MIDAS (Lim&Tan)

S$0.41-MIDS.SI

􀁺 Midas won 2 contracts from repeat customer CSR Zhuzhou Electric Locomotive Co.

􀁺 The first is for the supply of 120 train cars for the Kunming Metro Project and is worth Rmb33mln. Delivery is expected to be from 2H2011-2013.

􀁺 The second is for the supply of 192 train cars for Guangzhou Metro Lines 1,2,8 and is worth Rmb62mln. Delivery is expected to be from 2H2011-2012.

􀁺 The new contract wins bring the year to date total contract wins to Rmb323mln, still 32% short of last year’s total of Rmb473mln, which itself was 56% short of the previous year’s total of Rmb1.083bln.

􀁺 While there is still 4+ months more for Midas to try to catch up on more orders, unfortunately, the Railway Ministry has just announced that they will be suspending approvals on new railway projects and will conduct safety checks on all high speed railways that are in operation or under construction. They will also re-evaluate the safety systems on rail projects that have received government approval but have not started construction.

􀁺 Yesterday, China CNR Corp (existing customer of Midas) said that the Railway Ministry has ordered the company to stop shipments after a series of delays on the new high speed rail link between Beijing and Shanghai. The delays were caused by the automatic braking system installed on the company’s trains and the company said that they are currently trying to resolve the issues before shipments can resume again.

􀁺 The above suggests that while Midas’ stock price has already tanked 33% since the high speed train crash on 22 July 2011 and 55% since the firing of the top-man in the Railway Minstry for corruption charges in mid-Feb ’11 (about in line with the sector’s average decline), it is still early days for investors attempting to bottom-fish.