Thursday, March 21, 2013

Midas

Midas: OSKDMG hosted Midas on a roadshow in Singapore. Key takeaways are: 1) 1H13 will be challenging for Midas, but 2H13 could be stronger if things pick up. Although visibility on the speed at which the Chinese govt will award high speed rail contracts remains low, management is optimistic that the govt will meet its Twelfth 5-Year Plan target. This is supported by continued strong demand for railway transport in China; 2) The future is promising, as Asian countries plan to improve their connectivity by building high speed railways to neighbouring countries. As a preferred partner for global train manufacturers (Alstom and Bombardier), Midas is in a good position to ride on this trend; 3) Gearing is likely to increase, as Midas takes on loans for its new aluminum plates and sheets JV plant. This plant is expected to be ready by 2015, and would contribute to revenue growth. We have a BUY recommendation with a TP of $0.75.

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