Mainland rail builder steps up overseas expansion pace

China Railway No 2 Engineering Group Co Ltd, (formerly China Railway Erju Co Ltd), the leading railway construction contractor in China, is finalizing an agreement with the Algerian government for the construction of a railway project in that nation, a senior company executive said.

The deal is worth 1.5 billion euros ($2.15 billion), Zheng Jianzhong, vice-chairman of the company said in an exclusive interview with China Daily, while providing few other details on the agreement.

The Sichuan-based company, a unit of China Railway Group, is also bidding for railway and highway projects in Southeast Asia, including Malaysia and Vietnam, as well as the African nations of Ethiopia and Morocco, as part of an effort to expand into overseas markets, Zheng said.

The Shanghai-listed contractor's current overseas businesses generated 300 million yuan this year, only accounting for 1 percent of its total revenues. But Zheng said overseas business is expected to contribute 5 to 10 percent of total sales in the near future.

The company is one of the largest beneficiaries of China's 4 trillion yuan stimulus package largely allocated to infrastructure construction projects such as railways and highways.

Zheng expects China Railway No 2's revenue to reach 40 billion yuan this year - a 50 percent jump over last year - as a result of accelerated infrastructure and reconstruction work following the devastating earthquake that hit Sichuan province last year.

Revenue of State-owned competitor, China Railway Construction Corp, is also expected to grow by over 20 percent this year.

Construction and installation made up the largest part of China Railway No 2's revenue with over 30 billion yuan generated from this sector. The contractor also engages in retailing and logistics, which together contributed 3 billion yuan.

The builder is also considering investing in Beijing's property sector which is heating up rapidly and the group now holds a land reserve of 4 million sq m, according to the vice-chairman.