China Railway construction: Saudi Arabia project has been properly arranged

Securities Times reporter Zhang Yanping China CRCC (601186) issued a notice that in order to better promote the implementation of the Shatmega light rail project to ensure the smooth completion of the project, and to better deal with the project claims, China CRCC and its controlling shareholder China Railway Construction Corporation signed the Regarding the Shatmega light rail project related matters Arrangement Agreement, has transferred the Saudi project to the China Railway Construction Corporation.　　The two sides also arranged for the distribution of the subsequent claim income. The Saudi project is a mixed project for China's CRCC. As the leaders of the two countries personally witnessed the signing of the project, the Saudi project to China's Iron Building brought honor and brand influence far beyond the imagination of the people.　　Saudi Mecca Light rail project is recognized as the world's largest unit time design capacity, the most complex mode of operation, the shortest construction period of the light rail project. However, it is such a world-wide project, predicted by major foreign contractors as "impossible to complete", China Railway has achieved its operational operation on schedule and successfully completed the November 2011 Hajj mission, praised by the government of Saudi and millions of Muslim pilgrims from more than 180 countries,　　The Overseas brands and accreditation of China Railway have been greatly improved. However, after the project started, because the owners constantly put forward new functional requirements, command changes, increase the amount of work, underground pipe network and the serious lag of land expropriation and other reasons, resulting in a significant increase in project workload and cost investment, the planned duration of the phased delay. In this case, China's CRCC to ensure the progress of the schedule, increased investment in a large number of human, material and financial resources, project cost input exceeded expectations.　　China Railway construction According to the original contract, submitted to the owner of the change and claim information, the Saudi side also undertook to set up a special committee after the project to discuss the relevant claims and compensation issues. According to the announcement, as at October 31, 2010,　　The Saudi Arabian project contract is expected to have a total revenue of $12.051 billion, estimated to be 16.045 billion yuan, another financial cost of 154 million yuan, the project is expected to net loss of 4.148 billion yuan, which contains 3.462 billion yuan of the completed part of the cumulative net losses and 686 million yuan of the unfinished part of the estimated loss. In accordance with the "Agreement" signed by both parties, the specific agreement for the late implementation of the project is: since October 31, 2010, the China Railway Corporation shall exercise and fulfill all the rights and obligations arising from the general contract project of the railway project of the Chinese railways in Saudi Mecca and the general contracting contract.　　As a result of this arrangement, China Railway Construction Corporation should pay $2.077 billion to the Chinese railways. The claim income (if any) obtained from the owner shall be arranged in the following order: If the claim income is less than 1.385 billion yuan, the claim income is all owned by China Iron construction; If the claim income is higher than 1.385 billion yuan but less than 3.462 billion yuan, then the Chinese iron construction enjoys 1.385 billion yuan, the remaining part (up to 2.077 billion yuan) is owned by Chinese Railway Construction Corporation; If the claim income is higher than 3.462 billion yuan, then China's iron construction to enjoy 1.385 billion yuan, the Central Railway building totalThe company enjoys 2.077 billion yuan, the remainder is used to make up the loss amount (if any) in the later period of the project, and after the net loss of the compensation project, the remaining funds are all Fangui to China iron construction. Through these arrangements, China CRCC The Saudi project's biggest losses to 1.385 billion yuan (3.462 billion yuan of the completed part of the cumulative net loss, minus the 2.077 billion yuan on the price), compared with the last October announcement of the 4.153 billion yuan expected losses significantly reduced.　　At the same time, although the right to claim is transferred to China Railway Construction Corporation, but the amount claimed will be used as a priority to compensate the Chinese iron construction both losses, the final remaining part will be returned to the company, that is to say, the Chinese iron built in the lock loss limit, the future exists to further reduce the On the other hand, in the follow-up claims processing, as the central enterprises in China Railway Construction Corporation, is indeed more appropriate than the Chinese railway to deal with the subject of transactions. The Saudi project is highly complex and sensitive, and matters such as project claims are inevitably related to government relations and coordination between the relevant ministries, which will certainly be more conducive to the proper conclusion of the project and, in particular, better for the best possible claims.　　This is in itself also as China Railway construction of the largest shareholder of the Chinese Railway Construction Corporation would like to see results. Professionals believe that China Railway CRCC is the main business of the overall restructuring listed companies, China Railway Construction Corporation holds 7.566 billion stake in the Chinese railways, accounting for 61.33% of the total share capital, the rise and fall of the Chinese railway Construction company has a very significant impact.　　The scheme is, in fact, a more winning arrangement. "The concept of high-speed rail is the hottest in the market recently."　　At home, the high-speed railway has been identified by the government as the "Twelve-Five plan" priority development, strong support of emerging industries, overseas, the Chinese corporate mission to explore the footsteps of the U.S. state of California's land. Professionals believe that as China's largest railway construction group and overseas engineering contracting industry leading enterprises in the Saudi project to brand the Chinese iron construction, I believe that the company's performance and capital market performance in both hand over a more beautiful answer.