Midas

Midas: CIMB hosted Midas on a non-deal roadshow in Hong Kong last week during which the company gave a rather positive guidance on order momentum. Mgt guided that major clients in China are starting negotiations with suppliers, which could suggest impending high-speed train car orders. CIMB sees the potential of Midas riding on the wave of high-speed railway contracts, as it did in 2009. This will come from new train car orders to meet the planned 45k km express railway network by 2015. The house estimates, China still needs at least another 22k-31k train cars. Given that it takes two to three years to deliver a train set, it believes that orders could come in fast and furious in 2013 for the express railway network to be operational by the target date. Midas also sees strong potential from international and metro contracts that have been supporting its orderbook in 2012. Over the longer term, mgt sees new growth trends in the aluminium sheet/plate manufacturing segment, specifically for industries like aviation and automobile. Just as how Midas gained a first-mover advantage in its early ventures into aluminium profile manufacturing in the early 2000s, CIMB thinks that a successful diversification could raise Midas’s longer-term growth profile. Midas gained 142% in 2009 after bagging a slew of orders. With its price-to-orderbook multiple at the pre-order 2009 levels, CIMB says the shares could well see a similar price trajectory in 2013 when orders return. Believes current valuation offers an attractive entry point. Rates Midas at Outperform with TP $0.53, pegged to 15.5x CY14 EPS (10% discount from its 5-year forward average).