Midas

Midas: Grp has issued a negative profit guidance prior to its upcoming 1Q13 results release, saying that it expects to report an unaudited net loss. This is mainly due to lower revenue and gross profit margin given the change in product mix and weaker utilisation rates, as well as higher operating expenses and finance costs and a share of loss from its associated company, Nanjing SR Puzhen Rail Transport (NPRT). OCBC note that this profit guidance comes as no surprise to as house had forecasted Midas to record a net loss of Rmb3.2m in 1Q13. House still expect Midas to stage a recovery in 2H13, but the strength of this recovery will be dependent on the developments in China’s high-speed railway sector. Midas will report its 1Q13 results on 14 May after trading hours, while an analyst conference call has been scheduled the day after. House will provide more updates then. For now, house have a BUY rating and $0.595 fair value estimate on the stock.