The company has announced that on 3 Jul 2008, its board of directors approved a proposal to invest RMB 1.6 bln in Huhanrong Railway (Hubei) Co. Ltd as a vehicle for exploring entry into the railway market, a new facet of the company's scope of operations.

Huhanrong Railway is a single-purpose entity founded explicitly for the construction of both the Hefei-Wuhan section, covering 155 track kilometres at a cost of RMB 13 bln, and the Wuhan-Yichang section, covering 293.1 track kilometres for RMB 23.76 bln. The entire Huhanrong railway extends over 448.1 track kilometres.

The project has RMB 15.83 bln in cash on hand, of which RMB 5.92 bln has been allocated for the Hefei-Wuhan section and RMB 8.32 bln has been allotted to the Wuhan-Yichang section.

Huhanrong Railway (Hubei) Co. Ltd was founded in December 2007 and has registered capital of RMB 280.78 mln. Partners in the project include the Wuhan Railway Bureau, Hubei Province Passenger Railway Investment Co. Ltd and Wuhan Urban Construction Investment & Development (Group) Co. Ltd, each having respectively invested RMB 200 mln (71.23%), RMB 43.27 mln (15.41%) and RMB 37.51 mln (13.36%). The company, as the newest shareholder, will take a 10.11% stake by putting up RMB 1.6 bln in cash in installments.

Source: China Securities Journal

Date: 5 Jul 2008

CN01/NW/MZ/BT/MM