Midas to be a big beneficiary of China's CNY4t transportation boom

More deals may be sealed by 2020.

Citing a media report, OCBC Investment Research said China currently has 36 cities which have garnered approval to build urban rail transit systems. This may result in CNY4t worth of investments in this area by 2020, which we believe highlights the long-term sustainability of the rail transport sector in China.

OCBC expects Midas to benefit from this positive trend, given its strong track record as a supplier to major Chinese train manufacturers.

Here's more:

Meanwhile, China’s cumulative railway fixed assets investments for Jan-May 2013 grew 21.6% YoY to CNY157.61b, according to the China Railway Corporation (CRC). This can be further dissected into a 25.4% and 4.8% YoY increase to CNY132.3b and CNY25.3b for infrastructure and equipment spending, respectively.

Midas Holdings (Midas) announced recently that it has secured a CNY44.3m metro contract from CNR Changchun Railway Vehicles Co. for the Changchun Metro Lines 1 and 2 projects.

This involves the supply of aluminium alloy extrusion profiles for 44 train sets (or 264 train cars), with delivery
scheduled to take place from 2013 to 2015.

This latest development brings total YTD contract wins by Midas to ~CNY423.2m. It also illustrates the positive momentum in China’s metro industry, given the development of new metro lines and upgrading of existing systems.

Looking ahead, Midas will continue to strive for potential new metro and international railway order wins of ~CNY380-580m for the rest of 2013.

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