Midas Holdings reported a 46.7% YoY jump in its 1Q14 revenue to CNY296.9m (0.3% below our forecast), while bottomline reversed from a net loss of CNY4.9m in 1Q13 to a PATMI of CNY11.5m in 1Q14. However, this still fell short of our below-consensus projection by 24.0% due to higher-thanexpected operating costs and income tax expense, but partially offset by a strong share of profits contribution of CNY13.1m from its associate Nanjing SR Puzhen Rail Transport.

Notwithstanding this earnings miss, we note that China Railway Corporation recently increased its railway fixed asset investments target from CNY630b to CNY800b for 2014, which should imply more high-speed train car tenders in the months ahead. We will provide more details after speaking with management. Maintain BUY on Midas, but our S$0.66 fair value estimate is under review.

Source: OCBC Research - 12 May 2014