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About Guangshen Railway Company
Guangshen Railway Company Limited engages in railroad passenger transportation, freight transportation, railway network usage and other transportation-related services.
The company mainly engages in passenger and freight transportation businesses on the Shenzhen-Guangzhou-Pingshi Railway, which is 481.2 kilometers long, running vertically through Guangdong Province. The Guangzhou-Pingshi Railway is the southern part of Beijing-Guangzhou Railway, which connects Northern China with Southern China. The Guangzhou-Shenzhen Railway is strategically located and links with major railway networks in China (People’s Republic of China), including the Beijing-Guangzhou, Beijing-Kowloon, Sanshui-Maoming, Pinghu-Nantou, and Pinghu-Yantian lines, as well as with the Xiamen-Shenzhen Railway, Guangzhou-Dongguan-Shenzhen Intercity Railway and the East Rail Line in Hong Kong, which form integral components of the transportation network in the People’s Republic of China (PRC).
Passenger transportation is the company’s principal business, which includes the transportation businesses of Guangzhou-Shenzhen intercity trains (including Guangzhou East to Chaozhou-Shantou cross-network electric multiple unit (EMU) trains), long-distance trains and Hong Kong Through Trains. The company has adopted an As-Frequent-As-Buses operating model by dispatching one pair of its domestically manufactured electric multiple units trains, known as China Railway High-Speed trains or CRHs, every 10 minutes on average during peak hours between Guangzhou and Shenzhen. The through-trains passing Hong Kong jointly operated by it and the MTR Corporation Limited (MTR) are one of the most important means of transportation between Guangzhou and Hong Kong. The company has organized and operated a number of long-distance trains running from and to Guangzhou and Shenzhen that linked with most of the provinces, autonomous regions and municipals across the nation.
Freight transportation is another important segment of the company’s transportation business. The company is well equipped with comprehensive freight facilities and are able to efficiently transport full load cargo, single load cargo, containers, bulky and overweight cargo, dangerous cargo, fresh and live cargo, and oversized cargo. The company’s rail lines operated are closely knitted with the major ports in Guangzhou and Shenzhen and are connected to several large industrial zones, logistics zones, and plants and mines in the Pearl River Delta region via railroad sidings. The major market of the company’s freight transportation business is domestic mid-to long-distance transportation.
The company has extended its passenger and freight transportation business to include railway operation services with the commencement of Wuhan- Guangzhou Passenger Railway Line in 2009. As of December 31, 2021, the company had provided such services to Wuhan-Guangzhou Passenger Railway Line Co., Ltd., Guangdong Guangzhu Intercity Rail Transportation Company Limited, Guangzhou-Shenzhen-Hong Kong Express Rail Link Company Limited, Guangzhou-Zhuhai Railway Company Limited, Xiamen-Shenzhen Railway (Guangdong) Company Limited, Ganzhou-Shaoguan Railway Company Limited, Nanning-Guangzhou Railway Company Limited, Guiyang-Guangzhou Railway Company Limited, Guangdong Pearl River Delta Intercity Railway Traffic Company Limited, MaoZhan Railway Company Limited, Guangdong Shenmao Railway Company Limited and Guangdong Meizhou-Shantou Passenger Railway Line Company Limited.
Service Territory
The company’s rail lines traverse the Pearl River Delta and run vertically through Guangdong Province, an area that benefited early from the PRC economic reform policies.
As of March 31, 2022, the company had 48 stations situated on its rail lines, providing passenger and freight transportation services for cities, towns and ports situated along the Shenzhen-Guangzhou-Pingshi corridors and Hong Kong Through Train passenger service, which the company serves in conjunction with the MTR Corporation Limited (MTR). The company also provides railway operation services to other Chinese domestic railway companies.
The Shenzhen-Guangzhou-Pingshi railroad is an integral component of the PRC national railway network, and provides nationwide access to passenger and freight traffic from southern China to other regions of mainland China.
Northbound: At Pingshi, the company’s rail line connects with the Beijing-Guangzhou line, which is one of the major trunk lines linking southern China with Beijing and northern China. Another trunk line connecting northern and southern China, the Beijing-Hong Kong rail line, includes the section of its line from Dongguan to Shenzhen.
Southbound: The company’s line connects at Shenzhen with the rail line owned by the MTR that runs to Kowloon, Hong Kong.
