Reconstruction generating additional business
Reconstruction work underway in many provinces hit hard by the nation's worst winter in 50 years is generating additional business in a range of industries, with stock and metals prices rising along with increased demand.
At the top of the list are power equipment makers. Rebuilding the damaged power grid in snow-ravaged regions is increasing needs for equipment used for power transmission.
Shao Yukai, an industry analyst at Industrial Securities in Shanghai, says "a sharp increase in demand for power equipment will generate more than expected profits for listed companies."
Domestic building suppliers are also increasing output of cement and steel to provide needed materials.
Stocks for listed companies show that demand and production is high. Anhui Conch Cement Co rose an aggregate 8.7 percent to 67.43 yuan ($9.48) per share, while Hunan Huayin Electric Power Co climbed a total of 7.6 percent over a month ago to 8.2 yuan.
Analysts say the unusually heavy snowstorms revealed that the country's infrastructure is unable to withstand extremely severe weather conditions, a realization that has prompted the central and local governments to improve designs and construction.
Luo Guo, an analyst on the building materials industry at Orient Securities in Shanghai, notes that "reconstruction of damaged infrastructure poses an urgent need for many building materials" but the demand is temporary.
"When reconstruction work winds up, the demand for building materials will show a gradual decline that may bring the production and profit of those companies to their usual levels," Luo says.
"The reconstruction work will benefit relevant industries in the short term," says Liu Jiangang, an analyst at Industrial Securities in Shanghai. "The growth opportunities brought to some industries is just a temporary factor to consider,"
Ma Keming, an analyst on the steel
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