Chinese train makers to reunite for global market

BEIJING - China's top two train makers will merge after a 14-year split to explore the global market for their high-speed railway technology, analysts said.

The two, China CNR Corp Limited and CSR Corp Limited, will announce the details of their merger over the weekend after confirming the news on Tuesday.

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The move aims to avoid "in-fighting" between the two in their exploration of the global market, said Wang Mengshu, a railway expert at the Chinese Academy of Engineering.

The two split in 2000, and the then Ministry of Railways (MOR), which became the China Railway Corporation in 2013, delineated the companies' major sales domains with the Yellow River as the boundary. It also tried to set a boundary for the two in the overseas market to reduce their competition.

Sun Zhang, a railway expert at Tongji University, said the impending merger aims to improve their competitive edge against global peers.

The two have pocketed China's entire high-speed railway market. They have also produced about 80 percent of the total cargo trains in China and the majority of subway trains. Both have the ability to produce high-speed trains of the CRH380 series, which can run at 380 kilometers per hour.

The companies are listed in both Shanghai and Hong Kong, with a combined market value of about 30 $billion based on the closing prices before trading ended on Tuesday.

CNR's net profits jumped 65.1 percent year on year to 3.96 billion yuan ($645 million) for the first nine months, according to its latest quarterly results filed with the Shanghai and Hong Kong stock exchanges on Tuesday. In the January-September period, the CNR's operating revenues climbed 9.84 percent from a year ago to 64.2 billion yuan.

CSR, China's largest train maker by market value, has yet to disclose its latest quarterly financial statement.

CNR finished contracts worth $1.54 billion in the first half year, up 178.18 percent year on year, and CSR signed contracts worth nearly $3 billion in the first half year.

China is the largest market for high-speed rail, while 16 countries and regions now have high-speed railways in operation.

China had 11,028 kilometers of high-speed rail by the end of 2013, almost as much as all other countries combined. The country had 12,000 kilometers of high-speed railway under construction at the end of 2013.

By the end of 2013, China had approved 36 cities to plan or build railway networks, including subways and light rail, totalling 5,790 kilometers.