Monday, January 21, 2013

Midas

Midas: China will spend RMB$650b (3% above 2012's budget) on its railway system in 2013, including RMB$520b on building infrastructure, the Ministry of Railways (MoR) says. The total investment is the third largest in the country's history after 2009 and 2010, extending China's railway tracks by 5,200km. Back in 2009 when RMB$705b was spent on infrastructure, Midas saw its share price increase 89% for the full year before declining back to pre-2009 levels after the sector saw a wave of investment scandals in 2011, together with debt concerns for MoR. The sector should be supported by the new Transport Minister who is urging for reforms within the Ministry, and should translate to more transparent funds flowing down to the private sector, with Midas being a beneficiary from its manufacturing of products for the railway transport industry. Street's estimate for 2013 EPS growth is at 680% (from a low base), and 35% for 2014 EPS. Street estimate 2013 P/B of 1.05x, with a TP of $0.55.

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