Midas Holdings warns of loss

A 21.8% drop in revenue has been penciled in.

According to OCBC Investment Research, Midas Holdings has issued a negative profit guidance prior to its upcoming 4Q12 results release, saying that it expects to record a significant drop in its revenue and PATMI for FY12.

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This is unsurprising as its 9M12 results had already seen a 24.9% and 92.9% plunge in revenue and PATMI, respectively. We are forecasting FY12 revenue of CNY845.6m and PATMI of CNY6.8m, which translates into a decline of 21.8% and 96.4%, respectively.

We had also constantly highlighted that Midas’ near term financial performance would remain lacklustre in the near term. Reasons cited for the guidance arehigher operating and financial expenses and a share of loss from its associated company, Nanjing SR Puzhen Rail Transport (NPRT).

Midas will report its 4Q12 results on 27 Feb after trading hours, while an analyst conference call has been scheduled the day after. We will provide more updates then. For now, we have a BUY rating and S$0.60 fair value estimate on the stock.

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