China State Construction nets $100m US subway deal

By Liu Yiyu
China Daily
2009-11-24

China State Construction Engineering Corp, the largest contractor in China, has bagged a subway ventilation project worth about $100 million in New York's Manhattan area, marking the construction giant's third order in the United States' infrastructure space this year.

The contract was given to China Construction American Co, a subsidiary, the Wall Street Journal quoted a source as saying.

"The new project, along with the $410-million Hamilton Bridge project and a $1.7-billion entertainment project it won earlier this year, signals China State Construction's ambition to tap the American construction market," said Li Zhirui, an industry analyst at First Capital Securities.

Li, however, said the order came as no surprise as the US government is spending massively on infrastructure projects.

The three orders only account for about 4 percent of the value of its total orders this year, Li added.

In the first three quarters of this year, the Chinese construction giant signed more than $2 billion worth of contracts in the US market. China State Construction was also the contractor for a high school, a railway station and the Chinese embassy in the US.

Despite the progress made in the US market, the Middle East, Asia and Africa remain the State builder's key markets. The value of its contracts in Algeria this year increased 32 percent year-on-year, exceeding $800 million, and the value of its contracts in the Middle East surged 62 percent year on year, also exceeding $800 million.

The domestic market is still the largest contributor to China State Construction's revenue, mainly due to strong property sales and infrastructure sector projects.

China State Construction said it reaped 41 billion yuan in revenue from the property sector in the first 10 months of this year, up 83.2 percent over the same period last year. Orders from the infrastructure construction business were boosted by 90 percent largely due to the fiscal stimulus allocated to China's infrastructure sector.

Citing the company's recent performance, Shenyin & Wanguo Securities has given China State Construction a "buy" rating for the first time.

According to statistics provided by the Ministry of Commerce, China's overseas project contracts have increased 22.7 percent to $100.15 billion in the first 10 months of this year.