Midas

Midas: KE maintains Buy with $1.20 target, following analyst plant visit to associate, Nanjing Puzhen Rail Transport (NPRT). Notes that plant activities have increased btwn two-to-three fold since the last visit. Current capacity is 600 cars per annum, and is slated to increase to 800 next yr. Positive that NPRT has been moving up the value/ technology chain to become sole project mgrs now, vs having to JV with foreign companies previously…

Believes that increasing urbanization should continue to drive demand for train transport - more than 25 cities are planning to build their metro systems. Going forward, associate contribution should be underpinned by NPRT’s orderbook of RMB 6bn. Catalysts to come from new project order wins, particularly from Ningbo and Wuxi where NPRT is tipped as a front-runner.