Westbound: The company’s line connects with the Guangzhou-Maoming rail line operated by Guangdong Sanmao Railway Company Limited (GSRC), a company in which GRGC holds a 49.1% equity interest, which runs through the western part of Guangdong Province, connecting with other rail lines that continue on into the Guangxi Zhuang Autonomous Region, which provides access to southwestern China. Nanning-Guangzhou Railway and Guiyang-Guangzhou Railway commenced operation on December 26, 2014, and is connected with its line at Guangzhou Station, and Guangzhou and Guilin North. Nanning- Guangzhou Railway is owned by Nanning-Guangzhou Railway Company Limited, a subsidiary of Nanning Railway Bureau of CSRG. Guiyang- Guangzhou Railway is owned by Guiyang-Guangzhou Railway Company Limited, a subsidiary of Chengdu Railway Bureau of CSRG. The company provides the operational services to Nanning-Guangzhou Railway and Guiyang-Guangzhou Railway. The company’s line also connects with Guangzhou-Foshan-Zhaoqing Intercity Railway, in which Guangdong Provincial Railway Construction Investment Group Co., Ltd. and CSRG jointly invested.
Eastbound: The company’s line connects with the Guangzhou-Meizhou-Shantou rail line, Xiamen-Shenzhen rail line and Guangzhou-Dongguan-Shenzhen Intercity passenger line. Guangzhou-Meizhou-Shantou rail line is operated by Guangmeishan Railway Company Limited (GRCL), a company in which GRGC holds a 78.2% equity interest. A section of this line forms, along with its Dongguan to Shenzhen segment, a part of the Beijing-Hong Kong rail line, which terminates in Kowloon, Hong Kong. The section of Xiamen-Shenzhen rail line in Guangdong Province is owned by Xiamen-Shenzhen Railway (Guangdong) Company Limited, a subsidiary of GRGC. The company provides the operational services to Xiamen-Shenzhen rail line. Guangzhou-Dongguan-Shenzhen Intercity passenger line, which is mainly invested by Guangdong Provincial Railway Construction Investment Group Co., Ltd, connects with Guangzhou East to Xintang section of its rail line. At Pinghu, the company’s rail line connects with two local rail lines: one of them, Pingnan Railway, principally serves three ports located in western Shenzhen—Shekou, Chiwan and Mawan, which is under renovation and expansion to add passenger transport and sea-railway cargo transport capabilities—and the other, Pingyan Railway, serves Yantian port, an international deep-water port located in eastern Shenzhen. At the Huangpu and Xiayuan stations in Guangzhou, the company’s line connects with Huangpu port and Xinsha port. The company’s rail line also connects with certain industrial districts, commercial districts and the facilities of many of its customers through spur lines, which are rail lines running off the main line that are used and typically financed by a freight customer or a group of freight customers and maintained by it for a fee.
Passenger Transportation
The company’s passenger train services can be categorized as follows:
transportation business of Guangzhou-Shenzhen intercity express trains;
long-distance trains;
through Trains in Hong Kong; and
other revenue from passenger transportation.
As of December 31, 2021, there were a total of 240 pairs of passenger trains in the company’s operation area according to the then train schedule (each pair of trains meaning trains making one round-trip between two points), of which:
90 pairs of intercity high-speed passenger trains between Guangzhou and Shenzhen (including 15 pairs of Guangzhou East to the Chaozhou-Shantou and Meizhou cross-network electric multiple unit (EMU) trains);
9 pairs of Hong Kong Through Trains, the operation of which has been suspended due to the shutdown of Hong Kong boarder by the Hong Kong government as a result of the COVID-19 pandemic since January 30, 2020; and
141 pairs of long-distance trains. Long-distance trains included long-distance passenger trains operated by the company between the following departure and terminal stations during 2021:
Long-distance trains also included domestic long-distance trains that are operated by other operators but originate or terminate on, or pass through, the company’s railroad.
Guangzhou-Shenzhen Trains: In 2021, the company’s passenger transportation services on the trains between Guangzhou and Shenzhen, the Guangzhou East-Chaoshan cross-network EMU trains and other inter-city trains accounted for 30.8% of its railroad passenger transportation revenue. As of December 31, 2021, the company operated 90 pairs of intercity China Railway High-Speed train (CRH) passenger trains between Guangzhou and Shenzhen. Such CRH passenger trains are capable of running at a top speed of 200 kilometers per hour.
