Hitachi keen on Malaysia’s entire railway grid

by **Cals** Fri 30 Oct 2015, 03:08

Hitachi keen on Malaysia’s entire railway grid

By Sangeetha Amarthalingam / theedgemarkets.com | October 29, 2015 : 10:15 PM MYT

TOKYO (Oct 29): [size=16]Hitachi Ltd is keen to work with Malaysia on its entire railway grid and build a better business model instead of limiting itself to just the High Speed Rail (HSR) project connecting Singapore and Kuala Lumpur, for which it will have to compete with China.

“We need to put up proper solutions in Malaysia and [engage in] more business model discussions (for railway grid), to allow for more convenient transportations between the two cities.

“[It is] not simply about Kuala Lumpur and Singapore, but how to set up the whole railway grid in Malaysia. We will like to contribute to that type of total Malaysia railway condition,” said Hitachi chairman and chief executive officer Hiroaki Nakanishi.

Speaking to reporters after his keynote speech at the annual Social Innovation Forum organised by Hitachi today, he said it was difficult to collaborate with China on the railway project, because the Chinese government would want to make most of the decisions.

Nakanishi was asked to comment if China’s growing presence in Malaysia via infrastructure projects, including railway ventures, had inadvertently reduced Japan’s infrastructure ventures in the Southeast Asian country.

The Japanese consortium featuring Hitachi, East Japan Railway Co, Sumitomo Corp, and Mitsubishi Heavy Industries Ltd, was among 70 bidders that registered its interest in a yet-to-be called tender process for the HSR project.

In May, Chinese prime minister Li Keqiang pledged his government would support its nation’s consortium comprisingChina Railway Construction Corp Ltd, The Third Railway Survey And Design Institute Group Corp and CSR Qingdao Sifang Co Ltd, to bid for the multi-billion ringgit project.

Nakanishi said although China was a very important market for Hitachi, with an annual contribution of about US$10 billion (RM43.2 billion) to its revenue, it was also one of its main competitors in projects in Asia.

He added it was “undeniable” that China was involved in “unfair” competition, which made it difficult for Hitachi to play on a level playing field.

“Anyway, China is a huge and great country and we need to have a very good communication with them. As a matter of fact, we [have] had conversations with the Chinese government officials on many opportunities. So the relationship between Japan and China may be complicated. But Hitachi, as a private company, we can do a lot with China and sometimes compete too,” he said.

Meanwhile, Nakanishi said Hitachi could work with China on energy plants in Malaysia, with its technical expertise.

“Energy, Green Technology and Water minister Datuk Seri Dr Maximus Ongkili said to me that China always went to see him, not just for nuclear power, but [also] some other [type of] power plants.

“So he said to me, why don’t you come often too? I understand very well. Japan has so many operations in Malaysia, especially Hitachi, so (its is) quite natural to compete with them [China] in such a business environment,” he said.

One of Hitachi’s core business is railway construction, which is under the social infrastructure and industrial systems segment that contributed 15% to its total revenue of 9.8 trillion yen (RM350 billion) in its financial year ended March 31, 2015.

In its second quarter ended Sept 30, 2015, the sector saw an 11.6 billion yen (RM415 million) year-on-year drop in earnings before interest and tax of 12.8 billion yen (RM460 million) against a 6% higher revenue of 9.8 trillion yen (RM350 billion), due to the negative impact of certain projects in the infrastructure systems business.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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