A “cash cow”
By Don Durfee
Safe havens have been few and far between during the global economic crisis, but one has been fairly reliable: infrastructure. So it’s not surprising that many companies are betting on the biggest infrastructure opportunity of them all, China’s $585 billion spending package.
One of those is NWS Holdings, a subsidiary of Hong Kong’s New World Development. Speaking at the Reuters China Investment Summit, executive director Tsang Yam Pui spoke glowingly about the company’s investment in a project to develop 18 rail container terminals around the country.
Rail looks like a promising area. China’s crumbling rail network is due for an upgrade and only 3 percent of domestic cargo is shipped in containers, compared with 20-30 percent in developed markets. Beijing will pour 700 billion yuan into the sector over the next three years and everyone from those laying the tracks to those making the train’s braking systems are hoping to cash in.
The company certainly needs a boost. Many of its other businesses, which range from stock broking to running Hong Kong’s convention centre, have suffered during the economic slowdown. It posted a 64 percent drop in six-month profit.
NWS also sees itself gaining from the country’s push to develop water projects — both treatment and supply — and expressways. In addition to its rail projects, to which its committing $1.76 billion, the company plans to commit another $146 million annually to these areas, Tsang said.
With any luck, China’s stimulus will perk up NWS’s own profit. Or, as Tsang described China’s rail investments: “For the MOR (Ministry of Railway), this project is a national mission and for us it is a future cash cow.”