Bombardier Inc.'s Chinese joint venture, Bombardier Sifang (Qingdao) Transportation Ltd., has received a $4 billion contract to build 80 high-speed trains for China's Ministry of Railways.
The Montreal plane and train maker's share of the contract is estimated at $2 billion. It's the largest rail contract the company has received in fiscal 2010, and one of its largest contract wins in several years.
In Toronto, Bombardier is up 35 Canadian cents to C$4.92 on 5.8 million shares. Two analysts raised their ratings on the company in the wake of the news.
The Bombardier joint venture will supply 80 ZEFIRO 380 high-speed trains, which will include a total of 1,120 rail cars, for China's growing high-speed rail network. China is developing more than 6,000 kilometers of new high-speed lines to create one of the most advanced high-speed rail networks in the world.
The first train under the contract is scheduled for delivery in 2012, with final deliveries expected in 2014.
The contract adds to the strong toehold Bombardier has established in China, and analysts said it sets up the company for additional wins.
"While the very high-speed rail contract is probably the most high profile rail tender, we note that Bombardier is bidding or planning to bid on several large-scale rail equipment tenders in China," noted Cameron Doerksen at Versant Partners, who upgraded the company on the news.
And Benoit Poirier at Desjardins Securities said the contract was a "landmark" for Bombardier's ZEFIRO trains, which operate at maximum speeds of 380 kilometers an hour.
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