Midas: 1Q15 results below estimates. Net profit fell 5.3% to Rmb10.9m despite achieving higher revenue of Rmb320.6m (+8%), driven by its aluminium alloy extruded products division (+7.8%), which accounted for 90% of total turnover.
Gross margin widened to 28.8% (+4.8ppts), led by higher gross margin from the aluminium alloy extruded products division.
Operating profit was however hit by higher admin (+20.2% to Rmb40.4m), selling and distribution (+20.1% to Rmb16.5m) and finance costs (+53.2% to Rmb35.2m).
Associate contributions from Nanjin SR Puzhen Railway fell 27.6% to Rmb9.4m due to different project mix in the respective periods. Bottom-line was partially aided by lower tax expenses of Rmb1.4m (-71.1%), mainly due to recognition of deferred tax asset of Rmb2.9m in Luoyang Midas and JMLA during the quarter.
Going forward, Midas remains positive on its outlook, highlighting that for 2015, the PRC government has announced plans to invest Rmb800b into domestic railway construction, while the recent draft plan of the National Railway Administration, highlights additional plans to invest RMB2.8t over the next five years on railway spending.
Net gearing remains high at 94.8%, partially mitigated by current ratio of 1.36x and interest coverage of 1.35x.
At the current price, Midas trades at 26.3x forward P/E.
Latest broker ratings:
OCBC maintains Hold but places TP of $0.375 under review
No comments:
Post a Comment