S$0.61-MIDS.SI
Just a few days after last Sat’s high speed train crash in Wenzhou, Zhejiang province, more than 20 high speed trains were delayed due to continued power failures between the recently opened Beijing and Shanghai line, at least the 4th time this has happened since operations began just 2 weeks ago.
Following the recent sacking of 3 top officials from the railway ministry, the railway minister has ordered a 2 month safety review of the railway operations and made a public apology for the high profile accident last Sat as well as the repeated power failures and delays in the recently opened railway lines.
Following last Sat’s accident, numerous press reports have quoted analysts and industry experts as saying that the high growth that the railway industry have experienced over the last few years would likely slow down significantly going forward as export potential becomes increasingly challenged and top officials would face increasing pressures to get their acts together.
This has been reflected in share prices of railway related stocks in China where share price declines have averaged between 10-17% in the last 2 days after last Sat’s accident. Most have declined close to 40% since the high profile sacking of the topman in the railway ministry in mid Feb ’11.
Midas has similarly faced significant share price pressure, having declined 35% since then.
While share prices have already declined significantly, we do not see any reason for investors to bottomfish as yet given the increasingly uncertain prospects for order momentum to return anytime soon.
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