MIDAS

MIDAS: CIMB thinks that Midas 60% market share plus strong track record poises it for a tremendous opportunity in China’s aggressive railway expansion plans. The Chinese Government plans to add 11,200 high-speed train cars and extend HSR railway by 18,000km by 2015, with expected RMB 2.09t -2.16t for spending 2013-15. Taking Midas’ 60% market share, possible wins could amount to Rmb 2.5b – 3.2b by end 2015. CIMB highlighted Midas’ competitive edge: 1) Close relationship with customers 2) Having the capabilities to produce a variety of extrusion profiles 3) strong track record of manufacturing quality products Midas is currently trading at 0.9x P/B, and CIMB thinks the discount is unjustified. The house thinks that Midas can win Rmb545m in next round of procurement, which will provide further re-rating catalyst for the stock. CIMB maintains O/PF with TP: $0.74 (unchanged)