Midas Holdings Limited’s (Midas) recently announced that it has secured contracts totaling RMB247.7m for the supply of aluminium alloy extrusion profiles and fabricated parts for highspeed trains (RMB217.3m) and metro trains (RMB30.4m). These contracts are awarded by CRRC Changchun Railway Vehicles and are slated for delivery in FY16.

While we note that these contracts will contribute positively, we expect the contribution to be within our growth assumptions made for Midas. Furthermore, pending clarity over Midas’ ability to ramp up its new business in cold-rolled aluminium plates and sheets, and with the proposed acquisition of Huicheng Capital Ltd (HC) yet to complete, we opt to keep our forecasts unchanged for now.

Note that the approval in-principle for the proposed acquisition of HC, which also specializes in aluminium products, had been granted by SGX but subject to shareholders’ approval at Midas’ EGM. Maintain HOLD with the same FV of S$0.295.

Source: OCBC Research - 21 Mar 2016