Transportation in China is for the most part, privatized. The government still holds a stake, but only on paper and as the revenues flow in. The good part is; government bureaucracy and regulations are well in hand of company managers and the bad news is; the government has a little say overall operations. Today’s look at a railroad line in China reminds me of Amtrak and what happens when the government is completely in charge.

Guangshen Rail Company Ltd., ADS (NYSE:GSH) at around $26 a share on volume of 147,197 today (up $1.83) was trading near $30 in May. Today’s Market Cap settled at $134.38 billion. Formed in 1996, GSH has 33,450 employees and is based in Shenzhen, China.

GSH primarily provides passenger and freight transportation services on the Shenzhen-Guangzhou-Pingshi railway in the People's Republic of China. As of December, 2007, GSH operated 195 pairs of passenger trains, including 80 pairs of inter-city high-speed passenger trains between Guangzhou and Shenzhen; 13 pairs of Hong Kong ‘Through Trains’ between Hong Kong and Guangzhou; and 102 pairs of domestic long-distance passenger trains.

GSH freight services include the transportation of full load and single load cargo, containers, bulky and overweight cargo, dangerous cargo, fresh and live cargo, and oversized cargo.

And here’s something I like about GSH and its management; they see revenue streams and opportunities everywhere. Case in point, GSH operates restaurants, a travel agency, and a hotel in Shenzhen station. Around the rail yards, GSH leases space to independent retailers, as well as offers services relating to warehousing, loading, and discharging; and advertising boards for commercial advertising and railroad-related construction.

In an interim report of June 30, 2008, passenger delivery volume of GSH was 40.87 million, a year-over-year increase of 16.73%. Revenue from passenger transportation rose 21.98% year-over-year and the passenger delivery volumes of Guangzhou-Shenzhen trains, Hong Kong Through Trains and long-distance trains amounted to 15.57 million, 1.56 million and 23.74 million respectively, representing year-over-year increase of 53.66%, 3.79% and 1.56%. During the first six months of 2008, tonnage of freight transported by the Company increased by 8.86% year-over-year to 34.55 million tons.

Analysts like this stock and so do I. There are some who rate it a ‘five star’ value but with some reservation; as if the numbers are too good to be true. Perhaps, but China, like the U.S. was at one time, relies heavily on railroad transit and that’s not going to change any time soon.

ExHippy