Midas

Midas: 1Q14 results in line. net profit came in at Rmb11.54m (1Q13 loss: Rmb4.9m) while revenue was 46.7% higher at Rmb296.9m on increased aluminum alloy extruded products sales. Gross margins fell 1.2ppt to 24%. Associate Nanjing SR Puzhen Rail Transport reversed their loss, and as a result contributed Rmb13.1m to Midas’ bottom line as the former delivered more train cars. MKE expects stronger quarterly results ahead on better utilization rate. Contribution from the secured in April, worth a combined value of CNY464m, should also help. The PRC rail industry is expected to remain vibrant. China Railway Corp (CRC) recently announced that it would raise railway fixed-asset investment to CNY800b in 2014, representing a 27% increase from its earlier target of CNY630b. There could be another round of HSR tender by CRC in 2H14, augering well for Midas. Midas trades at ~1.3x P/B Maybank KE maintains Buy with TP $$0.75