Wednesday, November 24, 2010


Midas: Deutsche initiates on the China Rail sector. Says urban rapid transit/ rail eqpt capex likely better than expected, with house estimate of Rmb2.65tr to be spent on constructing rapid-transit networks in 2011-2020 (vs consensus Rmb1.5tr). Sees fixed asset invmt in railway eqpt in China growing 25% pa over 2010-12, as the substantial increase in operational rapid-transit lines stimulates demand for eqpt such as metro/light rail cars. Top pick is CSR (1766 HK) given co’s focus on eqpt…

We see this as a positive read-through for Midas’ prospects over the longer term, as CSR counts as one of Midas’ largest customers.
Midas trades at 19.8x fwd PE. Recent Street ratings (post 3Q results) all at Buy. Target prices range $1.10-1.25.

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