Summary：China Railway Group (HKG:0390) has been upgraded to a Must Own China Equity at Heffernan Capital Management and Economist Shayne Heffernan has placed a $6HKD price target on the stock for 2013.

China Railway Group (HKG:0390) has been upgraded to a Must Own China Equity at Heffernan Capital Management and Economist Shayne Heffernan has placed a $6HKD price target on the stock for 2013.

China Railway is confident of attracting 650 billion yuan (HK$799.5 billion) in new contracts this year by focusing more on its non-core railway business.

The mainland’s leading heavy infrastructure company won three metro construction contracts in Shenzhen, Kunming and Chengdu, which together contributed 86 billion yuan in the first quarter of this year.

Contracts from the metro sector are expected to grow to 150 billion yuan from 15 billion yuan last year.

“The impact from shrinking investments in domestic railway construction will be limited to the first half of the year,” chairman Li Changjin said.

Net profit fell nearly 10 percent to 6.69 billion yuan last year. A slowdown in the industry is expected this year after authorities cut railway spending.

However, considering the stable first quarter, Li expects revenue to exceed the firm’s original target of 431 billion yuan.

China Railway Group Limited is engaged in infrastructure construction, survey, design and consulting services, engineering equipment and components manufacturing property development, and other businesses.

The Company operates its businesses through infrastructure construction, which includes railway construction, highway construction, urban rail transportation and other construction; survey, design and consulting services business, which involves in provision of survey, design and consulting services for railway, bridge and tunnel projects; engineering equipment and component manufacturing business, which provides large bridge steel structures and passenger line turnout; property development business, and other business.