Midas

Midas: China infrastructure companies have funding secured for 2013. Recent reports stating China's plans to spend Rmb650b on its railway system in 2013, including Rmb520b earmarked for building infrastructure. The total investment will be the third largest in the country's history after 2009 and 2010 and would extend China's rail network by 5,200km. MoR took a bank loan on 45% of the funding, railway bonds made up 29% and funds from local govt and enterprises of 13%, with the remaining 13% of funding released on the central government budget. Funding was an issue for the past 2 years amidst the misappropriation scandal, causing the entire sector overhang. Going forward, DB believe there is an upside potential on the railway spending budget through government support. This should translate to a healthy order flow for rail equipment makers like Midas. After an earnings decline in GY12, the street is projecting EPS to bounce back strongly by 680% (albeit from a low base) in FY13 and 35% in FY14. The stock currently trades at FY13 P/B of 1.05x with a market ascribed TP of $0.55.