[ET Net News Agency, 26 June 2019] Moody's Investors Service said in a new report that
rising investment in China's railways, roadways and urban rail systems this year and next
will boost revenue growth for most rated Chinese construction companies, with China
Railway Group Limited (CRG, A3 stable)(00390), China Railway Construction Corporation
Limited (CRCC, A3 stable)(01186) and China Communications Construction Co. Ltd. (CCCC, A3
stable)(01800) set to benefit the most.
"We expect CRG, CRCC and CCCC to benefit most from the increase in infrastructure
investment, as more than 50% of their revenue comes from infrastructure construction, and
the other half from construction and other segments," said Chenyi Lu, a Moody's Vice
President and Senior Credit Officer.
"CRG and CRCC will benefit as the largest Chinese railway, roadway and urban rail
construction companies by revenue, while CCCC is also among the largest Chinese roadway
construction companies by revenue," added Lu.
China's central government (A1 stable) is increasing its own infrastructure spending to
spur economic growth, and has also expanded funding access for regional and local
governments to support infrastructure projects they undertake. In addition, it is
encouraging more private capital to invest in infrastructure through public-private
partnerships.
By sector, Moody's expects investment in railway infrastructure to increase 3% in 2019
and 1% in 2020, compared with 0.2% in 2018, driven by strong investment in China's central
and western regions and in its high-speed railways.
Investment in roadway infrastructure should increase by 4% in 2019 and 2% in 2020, up
from no growth in 2018, supporting key regional economic development initiatives, and
improving the quality and coverage of the roadway network across the country.
Finally, investment in urban rail systems will rise 17% in 2019 and 13% in 2020,
compared with 14.9% in 2018, reflecting more systems built in Tier 1 and Tier 2 cities,
increased funding access for regional and local governments, and new projects that have
already been approved. (KL)