Guangshen Railway Co. Ltd (ADR) (GSH)

NetscribeServcs (< 20) Submitted: 1/30/2007 7:40:27 AM : Start Price: $28.81 GSH Score: -10.11

Guangshen Railway Company Limited is engaged in providing passenger and freight transportation services between cities, towns and ports located between Guangzhou and Shenzhen in the Guangzhou-Shenzhen corridor and Hong Kong. It also provides certain long distance passenger transportation services. It owns three rail lines, two high speed and one regular speed.

The demand for railway transportation is expected to remain strong with the robust economic growth in China. The growth in rail transportation is much below the economy growth. The Chinese Government is investing approximately $ 12.8 billion by 2020 to expand the railway network by 35%. Tracks are being built, but at a slower pace and China is witnessing a rise in demand for rail transportation.

Recently the company sold 2.75 billion shares and plans to use the proceeds to fund its acquisition of Guangzhou-Pingshi railway line (GPL) from Yang Cheng Railway. With this acquisition, Guangshen Railway is expected to expand its capacity by 30% with construction of fourth rail line. Also, it will help to improve the capacity of its high-speed trains, domestic long distance trains and freight trains. With completion of this project, Guangshen Railway would be the first Chinese company to own a twin double track railway, allowing high speed passenger and regular trains, to run on separate lines. Guangshen Railway Company Limited is heading north ways, as China needs substantial investments to increase its rail capacity to meet the bulging economic growth rate.