Major listed contractors report robust Q1 results as nation ramps up infrastructure investment

Amid nationwide efforts to step up the momentum of economic recovery, some major listed contractors saw a surge in order value and numbers in the first quarter, buoyed by the expanding effective investment in infrastructure during the same period.

According to China State Railway Group Co Ltd, the national railway operator, the fixed asset investment in railways nationwide increased 6.3 percent year-on-year to 167.4 billion yuan ($23.9 billion) in the first four months — a record-high figure for the period — exceeding the pre-COVID-19 level of 162.3 billion yuan in the same period of 2019.

Against such backdrop, China's major transportation infrastructure developers China Railway Group Ltd (CREC) and China Railway Construction Corp Ltd (CRCC) — both listed on the Shanghai Stock Exchange — reported double-digit growth in new orders and order value in the first three months of this year.

According to reports recently unveiled by the two companies, the new contract value of CREC and CRCC in the first quarter reached 667.38 billion yuan and 539.63 billion yuan, up 10.2 percent and 15.82 percent year-on-year, respectively.

In particular, CRCC said in the report that, of the total new contract value, the value of new projects reached 397.69 billion yuan, soaring 41.66 percent year-on-year, which the company attributed to the surge in orders for projects including railways, highways, municipal engineering, and water transport and conservancy during the reporting period.

"As the support from the policy side remains relatively strong, the scale of government investment will be no less than that in 2022, and the effective investment is expected to stay on a growth track this year, with the main focus on major infrastructure projects due to its driving role in industrial chains," said Zhang Yiqun, deputy director of the China Special Committee on Budget Performance.

Enterprises in fields such as water conservancy and transportation will step up pace in promoting existing projects and launching new projects with better funding, as the robust growth seen in the sector will bring bigger social capital inflow, Zhang said.

According to a report last week by China Securities Co Ltd, the country's recovery still relies heavily on efforts to expand domestic demand, in which infrastructure investment plays a significant role. The sector will remain a major focus of macroeconomic policies this year.

The report also expects the annual growth of the sector to remain at a relatively high level of around 10 percent this year, with most spending seen in projects such as urban buildings, transportation and green infrastructure.

Shares of CREC rose 0.64 percent to 7.88 yuan on Thursday, while those of CRCC edged down 0.19 percent to 10.58 yuan.

Recently, many provinces nationwide reported stronger infrastructure investment in their first-quarter economic results.

For example, in East China's Fujian province, road and waterway transportation investment reached 28.9 billion yuan in the first quarter, accounting for 28.9 percent of the annual target. As of the end of March, 21 projects commenced construction, exceeding the planned number, the provincial transportation department said.

Zhejiang province, which neighbors Fujian, also posted a higher fixed-asset investment during the same period, rising 9.1 percent year-on-year, with infrastructure investment up 4.4 percent.

China Railway 24th Bureau Group Corp Ltd (CR24), a CRCC unit, said its projects nationwide have witnessed faster progress recently.

The State contractor said its construction workers in Cixi, a county-level city in Zhejiang, successfully completed the pouring of a basement slab on a school project.

Covering 46,227 square meters, the school project will shoulder the nine-year education of more than 2,400 students after completion and is listed as a key infrastructure project in Cixi's five-year development plan.

Considering its significance to local livelihoods, CR24 said its builders were trained to "hold firmly to principles of safety and quality" during construction to ensure the scheduled completion.

The project team routinely held on-site observation and exchange meetings to ensure smooth construction and promote strict management, said the CR24 project manager, who declined to be named.

"With adequate labor supply and smoother logistics since the beginning of this year, we are confident in accomplishing the project on time," he said.

Chinese stocks closed lower on Wednesday, with the benchmark Shanghai Composite Index falling 0.21 percent to 3284.23. The Shenzhen Component Index closed 0.07 percent lower at 11091.08.