Daqin Railway Profit Surges on China Coal Transportation Demand

Daqin Railway Co., operator of China's biggest coal transport line, said profit rose 38% last year as it moved more of the fuel from mines to power stations.

Net income jumped to 6.1 billion yuan ($871 million), or 0.47 yuan a share, from 4.4 billion yuan, or 0.39 yuan, a year earlier, the company said in a Shanghai Stock Exchange statement today. That's in line with the 6.07 billion yuan median of six analyst estimates compiled by Bloomberg. Sales climbed 26% to 20.9 billion yuan.

Daqin Railway carried 19% more coal last year as the fuel is used to generate about three-quarters of the nation's electricity needs. China, the world's largest coal producer, boosted output of the commodity 9.4% last year as its economy expanded 11.9%, the fastest pace in 13 years.

``The demand for coal shipments is enormous,'' said Li Lei, an analyst at China Securities Co. Ltd. in Beijing. ``The question is, whether the company can satisfy the demand.''

The railway operator's profit in 2008 may grow a further 30% due to the nation's economic expansion, Li said.

Daqin Railway, based in Shanxi province's Datong city, carried 325 million tons of coal in 2007, compared with 273 million tons in 2006, it said.

The rail operator plans to buy $2.5 billion of trains to carry the fuel, including 360 electric locomotives and 3,000 cars, it said earlier this month.