Beijing-Shanghai High Speed Railway Co to list on the Shanghai Stock Exchange
November 5, 2019 Category China News Round-up, Weekly
The asset securitization of the Beijing-Shanghai High-Speed Railway, the country’s most lucrative rail route, will lead the way for the country’s debt-ridden national rail system to raise capital and deepen the mixed-ownership reform to restore its earning ability, industry experts said, as the China State Railway Group Co, the national rail operator, submitted an application for an initial public offering (IPO) at the Shanghai Stock Exchange for the Beijing-Shanghai High Speed Railway Co. The 1,318-kilometer railroad has reported profit growth for five consecutive years since 2014. It reported a net profit of CNY9.52 billion in the first three quarters of 2019, according to a filing published by the China Securities Regulatory Commission (CSRC).
Company assets stood at CNY187.08 billion and liabilities at CNY27.35 billion by the end of the third quarter. Its equity debt ratio is only 14.6%, far below the 65% average for the nation’s railway operators as a whole. As the majority of passengers traveling by air between the major hubs of Beijing and Shanghai are business travelers, they are “insensitive” to fares, and airlines rarely offer tickets at a discount on this route, said Cheng Zhiwei, Researcher at the National Development and Reform Commission’s Institute of Transportation Research. “Therefore, many people choose high-speed trains between China’s two biggest cities, as they offer relatively cheaper prices and rarely experience delays on journeys due to thunderstorms, rain or snow,” Cheng said.
Founded in 2008, the Beijing-Shanghai High-Speed Railway Co only had 67 staff members and 12 shareholders, including the China Railway Investment Co, the National Council for Social Security Fund, and the Jiangsu Railway Group, by the end of September. The planned IPO will send more positive signals to other railroads across China, especially those in the country’s coastal regions, to restructure their assets and introduce more shareholders from both the private and state-owned sectors, the China Daily reports. The Beijing-Shanghai line was initially proposed in 1990, but construction only began in 2008. The work was completed in 2011 at a cost of CNY221 billion. The trains currently can run at speeds of up to 350 kilometers per hour.
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