The first Chinese railway company to list domestic A shares, Daqing Railway Co., plans to debut on the Shanghai Stock Exchange early next month after a huge initial public offering (IPO) of over 14 billion yuan (1.75 billion U.S. dollars).

The Daqing Railway Co. said on Thursday that its IPO will not exceed 15 billion yuan (1.875 billion dollars) and its equities on A shares will be no more than five billion shares.

Daqin's IPO will be the second largest in China's A shares since China resumed IPO last month following a year-long suspension. It is the second only to the Bank of China which made a strong debut in Shanghai on July 5 with the issue of about six billion A-shares for an IPO worth around 20 billion yuan (2.5 billion dollars).

The Daqin Railway Co. operates the major coal transportation railway line in northern China. The 1,000-km line links Datong, Shanxi Province, north China, and the port city of Qinhuangdao in Hebei Province, which is expected to handle 250 million tons of coal this year.

Luo Renjian, a researcher with the Institute of Comprehensive Transportation under the National Development and Reform Commission (NDRC), told Xinhua that the listing of Daqin marks a new leap in the reform of the railway investment system in China.

Luo believes more railway companies will follow the Daqin model by listing on the stock market to raise capital for railway construction.

Zhang Jianping, deputy director of the Development Planning Department under the Ministry of Railways, recently confirmed that the ministry will speed up the listings of some large and profitable railway companies.

The overseas-listed Guangshen Railway Co., Ltd is preparing to follow Daqin to list in China's A shares. In 1996, the company became China's first railway company to list in Hong Kong and New York.

China's major railway freight company, China Railway Container Transport Co., also plans to list by purchasing a listed railway-related company, Dalian Tielong Industry Company Co., Ltd.

Sources said the 100-year-old Jiaoji Railway that runs between Qingdao and Ji'nan city in east China's Shandong Province is also preparing to list overseas.

Luo said the listing of some profitable companies with transparent capital will be an important channel for the ministry of railways to explore investment resources in the future.

By the end of 2005, China had established 20 joint-venture railway companies, attracting investment of over 44 billion yuan (5.5 billion dollars), including 2.5 billion yuan from private investors. The money has been used for the construction of 20 railway projects like coal railways and express railways solely for passenger trains.

According to China's middle and long-term plan of railway development, by the year 2020, China will extend its total railway length from the current 74,000 to 100,000 km, which will need an total investment of 2,000 billion yuan (250 billion dollars).

Source: Xinhua