Midas: according to the Economic Observer, China plans to reduce its investments in high-speed railways this year by over Rmb200b (US$30.8b), to >Rmb 400b from a previously planned Rmb 700b.
This corresponds with the People’s Daily’s report that total investment in railway infrastructure in the 12th Five Year Period will be Rmb 2.8t, which is slightly lower than the Ministry of Railway’s previous target of Rmb 3.0t (RMB600b per year)...
Lower railway investment may signal less demand for Midas’ aluminium extrusion profiles used in making train cars going forward.
In contrast, Midas has been expanding capacity rapidly. It will invest Rmg600-650m for its new plant in Luoyang City, Henan. The new plant is expected to be completed by 2H12 and will increase Midas’ annual extrusion production capacity by 40% to 70k tons, and fabrication capacity by 300 train cars to 1300…
The co disclosed Rmb 166m in new orders ytd. This compares with Rmb 400m of orders secured in 1Q10, and its existing order book of Rmb 1.3b.
Stock trades at 15.4x P/E…
Technically, the stock is in a longer term downtrend. Further weakness is probable, after the stock failed to keep above the critical $0.80 level. The standard indicators are tipped downward, and RSI still has some way to go before reaching oversold territory. Support at $0.66, resistance at $0.80.
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