OSK RESEARCH on 10 Jan2013
CHINA'S rail industry is likely to pick up, as the government increases infrastructure investment to drive economic growth. The Chinese government plans to spend between 600 billion yuan (S$118 billion) and 650 billion yuan in 2013 in rail investment, and as one of the dominant aluminium alloy extrusion products manufacturer for the rail transport industry, we believe Midas stands to benefit.
Its JV (NPRT) is expected to turnaround in FY2013, supported by its strong order book of 9 billion yuan, with deliveries expected from FY2013. With the potential for more orders as the demand for train cars rises, we think Midas should enjoy a re-rating. Maintain "buy" with a TP of S$0.75, based on 1.5x FY2013 P/B, a 25 per cent discount from its average of 2x.
BUY
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