Upgrade to Outperform from Neutral. We keep our FY09-11 EPS estimates unchanged but roll over our target price for Midas to S$1.14 from S$0.87, now based on 15x CY11 P/E (based on peer average). Our previous target price was based on 15.3x CY10 P/E. We upgrade Midas to Outperform on the back of better earnings visibility for FY11-12.
Rmb1.76bn metro train contract secured but more could come. Midas announced on 28 Sep 09 that its associate, NPRT, had been awarded a contract worth Rmb1.76bn by Hangzhou Metro to supply 288 metro train cars. The award of this contract should improve earnings visibility for FY11-13. Including this contract, Midas’s order book is Rmb6.26bn. We believe there could be more contracts to come from China as the Chinese government has yet to fully award all the contracts for its planned 800 High-Speed train sets.
China’s railway network set to become second largest in the world. PRC’s Vice Minister of Railways, Wang Zhiguo, announced in Aug 09 that China will increase its rail construction spending to Rmb600bn for 2009 and spend at least Rmb700bn per year on average over the next three years. With this increase, China’s operating railway network will be expanded from 80,000km to 86,000km by the end of 2009 and 110,000km by 2012, surpassing Russia and second only to the US.
Proposed secondary listing in Hong Kong. While a wider investor base would be generally positive for Midas, we believe its valuations are unlikely to improve as comparable companies in Singapore and Hong Kong are trading at similar valuations.
No comments:
Post a Comment