Tuesday, December 17, 2013

Midas Holdings - Speeding ahead (DBSV)

Midas Holdings -
BUY S$0.49
STI : 3,113.64
Price Target: 12-Month S$0.64 (Prev S$0.60)
Speeding ahead

• Firm earnings rebound expected in FY14F as high-speed railway (HSR) contracts roll in
• Potential huge HSR order for Midas from second rolling stock tender for 314 sets
• Metro and overseas contracts to continue boosting the Group’s order book
• Maintain BUY, with our 12-month TP raised to S$0.64, based on 1.2x FY14F P/BV

More high-speed railway contracts to come
Midas won its first HSR contract (Rmb168m) in over two years in October, as China resumed its HSR development programme, with more likely to come. We believe the Group could win a substantial order arising from the recent second rolling stock tender for 314 train sets, or about 2,500 train carriages. Over the next two years, we believe a further 700 over train sets could be tendered for, resulting in further wins for Midas in the HSR segment.

Metro and overseas orders remain robust
At the same time, we expect (PRC) metro orders to continue flowing in, and overseas orders, which have grown substantially in 2013, to continue to be robust as Midas looks to maintain a more diversified earnings base. Hence, we project Midas’s earnings to improve from Rmb61m in FY13 to Rmb209m in FY14, on higher revenue as well as better margins.

Undemanding valuation for turnaround play
With 2013 at its end, and having introduced FY15F estimates, we roll over our valuation multiple for the stock to 1.2x FY14F P/BV to derive a new TP of S$0.64. Trading at just 1x FY13 P/BV, we believe current valuations are attractive for a stock whose earnings are poised for a strong rebound into FY14F and FY15F.

Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 10/12/13

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