* Contract worth $4 bln, Bombardier’s share worth $2 bln
* First train to be delivered in 2012
* Shares up 7.7 percent on TSX
* Analyst upgrades stock to “neutral” from “sell” (In U.S. dollars unless noted)
By John McCrank
TORONTO, Sept 28 (Reuters) - Canada's Bombardier Inc BBDb.TO said on Monday that its Chinese joint venture has a $4 billion contract from the Chinese Ministry of Railways to supply 80 high-speed trains.
Bombardier Sifang (Qingdao) Transportation Ltd, a joint venture of Bombardier and CSR Sifang Locomotive and Rolling Stock Ltd, will supply 80 ZEFIRO trains with maximum operating speeds of 380 kilometers per hour, the company said.
Bombardier’s share of the contract is worth about $2 billion and the first train is scheduled for delivery in 2012 with final deliveries by 2014.
Shares of Bombardier, the world’s No. 1 train maker and No. 3 aerospace company, were up 35 Canadian cents, or 7.7 percent, at C$4.92 on the Toronto Stock Exchange on Monday morning.
Cameron Doerksen, an analyst at Versant Partners in Montreal, raised his rating on the stock to “neutral” from “sell” after the deal was announced and increased his price target on Bombardier shares to C$4.90 from C$4.25.
“In addition to the deal being a large dollar value, this is an important win for Bombardier as it increases the company’s share in the high-speed rail market segment,” he said in a note to clients.
China is developing more than 6,000 kilometers of high-speed lines so this contract positions Bombardier well for future business, said Doerksen, adding that Bombardier is bidding or planning to bid on several large-scale rail equipment tenders in China.
Doerksen said Versant still views the low C$4.00 range as an attractive entry point for the stock due to ongoing difficulties in the business jet market.
China has 170 cities of more than 1 million people and Bombardier has excellent prospects of winning more regional and high-speed train and subway-car orders in China, RBC Capital Markets analyst Nick Morton said in a note to clients.
RBC rates Bombardier stock as “outperform” and has a C$6.00 price target on the shares.
“Bombardier is the only major manufacturer in China committed to transfer to China its latest technology,” he said.