A Mitsubishi Heavy Industries Ltd-led group of eight companies won a ?105 billion (US$896 million) order to build about half of Taiwan's planned high-speed rail line, which is modeled on Japan's bullet trains.
The entire 345km link between the capital Taipei and the southern city of Kaohsiung will cost NT$446.4 billion (US$13.4 billion) and should be completed by October 2005.
"We expect a decision regarding the rest of the track by the end of the year," said Susumu Uchida, Mitsubishi Heavy's deputy director of transport technologies. "We're confident that we will win it."
Recent cutbacks in government spending have prompted Japanese rail companies to look to the expanding economies of other Asian countries for business opportunities. Mitsubishi Heavy is in talks to build similar high-speed links in China as well as Thailand and India, Uchida said.
"It's a mature market in Japan. Japanese companies have got to go overseas for growth," said Graeme McDonald, an analyst at HSBC Securities Japan Ltd. The European railway systems market is dominated by local companies such as Germany's Siemens AG and Alstom of France, so Asian markets offer the best growth prospects, he said.
The other companies in the consortium are Mitsui & Co., Kawasaki Heavy Industries Ltd, Toshiba Corp, Mitsubishi Corp, Marubeni Corp, Sumitomo Corp and Taiwan's Evergreen Development Corp (長榮開發).
HSBC's McDonald has an "add" rating on Mitsubishi Heavy shares and a "reduce" recommendation on Kawasaki Heavy stock.
The companies signed the contracts with Taiwan High Speed Rail Corp (
The company didn't include the order for the track in its May order backlog forecast, Uchida said. In May he said the total value of orders will rise 13 percent to ?2.7 trillion in the year to March 31.
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