CSR delays shareholder meeting, cites effect of accident
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China Daily, August 4, 2011
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A high-speed train is seen at a railway station. |
China South Locomotive and Rolling Stock Corp Ltd (CSR) said on Wednesday that it postponed a shareholder vote on an 11 billion yuan ($1.7 billion) fundraising plan, a move meant to give investors time to assess the effect of last month's fatal train crash.
CSR said in a statement it would defer the shareholder meeting, originally scheduled for Friday, until Sept 29 "because of the recent train crash and the negative effect from US Treasuries" as concerns about the US debt situation persist.
The company plans to provide further information to investors before the meeting, it said in the statement.
It intends to sell up to 1.83 billion shares at 6.02 yuan each to investors including the National Social Security Fund, with the proceeds to be used to build rolling stock for the country's high-speed railway network.
Analysts said the delay was intended to ease investors' concern that the accident might trigger a substantial slowdown in investment in China's ambitious railway construction program.
Shares of Shanghai-listed CSR fell 0.9 percent to 5.44 yuan on Wednesday.
The shares have fallen about 19 percent since the crash in East China on July 23.
The two trains involved in the accident were produced by CSR and its partners, Bombardier Inc and Kawasaki Heavy Industries Ltd.
Shenyin & Wangguo Securities Co Ltd last Monday downgraded their ratings for CSR to "neutral" from "recommend".
But China Galaxy Securities Co Ltd and China Fortune Securities Co Ltd last Thursday released reports with "recommend" ratings for CSR, saying recent contracts will guarantee the company's long-term prospects.
CSR said in a statement last Thursday that it signed contracts worth 6.89 billion yuan to build subway and passenger rail cars. It didn't disclose the customers.
Zhao Xiaochuang, an analyst with Century Securities Co Ltd, said that since CSR has stable contracts, and the share price is fairly low, the company still has long-term growth potential.
However, industry experts warned that the latest crash threatens to undermine the country's plan to export high-speed train technology.
Yang Hao, a professor in transportation with Beijing Jiaotong University, said Chinese rail exports would be affected as overseas clients might be doubtful about the quality and safety of the equipment.
CSR signed an agreement with General Electric Co in December to establish a 50-50 joint venture to manufacture high-speed trains in the United States, using China's technology, and to jointly explore the US high-speed railway market.
China has signed agreements for bilateral cooperation on railways with more than 30 countries since 2003, including the United States, Russia, Brazil, Saudi Arabia, Turkey, Poland and India.
The country has adjusted its railway investments since the former minister of railways, Liu Zhijun, was removed from his position in a graft probe.
The Ministry of Railways announced in May that rail infrastructure investment would touch 600 billion yuan this year, down 100 billion yuan from earlier estimates.
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