China Railway Group, the biggest construction company in Asia, booked a third-quarter net loss of 550 million yuan - its first loss since listing in Hong Kong and Shanghai in December.

The investment losses alone were 389 million yuan, while foreign-exchange losses accounted for most of the rest.

According to a report filed with the Shanghai Stock Exchange, the company's operating revenue in the third quarter reached 58.7 billion yuan, just less than its operating costs of 58.75 billion yuan.

In the first nine months of 2008, the company's foreign-currency losses reached 1.94 billion yuan, while its operating revenue was 154 billion yuan and its net profits remained at 1.33 billion yuan.

The earnings per share in the first nine months amounted to 0.06 yuan, and the loss per share in the third quarter was 0.03 yuan.

Merrill Lynch has downgraded China Railway Group to "underperform" from "buy" and slashed its 2008 earnings estimate by 61 percent to 1.5 billion yuan, due to the company's foreign-exchange loss, late disclosure of its Australian dollar exposure and poor management of capital raised from its initial public offering (IPO).

Until Oct 30, the balance of proceeds from its Hong Kong IPO was HK$65 million, US$1.68 billion and A$820 million.

China Railway Group said on Friday that it won contracts worth 14.96 billion yuan, benefiting from the central government's initiative to boost the mainland's transportation network.

Meanwhile, Shenzhen Expressway posted an 18.1 percent drop in its third quarter results, with net earnings of 150 million yuan.

For the first nine months of 2008, the company's turnover also dropped by 1.2 percent, to 779 million yuan.

Tai Fook Research analyst Cho Fook Tat said the railway and construction industry on the mainland can maintain its earnings amid the financial turmoil.

"The central government may boost the economy through different kinds of construction, which will help the railway and construction industry on the mainland to continue its growth," Cho said, though he added that the economic slowdown on the mainland may have an impact on the industry's operational results.

Shares of Shenzhen Expressway jumped 0.78 percent, or HK$0.02, ending at HK$2.59 on Friday, while China Railway Group increased 2.33 percent, or HK$0.01, to HK$4.40.

(HK Edition 11/01/2008 page2)