Date
19 October 2017

CNR on the fast track as orders pour in

New orders are piling up on the table of China North Locomotive and Rolling Stock Industry (Group) Corp. (CNR, 601299.CN). According to the China Securities Journal, the state-owned railcar maker bagged contracts worth almost 40 billion yuan (US$6.57 billion) in the four months to September, making it one of the biggest beneficiaries of China’s railway, metro and tramway development push.

Although repeatedly delayed, the new round of train procurement by China Railway Corp. (CRC) since August has apparently given the entire sector new momentum.

While everyone within the industry could get a slice of the large pie, reported to be worth at least 60 billion yuan this year, some stand a better chance of swooping in for the feast.

CRC is said to have particular appetite this time for new types of rolling stocks including cargo wagons, electric locomotives as well as high-speed trains with service speed of up to 350-380 kilometers/hour. Most of these models like CRH3, CRH380B and CRH380C are supplied by CNR’s manufacturing bases in Changchun and Tangshan.

Good relations with a number of regional railway bureaus and other entities affiliated to CRC, in places such as Beijing, Shanghai, Jinan, Shenyang and Harbin, can also lend CNR some extra advantage. The company has already secured orders worth almost 30 billion yuan in relation to such entities.

In the metro and subway arena, CNR has also consolidated its position. The company has entered into contracts with metro and subway operators in Shanghai, Suzhou, Chengdu, Nanchang, Changchun and Wuhan since March, adding another 7.33 billion yuan as sales revenue, China Business News reports.

A CNR executive has said that as China prepares to wrap up construction of the national high-speed railway grid and inter-city links, subway and metro lines to be built in more second- and third-tier cities will be the most vital and fertile market to tap into, and that CNR is well poised to reap the reward.

CNR shareholders are expecting a solid fourth-quarter report card. Analysts say it is almost certain that the firm will deliver robust revenue growth in the next 12 months as it fulfills orders.

– Contact the writer at [email protected]

RC

EJ Insight writer

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