Midas

Midas: DMG maintains Buy with $0.75 TP. House recently played host to Midas at its ASEAN Corporate Day held in Singapore. The key takeaways from the meetings were: i) China railway outlook is healthy, especially for 2014 and 2015, as the govt continues to increase spending on rail infrastructure, which would buoy the demand for high-speed trains. Estimates at Rmb500b/yr on railway construction. ii) Midas is taking steps to diversify beyond 2015; the grp plans to diversify into the production of aluminium alloy plates and sheets, has set up a JV company with Jilin Kaitong Engineering, in which it has a 55% stake, with an expected capacity of 200,000 tons, which is envisaged to be operational in 2015 when the government’s plans for the rail industry are expected to come to fruition. iii) it does not expect its operations/activities in 1H13 to differ much from those in 2H12, and any orders secured now are likely to be delivered from 2014. Midas expects to release its 4Q12 results before end-Feb. House reiterate BUY recommendation and $0.75 TP as the potential order flow looks good given the government’s commitment to expand China’s rail network.