Feb 19 2011
China Advanced Construction Materials Group, Inc. (NASDAQ: CADC) ("China ACM"), a leading provider of ready-mix concrete and related technical services in China, today announced it has been awarded two high-speed rail (HSR) contracts valued at $6.8 million total.
The contract was awarded to the Company's Manufacturing Services business segment and is being fulfilled with premium ready-mix concrete (RMC) from four portable plants. China ACM reported a gross margin of 31 percent for its rapidly growing Manufacturing Services business segment, compared with its blended gross margin of 19 percent, in the second fiscal quarter ended Dec. 31, 2010.
China ACM was awarded the contracts by CCCC Tunnel Engineering Co., Ltd., a subsidiary of Beijing-based China Communications Construction Company Limited (HKEx: 01800), for its premium RMC manufacturing and related engineering services on the Shanghai - Kunming Passenger Line in Jiangxi Province. They will require approximately 830,000 cubic meters of RMC and are valued at $6.8 million.
The first contract is for Part 4, Section 3, Jiangxi Section of the Shanghai - Kunming Passenger Rail project in Jiangxi Province. It is valued at approximately $4.34 million and will require about 530,000 cubic meters of China ACM premium RMC.
The second contract is for Part 5, Section 3, Jiangxi Section of the Shanghai - Kunming Passenger Rail project in Jiangxi Province. It is valued at approximately $2.46 million and will require about 300,000 cubic meters of China ACM premium RMC.
These contracts are estimated for completion in the second and fourth quarters of Fiscal Year 2012, respectively. This brings to 23 the total number of Company portable concrete plants, with 19 fully contracted and operating country wide today. The remaining four are in preliminary, trial production at client sites, as is customary, and the Company anticipates announcing that they are fully contracted in the current or subsequent quarter.
Commenting on the contract, Mr. Xianfu Han, Chairman and Chief Executive Officer of China ACM, said, "High speed rail is a major, vital component of China's drive toward modernization and urbanization. I am pleased to report continuing solid progress in our rapidly growing manufacturing services business, reflecting growing demand for our patented, premium eco-friendly RMC blends."
China ACM estimates the total addressable market just for HSR RMC at $15 billion over the next 10 years. Analysts report that China's 6,552 km high-speed railway system is the longest in the world, and is expected to double to 13,000 km by the end of 2012. This includes newly built high-speed links and existing track that will be upgraded to accommodate trains running 200-250 km/hour. Over the next 10 years, the Ministry of Railways plans to construct an additional 34,000 km of railway track in the country (more than half of which will be HSR), more closely linking the Central and Western regions to coastal provinces.