China may issue at least 38.4 billion yuan ($6.2 billion) of high-speed train tenders within the next two months, ending a more than yearlong hiatus following a fatal crash
The government will probably seek bids for between 300 and 400 train sets, according to Hong Kong-based Citigroup Inc. analyst Paul Gong, who made the estimate after meetings with the nation’s two major trainmakers. Jefferies Group Inc. and Everbright Securities Co. made similar predictions. A set comprises of eight or 16 carriages.
A revival of purchases would be a boost for CSR Corp Ltd. (1766) and China CNR Corp. (601299), the nation’s two big trainmakers, whose shares are yet to recover from a slump following the July 2011 train disaster. The government may resume orders as it steps up railway building as part of wider plans to stoke economic growth.
“This is obviously great news for Chinese trainmakers,” Gong said in a Nov. 6 interview. “The order will help to remove concerns that the country may shift its focus from high-speed trains after the fatal crash.”
CSR has made preparations for possible tenders, it said in an e-mailed reply to Bloomberg News questions. China CNR said it expects demand for more high-speed trains as new lines open.
High-speed train purchases were also slowing before the crash amid a corruption investigation that led to the downfall of then-Rail Minister Liu Zhijun. The ministry ordered about 1,100 high-speed carriages in 2010 and 2011, before the crash, compared with about 6,000 in 2009, according to data compiled by Citigroup.
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