Thursday, January 17, 2013

Midas

Midas / China Railway: Possible positive sentiment, after grp announced that its JV co, Nanjing SR Puzhen Rail Transport (NPRT) has won its first 100% low-floor tram project valued at approximately RMB338m. The contract is awarded by Suzhou New District Tramway Co, for the supply of 18 100% low-floor trams for the Suzhou National New & Hitech Industrial Development Zone Tramline 1, a light rail line that is currently under construction. Delivery of the trams is slated to take place in 2014 and is expected to contribute positively to Grp’s financial performance for FY14. Grp note that modern low-floor trams offer a suitable solution to the transportation needs of small and medium sized PRC cities and can also serve as a feeder service connecting to major metro lines. Note that Midas has a 32.5% equity stake in NPRT. CIMB maintains O/p with $0.59 TP, and note that latest contract win is within house expectations and maintain its estimates. Add that Midas’s recent run-up resembles the price trajectory seen in 2009, before it won back-to-back contracts. This reflects resurrected investor confidence in Midas. Separately, China Railway Construction and China Railway Grp attended Deutsche’s Asian Access conference, whereby Mgt of both co’s continues to have a positive outlook on the railway construction business. Key drivers are projects invested by local governments and overseas projects in the emerging markets. The investment proportion for high-speed railway lines will be reduced, while the investment proportion for standard and cargo lines will be increased. Total railway infrastructure spending in China during 2011-2015 is estimated to be more than Rmb2.3-2.4trillion, implying an annual investment of Rmb530bn-600bn p.a. in 2013-2015

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