BUY S$0.745

Price Target : 12-Month S$ 0.93 (Prev S$ 0.82)

Reason for Report : Company announced contract wins.

Potential Catalyst: Further contract wins and earnings execution.

Analyst

Paul Yong CFA +86 21 6888 3372

paulyong@dbsvickers.com

Huge contract wins bolster earnings visibility

• Order book stands at over S$250m, with associate

NPRT order book at c. RMB4.5bn

• Earnings visibility increased substantially as company looks to secure contracts for 2011 and beyond

• Target price raised to S$0.93, as we roll over to 15x FY10 PER, Maintain BUY.

A slew of contract wins recently. Over the last week, Midas announced that it has won 4 contracts to supplyStrong order book of >S$250m, with potential for more contract wins.

aluminium extrusion profiles for various inter-city high speed projects worth a total of RMB775m, to be delivered

from the second half of 2009 to 2011.

With these latest contract wins, we estimate that Midas has secured our projected revenue for

the rest of 2009 and more than 80% for 2010. Meanwhile, the Group is still bidding for more

high-speed train and metro train projects, which should further boost its order books and increase

earnings visibility to 2011 and beyond.

Associate Nanjing Puzhen (NPRT) also has huge order book and good prospects.

NPRT has a backlog of over 750 train cars to be delivered, worth c. RMB4.5bn, andMaintain BUY, target price raised to S$0.93.

with its production capacity on track to be enhanced to 500 train cars by the end of 2009,

it is also in a prime position to win more metro train projects.

We raise our target price by rolling over our valuation multiple of 15x PE (unchanged) to FY10 earnings

(from FY09//10) as Midas’ earnings visibility has improved substantially following these contract wins.

HK-listed peers, CSR Zhuzhou and China South Locomotive, are trading at over 20x earnings.

Contract wins for Aluminium Extrusion Business

aggregate sum of RMB603 million, to supply aluminium alloy extrusion profiles for 100 train sets

(1 train set = 16 train cars), an equivalent of 1,600 train cars, for the inter-city high-speed train “CRH3-380”

project with speeds up to 350km/h. (Beijing-Shanghai high-speed railway line).

Based on the number of train cars and the combined value of the two contracts, CRH3-380 is the single largest project

order secured by Midas to-date. The first contract, worth RMB306 million, was awarded by CNR Changchun Railway

Vehicles Co., Ltd whilst the second contract, worth RMB297 million, was awarded by CNR Tangshan Railway Vehicles

Co., Ltd. Both contracts are to supply 50 train sets each (800 cars) for the CRH3-380 project. Both contracts are to be

 fulfilled over the second half of 2009 through to 2011.

Second two contracts: RMB172m. On 22 June, Midas announced that it had won another 2 contracts worth a total

of RMB172m, to supply extrusion profiles for 480 train cars for inter-city high-speed train projects with speeds up to

350km/h. Both contracts were awarded by CNR Tangshan Railway Vehicles.

The first contract, worth RMB115m, for 20 train sets of 16 cars each for the CRH3-380 project, is to be completed

between 2H09 to 2011. The second contract worth RMB57m, for 20 train sets of 8 cars each for the CRH3-300

project, is to be fulfilled between 2H09 and 2010. Earnings visibility greatly enhanced. This brings year-to-date

contract wins for Midas for its aluminium extrusion business to c. S$180m and current order book to over S$250m.

Based on our estimate of its order book delivery and new contract wins, we project that almost all of our forecast FY09

revenue and more than 80% of FY10 revenue are in the bag.

Bidding for more projects.

We believe Midas is still bidding for more contracts in both the high-speed trains and metro trains segment and is likely to

announce more contract wins over the next 6 months, 2010 and beyond, given that China and its cities are still in an early