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Kandy Wong

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.



Guangshen Railway buys line from parent