Midas Holdings reported 2Q14 earnings which came in below our expectations. Although revenue rose 18.4% YoY to CNY336.3m, PATMI slumped 44.2% to S$8.3m. This was largely due to a spike in administrative expenses (+44.7% YoY) and finance costs (+57.2% YoY), as well as a higher effective tax rate of 59.8% (2Q13: 28.1%). An interim dividend of 0.25 S cent/share was declared, similar to 1H13. For 1H14, revenue jumped 30.2% to CNY633.2m, forming 45.6% of our FY14 forecast.

Although PATMI surged 98.6% to CNY19.8m, this constituted only 22.1% of our full-year projection of CNY89.6m, which was already the lowest on the street. We will speak to management and will provide more details thereafter. Our Buy rating and S$0.61 fair value estimate are both under review.

Source: OCBC Research - 15 Aug 2014