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DMG Buy Recommendation
Midas: A sound long-term investment (BUY\S$0.43\Target S$0.73)
Right place, right time.
products and polyethylene pipes, is set to enjoy strong growth on the back of the railway sector.
It will also get a boost from 32.5%-owned associate NPRT, being one of the four entities with a
licence to assemble/produce Metro train cars in China.
Midas Holdings, which has investments in aluminium alloy extrusionOrder book flow should remain robust going forward.
S$120m, with deliveries stretching out over the next two years. NPRT has a much bigger order
book, clocking up RMB4.5b worth of orders (784 train cars) for delivery between FY09 and FY11.
With many more railway systems to be added in major cities and also connecting various cities,
we are confident Midas and NPRT will be adding to their current tallies.
Midas’ current order book is worthDirect beneficiary of the China stimulus package.
the Ministry of Railways (MOR) for expansion of China’s existing railway system between FY09
and FY12, mostly for intercity train systems. As much as RMB600b will be spent in FY09 out of
this RMB2 trillion. The MOR has also announced it will spend at least RMB500b on rolling stock
alone in the next four years. We have estimated that Midas will see a RMB2b surge in orders,
based on its 80% market share in AA train car body extrusion.
Approximately RMB2 trillion is budgeted byStable earnings growth.
S$144.5m, a CAGR of 24.5%. Despite the current credit and economic crisis, we believe Midas
will continue its path of strong and stable earnings growth with the construction of a third AA
production line and higher contributions from NPRT going forward.
From FY04 to FY08, Midas grew its top line 140% from S$60.2m toValuation.
applying a WACC of 15.5%, a beta of 1.1 and a terminal growth rate of 1%. At the last traded
price, the stock is trading at 10.1x FY09 and 7.5x FY10 P/E, offering a yield of 2.3% and 2.9%
Kim Eng Buy recommendation
1) Midas – Plant Visit Note (James KOH 64321431)
Previous day closing price: $0.415
Recommendation: Buy (maintained)
Target price: $0.68 (maintained)
Fruitful trip to China
We visited Midas last week where we had a positive first-hand look at its aluminium alloy division
in Jilin Province and the NPRT operations in Nanjing, PRC. In this visit, we also had insightful
discussions with the local operations management about the business and industry prospects.
Overall expansion plans appear on track.
Promising progress of 3
rd extrusion line and downstream fabricationMidas is in the midst of installing its 3
from 20,000 to 30,000 tonnes. We now expect this to be operational by end 09/ early 10.
Downstream fabrication machineries are also being installed at its new site, which we believe will
put Midas further ahead of the competition when they are ready by 2H09.
rd production line, which would increase its annual capacity32.5%-owned NPRT to step up a gear this year
NPRT is in the midst of an aggressive capacity expansion plan, backed by its strong S$1b
orderbook. Based on our discussion with the NPRT management, we believe the delivery
schedule for this year will be 3-4 times higher than FY08. To cope with the increase, manpower
has increased from 500 (end 2008) to 900 now.
China Ministry of Railway to continue its train-set buying spree
China’s MOR recently signed a deal with the China Northern Railway Group (CNR) for the
purchase of 100 high-speed train sets. This is equivalent to 1,600 train cars or the requirement of
about 16,000 tonnes of aluminium alloy extrusion products for its train bodies. Industry sources
reveal that this is the harbinger for another 700 train set purchases over the next 3-5 years.
Unstoppable momentum!
NPRT’s delivery schedule for FY09 gives us optimism that our associate earnings estimates can
be met. Given that organic expansion plans will likely only bear fruit for FY10, NPRT will be the
main contributor to bottom-line growth for FY09. We have kept our estimates and target price of
S$0.68 based on SOTP unchanged.
On track up alittle
leechongpeng ( Date: 14-Jan-2009 13:23) Posted:
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tchoonw ( Date: 13-Jan-2009 17:05) Posted:
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Being as an audience for the Trick, sell in strength loh, if the trick looks good.
Buy in dip, if d magician packing up n chow loh. Cheers.
tchoonw ( Date: 14-Jan-2009 09:25) Posted:
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Range Trading can profit when market is down.. opposite when market up. But risk is high when a sudden halt for good news annoucemnt will wipe clean the gain by doing naked shorting. (This one got institutional interest counter) Anyway, insider have been buying up at much much higher price over the years. 5 year track record, div record and fundamental due to the china gov spend have been good.. (Rather long than short on this one)
Other stocks also dropped alot, can gain by shorting also.. But the risk is high on this one, history show it has many sudden upsurge also..
I vested since 28cent buying all the way up with afew cover short when it move up to fast.. (The up are sudden as well). But this is one of the counter to stay vested in at this price.. as sales looking to double in 2009.. (Doing range trading better be covered, naked is not advisable on this one)
Prudent is the game, all it takes is one big surge like at 30cent to 37cent based on historical will wipe clean the profit. Check the historical data.. See many people become bankrupt before, no one is smarter than the market.
I still believe 2009 Dec 31 price will be higher than the current still got 300 more days to result
leechongpeng ( Date: 13-Jan-2009 11:00) Posted:
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tchoonw ( Date: 13-Jan-2009 14:22) Posted:
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arowana1 ( Date: 13-Jan-2009 08:13) Posted:
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tchoonw ( Date: 12-Jan-2009 10:24) Posted:
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Jangan tension, it looks steady leh. Got vol as well.
tchoonw ( Date: 12-Jan-2009 10:24) Posted:
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