Midas to juice order wins from China's fat railway investments

It's a whopping CNY600-650b.

According to OCBC, it views Midas Holdings as a proxy play to the economic recovery story of China in 2013, which would be driven largely by infrastructure investments and domestic consumption.

In particular, it also expects railway capex to form an integral part of these investments. According to media reports, approximately CNY600-650b of railway investments will be made in China this year.

Here's more from OCBC:

We believe that China’s Ministry of Railways could resume high-speed passenger train car contract tenders in 1Q13. We expect this to translate into order wins for Midas from its customers in 1H13, with deliveries possibly happening from 2H13.

China’s expected increase in railway spending is fuelled in part by rising urbanisation. Vice Premier Li Keqiang is a strong advocate of urbanisation as a means of boosting China’s economic growth.

According to the National Academy of Economic Strategy (under the Chinese Academy of Social Sciences), China’s urbanisation rate would grow by 0.8 to 1 ppt per annum in the coming years from 2013.

Hence we believe that it makes economic and social sense for the government to develop its railway transportation network.

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