China Railway shares drop after senior executive dies

Bai Zhongren, president of China Railway

China Railway Group Ltd saw its shares slump on Monday on the Hong Kong and Shanghai stock exchanges following the death of its president.

Both the A- and H-share listings of the nation's second-largest rail builder dropped more than 4 percent on Monday after the company said in a statement that its president Bai Zhongren died in "an accident" on Saturday evening, without providing any further details.

The company's operations will go on as usual, and its chairman will assume Bai's responsibilities until a new appointment is made, the statement added.

China Business News, a Shanghai-based business newspaper, reported on Monday that Bai, 53, jumped to his death from a four-story window at home, because of depression resulting from his company's financial situation.

The Beijing-based China Railway, a State-owned rail giant behind many national projects, declined to comment.

China Railway, which has 290,000 employees, builds railway networks and other infrastructure projects across the nation. It was ranked No. 102 last year on Fortune magazine's list of the world's biggest companies.

The State-owned railway operator said in December its network had more than 100,000 kilometers of tracks, including 10,000 kilometers of high-speed lines.

For the first three quarters of 2013, China Railway posted a net profit of 6.26 billion yuan ($1.03 billion), up 46 percent from 2012. The company's total assets stood at 626.5 billion yuan, and it had total outstanding debt of 531.9 billion yuan, with debt-to-asset ratio of almost 85 percent, according to the company's third quarter filings for last year.

Thanks to the central government's support for railway and urban infrastructure construction projects, the company's net profit will continue to rise in 2014 despite Bai's death, according to a research note from Wind Information Co Ltd.

China's railway construction projects have accelerated since 2008 when the government launched a 4-trillion-yuan economic stimulus package.

Such projects reached a peak in 2010 with infrastructure investment totaling 707.5 billion yuan.

Experts said that China's railway fixed-asset investment may rise "slightly" this year.