Hong Kong Through Trains: In 2021, the company’s passenger transportation services on Hong Kong through trains were suspended. The operations of the Hong Kong Through Trains have been entirely suspended since January 30, 2020, when the government of Hong Kong announced the suspension of services of Hung Hom Station as a result of the COVID-19 (Coronavirus Disease 2019) pandemic.
Domestic Long-Distance Trains: In 2021, the company’s passenger transportation services on domestic long-distance trains accounted for 62.9% of its railroad passenger transportation revenue. As of December 31, 2021, the company operated on a daily basis 141 pairs of long-distance trains on its rail lines to cities in Guangdong, Hunan, Hubei, Jiangxi, Anhui, Jiangsu, Liaoning, Shaanxi, Gansu, Fujian, Heilongjiang, Jilin, Zhejiang, Hebei, Henan, Sichuan, Yunnan, Hainan, Shanxi and Shandong provinces, Chongqing, Shanghai, Beijing and Tianjin municipalities and Guangxi Autonomous Region, Xinjiang Autonomous Region and Tibet Autonomous Region. In 2021, the number of passengers traveled on the company’s long-distance trains was 23.4 million.
Freight Transportation
Revenue from the company’s freight transportation accounted for 10.1% of its total revenue and 10.7% of its revenue from railroad businesses in 2021. The company’s principal market for freight is domestic medium and long-haul freight, originating and/or terminating outside the Shenzhen-Guangzhou-Pingshi corridor. The company is well equipped with various freight facilities and can efficiently transport full load cargo, single load cargo and containers. The company has established business cooperation with ports, logistics bases and specialized building materials markets in its service region.
The majority of the freight the company transports is high-volume, medium to long-distance freight received from and/or transferred to other rail lines. A portion of the freight the company transports both originates and terminates in the Shenzhen-Guangzhou-Pingshi corridor. As a result, the company reclassified its freight business into two categories as follows:
Revenues from freight charges, which mainly represents the revenues from the total freight charges of the company’s outbound freight transportation, whereas the revenues from outbound freight and inbound freight as presented in previous years refer to the revenue of freight transportation (including the outbound, pass-through and arrival freight) charged by the distance managed by it under the section fares system; and
Other revenues from freight transportation, which mainly represents the revenue from freight services for transportation between the stations and receiving locations designated by the company’s customers.
The company’s outbound freight volume was 18.8 million tonnes in 2021. The company serves a broad customer base and ships a wide range of goods in its freight transportation business. The company transports a broad range of goods, which can generally be classified as follows: metal ores, coal, containers, construction materials, steel, petroleum, and other goods.
The majority of the company’s inbound freight consists of raw materials and essential production materials for manufacturing, industrial and construction activities, while the majority of its outbound freight consists of imported mineral ores, as well as coal and goods produced or processed within its service territory, for customers throughout China and abroad.
Railway Network Usage and Other Transportation-Related Services Business
Revenue from the company’s railway network usage and other transportation-related services accounted for 53.5% of its total revenue and 53.5% of its revenue from railroad businesses in 2021.
Other Businesses
Revenue from the company’s other businesses accounted for 5.9% of its total revenue in 2021. The company’s other businesses mainly consist of train repairs, on-board catering services, leasing, sales of materials and supplies, sales of goods and other businesses that are related to railway transportation.
Seasonality
There is some seasonality in the company’s businesses. The first quarter of each year (year ended December 31, 2021) typically contributes the highest portion of the company’s annual revenue, mainly because it coincides with the Spring Festival holidays when Chinese people customarily travel from all over the country back to their hometowns. In addition, the Spring Festival holidays, the Qingming Festival holidays, the Labor Day holidays, the Dragon Boat Festival holidays, summer holidays and the National Day holidays in China are also high travel seasons. During these holidays, the company usually operates additional passenger trains to meet the increased transportation demand.
Sales
Passenger Transportation
The company’s passenger tickets are sold primarily through the internet. Passengers also can buy tickets at the ticket counters and automatic selling machines that are located in the company’s train stations, as well as through telephone. Additionally, the company’s tickets are sold in Hong Kong and major cities in the Guangdong Province through ticket agents, travel agents and hotels, at its usual prices plus nominal commissions.
