Published November 11, 2009

Midas posts 17.4% rise in Q3 profit

Higher gross margins and profit share from associate drive earnings

By OH BOON PING
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MIDAS Holdings has reported a 17.4 per cent rise in its net profit to $9.4 million for the third quarter ended Sept 30, thanks to higher gross margins and profit share from an associate.

The three months saw revenue rise 3 per cent to nearly $37 million while earnings per share was 1.01 cents, up from 0.95 cent. For the first nine months of the year, its net profit rose 12.9 per cent to $27.35 million from $24.23 million a year ago, even though revenue fell 3.9 per cent to $106.2 million.

Contributing some 95 per cent of total revenue, its aluminium alloy division saw a 7.8 per cent increase in revenue from $32.6 million in Q3 2008 to $35.2 million in Q3 2009. The transport industry accounted for 63.1 per cent of the division's revenue, while the power industry and the 'others' segment made up 18.7 per cent and 18.2 per cent of the nine-month total revenue respectively.

Gross profit margin for the aluminium alloy division increased from 34.2 per cent in Q3 2008 to 41.1 per cent in Q3 2009, due to a decline in raw material costs. The group's gross profit margin rose to 40.2 per cent from 33.9 per cent.

In addition, share of profits of an associate contributed $927,000 - up from $51,000.

Since June, its aluminium alloy division has secured more than one billion yuan (S$204 million) worth of contracts, including high speed train projects, metro train projects and international projects in the Middle East.

In addition, it also secured its first downstream fabrication contracts during the same period.

Midas said that it is in the process of expanding its capacity to meet the impending demand as China's Ministry of Railway continues to invest heavily in railway projects.

By the end of next year, Midas expects to have a total of five production lines and total annual production capacity of 50,000 tonnes - up from the current two production lines and annual production capacity of 20,000 tonnes.

According to Midas, plans are afoot in many cities to roll out new metro train projects or expand their existing metro train systems.

'Our associate company Nanjing SR Puzhen, being one of the four Chinese licensed manufacturers of metro train, is expected to be a direct beneficiary of these plans.'

The group has also declared a third interim cash dividend of 0.25 cents per ordinary share.

Midas shares rose 2.5 cents to 0.85 cents yesterday.