Here's proof that Midas Holdings' NPRT is poised for a comeback

After reporting CNY4m loss in 1Q.

According to OCBC Investment Research, although NPRT has been a drag on Midas’ financials, with a reported share ofloss of associates of CNY5.7m and CNY4.0m for FY12 and 1Q13, respectively, we believe that the situation would improve from 2H13, based on NPRT’s delivery schedule. We forecast Midas to record a share of profits of associates of CNY11.9m for FY13 and CNY24.8m for FY14.

Here's more:

Midas Holdings’ (Midas) 32.5%-owned JV company Nanjing SR Puzhen Rail Transport (NPRT), which manufactures metro trains in China, recently secured three contracts amounting to ~CNY2.45b (assuming a 70% stake for one of the contracts won together with its consortium partners) within a span of two weeks (29 May to 11 Jun).

This entails the supply of a total of 428 train cars, with delivery spread over 2013 to 2016. We believe this highlights the fast growing momentum of China’s metro industry, which is targeted at easing China’s traffic congestion and environmental pollution issues.

As Midas is also a key supplier of aluminium alloy extrusion profiles to NPRT, we expect it to strive to win new orders from NPRT. YTD, Midas has already clinched CNY99m worth of contracts from NPRT (for projects which NPRT won last JulSep).

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