Thursday, October 24, 2013

Midas Holdings: Awaken the sleeping giant (OCBC)

Midas Holdings:
Fair value S$0.65
add: 12m dividend forecast S$0.005
versus: Current price S$0.475

Awaken the sleeping giant
• High-speed contracts win a re-rating catalyst
• YTD order wins hit CNY812.6m
• Maintain BUY and S$0.65 FV estimate

Following last week’s CNY221.8m international train and China metro contract wins, Midas Holdings (Midas) announced last evening that it has secured contracts to supply aluminium alloy extrusion profiles and certain fabricated parts for the manufacture of high-speed trains in China.
These contracts are worth CNY167.5m in total, with delivery expected from 2013 to 2014. Total YTD order wins for Midas has now hit ~CNY812.6m (FY12: CNY324.9m). We view Midas’ latest high-speed train contract success as a strong re-rating catalyst for its share price given that its last high-speed contract win came in Feb 2011. We believe this may also set the momentum for further such contract wins to come, given China’s ambition to develop its rail transport sector. Maintain BUY and S$0.65 fair value estimate on Midas, based on 1.3x blended FY13/14F P/B.

Clinches high speed train contracts after a >2.5 years hiatus
Midas Holdings (Midas) announced last evening that it has secured contracts to supply aluminium alloy extrusion profiles and certain fabricated parts for the manufacture of high-speed trains in China. The contracts are worth CNY167.5m in total and are awarded by CNR Changchun Railway Vehicle and CNR Tangshan Railway Vehicle. This comes as a welcome relief for the shareholders of Midas given that the long wait for Midas to win high-speed train contracts in China is finally over. The last time Midas secured a high speed train contract was in Feb 2011 (hiatus due to Minister of Railways corruption scandal and high-speed train crash in Wenzhou in Jul 2011). This positive development is largely within our expectations as we had highlighted in our 11 Sep 2013 report that we expected Midas to clinch high-speed contracts of an estimated CNY153m in value in 4Q13. Delivery of these supplies will take place from 2013 to 2014.

Recently won international train and China metro contracts too
Last week, Midas also clinched a number of international train and China metro contracts amounting to CNY221.8m (announced on 16 Oct). The former is for two main train projects in Europe and worth EUR17.7m (~CNY145.9m), with delivery expected between 2013 and 2017. The metro contracts from China have an aggregate value of CNY75.9m and were awarded by Midas’ 32.5% owned joint-venture company, Nanjing SR Puzhen Rail Transport (NPRT), for a number of projects such as the Nanjing Metro Line 4 project. Deliveries for the various projects are slated to occur between 2013 and 2016. As a result, Midas’ YTD order wins has now hit ~CNY812.6m (FY12: CNY324.9m).

Re-rating catalyst ignited; maintain BUY
We view Midas’ latest high-speed train contract success as a strong re-rating catalyst for its share price and believe that it may set the momentum for further such contract wins to come, given China’s ambition to develop its rail transport sector. Maintain BUY and S$0.65 fair value estimate on Midas, based on 1.3x blended FY13/14F P/B.


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 22/10/13

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