news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

21st Century Business Herald reporter Zhang Min reports from Beijing

Recently, infrastructure companies have successively released their operating briefs for the first half of 2024. Affected by various factors, the scale of new orders signed by infrastructure companies in the first half of the year has risen and fallen. Giants such as China Railway Group, China Railway Construction, and China Metallurgical Group Corporation have all seen a year-on-year decline in the amount of new orders signed.

At the same time, infrastructure companies with real estate businesses generally saw a decline in their real estate businesses.

So far, infrastructure companies have not released their full semi-annual reports. However, analysts pointed out that compared with some local state-owned infrastructure companies and private construction companies, central enterprises will still maintain stable performance.

It is worth noting that four central SOEs in the infrastructure sector have recently seen changes in their management. Although most of these were adjustments made after the appointment, analysts believe that changes in important management may have a certain impact on the development strategies of some businesses.

Orders of three infrastructure giants fell

As of July 31, the eight major central enterprises in infrastructure construction have all released their operating briefings for the second quarter and the first half of this year. Judging from the contents disclosed in the briefings, the order performance of central enterprises in infrastructure construction in the first half of the year was inconsistent.

In the first half of this year, China Construction's newly signed contracts amounted to 2.48 trillion yuan, up 10.00% year-on-year. Among the mainstream construction businesses, the order sizes of housing construction and infrastructure have both increased.

From a regional perspective, domestic business still accounts for the majority. Although the scale of overseas business is relatively small, the total amount of newly signed contracts in the first half of the year reached 123.1 billion yuan, with a growth rate of 105.4%.

Among other central construction enterprises, the newly signed contract amounts of China Power Construction, China Energy Engineering, China Communications Construction and China National Chemical Corporation in the first half of the year were 648.887 billion yuan, 738.601 billion yuan, 960.867 billion yuan and 203.57 billion yuan, respectively, up 7.50%, 14.35%, 8.37% and 10.00% year-on-year.

However, there are still three central enterprises that saw a decline in the value of newly signed contracts.

In the first half of the year, the newly signed contract amounts of China Railway Group and China Railway Construction Corporation exceeded one trillion yuan, but declined to varying degrees compared with the same period last year, with China Railway Group's decline being 15.3% and China Railway Construction Corporation's being 19.02%.

Another central enterprise in the infrastructure sector, China Metallurgical Construction Corporation, signed new contracts worth 623.95 billion yuan in the first half of the year, down 6.6% year-on-year. Among them, the newly signed contracts for metallurgical engineering and industrial manufacturing increased, while housing construction projects and municipal and infrastructure projects saw double-digit declines.

Overall, in the first half of 2024, the eight major central construction enterprises signed a total of 7.89 trillion yuan in new orders, a year-on-year decrease of 0.5%.

Many institutions have pointed out that in the macroeconomic environment where real estate investment has not yet bottomed out and local government debt has yet to be resolved, the construction industry market has shrunk in the first half of the year. According to data from the National Bureau of Statistics, the construction industry signed new orders of 14.91 trillion yuan in the first half of this year, a year-on-year decrease of 3.4%.

In addition, heavy local fiscal pressure, slow issuance of special bonds, and adjustments in companies' own business strategies are all reasons for the decline in infrastructure orders.

It is worth noting that the impact of the decline in the real estate market cannot be ignored. Infrastructure companies with real estate businesses have generally seen a decline in their real estate businesses.

In the first half of this year, China Construction's real estate business contract sales amounted to 191.5 billion yuan, down 20.6% year-on-year; contract sales area was 6.55 million square meters, down 33.2% year-on-year. However, China Construction's new land reserves in the first half of the year were 3.7 million square meters, up year-on-year.

During the same period, the real estate business sales of China Railway Group and China Railway Construction Corporation were 13.25 billion yuan and 39.77 billion yuan, respectively, down 63.3% and 25.5% year-on-year.

So far, infrastructure companies have not released their full semi-annual reports, but from the performance forecasts of some companies, revenue and profit declines continue to exist. For example, Chongqing Construction Engineering's net profit attributable to its parent company will be a loss of 17 million to 20 million yuan in the first half of the year.

Analysts believe that this also means that the performance differentiation of infrastructure companies will continue. Compared with some local infrastructure state-owned enterprises and private construction companies, central enterprises will still maintain stable performance.

Personnel changes are concentrated

In the middle of this year, some central state-owned infrastructure enterprises experienced personnel changes in their management.

On July 30, China Railway Construction Corporation Limited issued an announcement stating that according to the 43rd meeting of the fifth board of directors, Huang Chao was appointed as the company's vice president.

Huang Chao, 47, is a senior engineer who has been working in the China Railway system since he started working in 1999. He is currently the Party Secretary and Chairman of China Railway First Survey and Design Institute Group Co., Ltd.

On the same day, China Railway Construction Corporation also issued an announcement, appointing four vice presidents, Chen Zhiming, Huang Changfu, Li Xinglong and Yang Zhefeng. Previously, all four had served in the China Railway Construction system for a long time.

It is worth noting that Li Xinglong is the party secretary of China Railway Construction Real Estate Group Co., Ltd. After being promoted to vice president of China Railway Construction, he will step down from his original position. However, China Railway Construction has not yet announced his successor.

Among the eight central construction enterprises, China Railway Construction's real estate business is second only to China Construction. In the first half of this year, China Railway Construction's new land reserves (building area) exceeded 30%, showing a strong growth trend. An anonymous real estate analyst told the 21st Century Business Herald reporter that against the backdrop of the decline of private real estate companies, China Railway Construction is quite ambitious in its real estate business. Whether this ambition can continue after the change of leadership is worth further observation.

On July 27, China Communications Construction Company appointed Liu Yongchang as secretary to the board of directors. Liu Yongchang's current position is the company's financial director.

The most watched personnel adjustment recently took place in China Energy Engineering. According to the resolution of the board of directors, China Energy Engineering appointed Ni Zhen as the general manager of the company. Ni Zhen was born in 1971 and has worked in the China Railway Construction system for a long time and has also been in charge of the real estate business of China Railway Construction.

Previously, the general manager of China Energy Construction China Power Engineering New Energy Company was changed and Wang Yongji took office.

It is worth noting that these personnel changes are normal adjustments after the completion of the term of office, and many of them left due to age issues.

A person related to a central SOE in infrastructure construction told the 21st Century Business Herald reporter that most central SOEs in infrastructure construction bear certain responsibilities at the national strategic level, and the company's development strategy is relatively stable. Therefore, personnel changes will not have a fundamental impact on the company's development.

But he also pointed out thatNew managers may bring different management styles and strategic ideas, which may affect the development of some non-core businesses.As for the potential impact of this round of management adjustments in central infrastructure enterprises, it remains to be seen.