Midas

Midas: Announcing that it has clinched five contracts worth Rmb 109.6m (S21.71m) to supply aluminium alloy extrusion and fabricated parts to five metro projects in China. We note that this represents Midas’s first contracts for 2013, at the subsidiary level, with those announced so far, by its JV associate Nanjing Puzhen Railway Transport (NPRT) Of the 5 contracts, 4 were awarded by its 32.5% JV Co., NPRT, which includes a Rmb 27m deal to supply parts to the Wuxi Metro Line 2 project, a Rmb 22.7m deal for the Dongguan Rapid Railway R2 Line project and a Rmb 17.6m deal for the Nanjing-Gaochun Intercity Rail project. Deliveries for these will take place between this year and 2014. The supply of parts to the fourth project, a 31.7m Hangzhou Metro Line 2 contract, will be fulfilled between now to 2016. The final Rmb10.6m contract was awarded by CNR Changchun Railway Vehicles Co, for the Wuhan Metro Line project. The group said the contracts are expected to contribute positively to its financial performance from 2013 to 2016. With the latest order, orderbook currently stands at approx. Rmb 550-600m, and latest orders could potentially give share price a positive kicker. CIMB maintains O/p with $0.58 TP. Note that outlook for China’s railway industry is becoming more favourable given an increase in planned railway FAI. The proposed reform of the Ministry of Railway should help alleviate financing woes in the industry. Advise investors to position early to capture potential alpha from HSR contract announcements.