gaojiao already ramped up by long-term investors to well over 20 times their 1994 earnings, Shanghai Diesel Engine could be an alternative for investors who want to participate indirectly from the rapid expansion of infrastructure facilities.
The recently listed Shanghai Diesel Engine is the leading manufacturer of diesel engines for construction machinery and vehicles in China.
The company has a 60 per cent share of the 135 series diesel engines market in China and is the sole manufacturer of 3300B series diesel engines in the domestic market.
Principal applications of these products include construction machinery, heavy duty vehicles and power generators.
According to some projections, China will spend about 80 billion yuan annually between 1994 and 1999 on improving its transportation facilities.
The massive investment in roads and bridges will generate strong demand for diesel engines and other construction related products.