Midas

Midas: ($0.455) Recent price weakness presents attractive entry The stimulus package designed to boost railway spending and construction investment announced two days ago by the Chinese government has translated to good interest in Midas yesterday. The counter gained 3.4% to $0.455, after taking a 3-month breather when share price slumped from a peak of $0.525 in Jan to $0.425 in Apr. Recall, the State Council announced that US$24b of bonds will be sold to build railways in the less developed central and western regions. Maybank-KE reckons that the potential reform of China Railway Corp's (CRC) funding structure as a key development, given that its high debt level has created a bottleneck in the industry, stalling railway construction and disrupting train purchase schedules. The House deems the recent price weakness for Midas offer a good buying opportunity, for its compelling earnings turnaround story with a compounded average growth rate on earnings of 73% over FY14E-16E, driven by operating leverage. House maintains BUY with $0.75 TP.