Midas

China Railway / Midas: Deutsche has sector report. Note that increased railway capex budget and strong monthly figures will benefit the sector. CRC’s and CRG’s share prices rose 12% in the past one month, outperforming the HSI Index, mainly due to an increase in railway spending budget. According to the MoR’s latest bond prospectus, it has further raised its 2012 infrastructure investment budget to Rmb516b (4% higher than house estimate) from Rmb496b. This is the fourth time ytd that the MoR has raised railway infrastructure spending budget. The MoR did not raise railway equipment spending this time. MoR released that railway infrastructure capex in Sept was Rmb64bn (+111% yoy vs. +19% yoy in August and -28% in 8M12), signaling a strong recovery. This further supported share prices. Overall, house still positive on the railway sector (especially for constructors) due to the accelerating investments in railway infrastructure over the rest of this year and a better outlook for 2013. Potentially higher-than expected subway spending might further support the sector.