Midas

Midas: CIMB maintains O/p with $0.63 TP. Note that Midas has re-rated recently but still see price catalysts from high speed contract wins. CSR, China’s state owned locomotive manufacturer, expects high-speed orders by 4Q12 or 1Q13. Midas will be one of the key beneficiaries on such announcements. Add that China’s National Development and Reform Commission (NDRC) has planned close to Rmb1 trillion of urban railway projects up until 2020. CSR is expecting high-speed contracts by 4Q12 or 1Q13. It typically takes 3-6 mths before contracts tickle down to downstream players like Midas; this means that orders could come as early as 1Q13 House roll forward to FY14 P/E, with target now based on 15.5x (10% discount to its 5-yr forward average; previously -0.5SD). House change valuations to account for potential ROE and growth normalisation. Stock catalysts are expected from order flows, while operational risks are contained.