China’s Beijing-Shanghai high-speed rail operator is more profitable than Apple, plans stock market listing
- Plan for initial public offering shows company that runs 1,300km section of line between the two key cities is more profitable than Apple
- Net profit hits 9.5 billion yuan in first nine months of 2019, representing a margin of 38 per cent
The company that operates the Beijing-Shanghai section of China’s high-speed railway network has submitted a formal application to float on the stock market, and in doing so revealed details of its lucrative operation.
According to the filing, published by the China Securities Regulatory Commission on Friday, Beijing-Shanghai High Speed Railway, which operates the 1,300km (807 mile) line, booked a net profit of 9.5 billion yuan (US$1.3 billion) in the first nine months of the year.
That represents a margin of about 38 per cent on its revenue for the period and makes it more profitable than both Apple which makes the iPhone, and Kweichow Moutai, which makes China’s most famous brand of baijiu, the world’s most popular spirit.
The rail company booked a full-year net profit of 10.2 billion yuan (US$1.4 billion) in 2018, up more than 13 per cent from 2017, according to the filing. It said it was seeking a listing on the Shanghai stock market to raise funds to buy other railway projects in southeast China’s Anhui province.
The plan suggests that China State Railway Group, which owns a 50 per cent stake in the high-speed operator through its investment arm, wants to use its share of the profits to shore up less profitable lines.
The profitability of the Beijing-Shanghai line – on which trains run at speeds of up to 350km/h (217mph), cutting the journey time between the two cities to 4½ hours – highlights the success of the high-speed rail network in affluent regions of China where demand for luxury and comfort is high.
A first-class ticket for a one-way trip costs 933 yuan (US$130), or about the same as a plane ticket, though standard seats are cheaper at 553 yuan. In 2018, the line carried 192 million passengers, or about 6 per cent of all those who travelled by high-speed rail in the country. Since the start of this year it has been operating at an average occupancy rate of 80 per cent.