Hong Kong Through Train tickets are sold in Guangdong Province through Guangzhou East, Changping and Foshan railway stations, as well as through various ticket outlets, hotels and travel agents. In Hong Kong, these tickets are sold exclusively by the MTR. As MTR’s sales network for these tickets is relatively limited, MTR has engaged the China Travel Service (HK) Ltd., or CTS, as the primary agent for such sales on a non-exclusive basis.
In all of its railway stations, the company has adopted a real-name system for passenger tickets, and promoted paperless e-ticket services, which allow passengers with valid government IDs to purchase tickets online, at station ticket windows or automatic ticket selling machines. Passengers can choose to pay for tickets by e-payment via WeChat, Alipay and Unionpay. All passengers need to scan codes to pass ticket inspection machines. The company also allows passengers to use cash, WeChat or Alipay on the train to extend ticket coverage. As of December 31, 2021, the company had a total of 239 automatic ticket- selling machines, 397 automatic ticket inspection machines and 190 reimbursement voucher printers along its rail line.
The settlement method for passenger transportation was stipulated by the MOR and is still under execution by CSRG. It provides that all revenue from passenger train services (including revenue generated from luggage and parcel services) is considered passenger transportation revenue and belongs to the railway company that operates that train. The railway company in turn pays other railway companies the fees for the use of their rail lines, hauling services, in-station passenger services, water supply, electricity for electric locomotives and contact wire use fees, etc. Under this settlement method, the railway companies operating the long-distance train services are required to pay the company the following fees: the portion of the revenue from the sale of tickets that is higher than the PRC national railway standards due to its special pricing standards and other fees including those for railroad line usage, in-station passenger service, haulage service, power supply for electric locomotives, usage fees of contact wires and water supply.
In October 2016, the company acquired parts of the railway operation assets of GRCL and GSRC. As a result of the acquisition, the company expanded its service scope of railway operation of the Shenzhen-Pinshi rail line to the entire Guangdong Province, which improved the supply of passenger trains and its competitiveness in passenger transportation.
Freight Transportation
In May 2013, CSRG restructured the businesses between CRCT, CREC and China Railway Special Cargo Services Co., Ltd. (CRSCS). After the restructuring, CRCT took charge of the container operation and management and left the container transportation business with all relevant assets to State Railway Bureaus (including GRGC). CREC transformed into a logistics company, providing services to the public, while National Railway Bureau was responsible for the operation and management of luggage carts, postal trains, postal and parcel express special trains and operational bases. CRSCS expanded the businesses into container, mail and luggage transportation.
On November 30, 2013, the company entered into an asset transfer agreement with China Railway Express Co., Ltd. Guangzhou Branch (CREC GB) and China Railway Container Transport Co. Ltd. Dalang Processing Station (CRCT DS). CREC GB and CRCT DS are all subsidiaries of CSRG.
The company’s revenue from container, postal transportation and postal and parcel express special train services have been included into transportation revenue after business optimization.
The company and State Railway Bureaus (including GRGC) pay CSRG a fee for railway containers, which is collected by the CRCT. Special cargo transportation income, partially paid to National Railway Bureau and the company as railroad usage fees and locomotive traction fees, is attributable to CRSCS.
CSRG charges a door-to-door freight fee for railway freight transportation that covers all fees incurred from loading goods, transportation from departure station to arrival station and ultimately to the designated destination.
Equipment, Tracks and Maintenance
As of December 31, 2021, the company operated 175 diesel locomotives, 60 electric locomotives, 36 EMUs and 2,182 passenger coaches for its operations.
The company operates CRHs that it purchased from Bombardier Sifang Power (Qingdao) Transportation Ltd. and Bombardier Sweden Transportation Ltd. Each CRH is designed to have a top speed of 200 kilometers per hour.
Major Suppliers and Service Providers
China Railway Guangzhou Group Co., Ltd. (GRGC), the company’s single largest shareholder, and its subsidiaries are major suppliers of its materials and supplies. The electricity the company uses, including electricity used for its lines, is supplied through various entities under the jurisdiction of the Guangdong provincial power bureau on normal commercial terms.
History
Guangshen Railway Company Limited was founded in 1996 as a joint stock limited company under the Company Law of the PRC. The company was incorporated in 1996.
