China Railway / Midas

China Railway / Midas: CS note that according to a 28 Sept article in China Securities, the Ministry of Rail (MoR) is likely to restart bidding for 1,200 passenger coaches and 15,000 freight wagons, both of which are to be delivered in 2012, taking FY12 delivery of passenger coaches and freight wagons to 4,200 and 40,000, modestly lower than house forecasted 4,300 and 48,000, respectively. In addition, the article mentioned a potential 40 MU set delivery (not a new order) for Harbin-Dalian and Beijing-Shijiazhuang HSRs, again lower than house forecasted 61 sets for the two lines. Overall, believe this round of bidding, is in line with house bearish view on MoR’s capex for the remainder of the year and does not offer upside surprise.The Ministry of Finance announced on 29 September that railway operations’ business tax and 40% of income tax will be paid to local govt (ves central government previously). Note however that this is a step in the right direction, but more money than this (Rmb21 b/Rmb6.5b of business tax and income tax, respectively, in 2011) is needed to make a real difference.