• JV won contracts worth RMB2.7b
• Extended outstanding notes
• Mixed outlook

Solid Order Flow at NPRT

Midas Holdings Limited announced Wednesday that its JV unit (32.5% equity stake), NPRT, has secured three metro train car supply contracts worth RMB2.7b in China. The first supply contract is for the Shenzhen Line 4 Phase 3 Project with delivery scheduled between Feb 19 and Sep 20, worth ~RMB1.2b.

The second and third supply contracts are for the Hangzhou Metro Line 6 Phase 1 Project worth ~RMB1.1b and Hangzhou-Fuyang Inter-city Metro Project worth ~RMB0.4b, both of which are scheduled for deliveries between Sep 18 and Aug 19. These contracts represent strong order flow and we believe they will be meaningful positive contributions to Midas ahead, especially for FY19 and FY20, based on the delivery schedule.

Extension of Maturity Date of US$30m Notes

Back in Nov 17, Midas also announced that the holders of the outstanding Series 003 Notes had, by way of an extraordinary resolution in writing, authorised to extend the maturity date of the notes by one year, from 23 Nov 17 to 23 Nov 18. However, Midas’ share price has since taken a hit until two days ago when it made the announcement of the solid orders at NPRT.

No Clear Outlook

While outlook over its core business seems positive as China continues to pour investments into building up the rail network in the country, the uncertainty with regards to the start-up and ramp up of its aluminium light alloy factory (JMLA) remains. Furthermore, the extension of the notes required Midas to enter into a letter agreement, for which the implication is that Midas has to put in place encumbrances on the company’s assets pursuant to the pledges and increased obligations of Midas. Hence, all considered, we believe the outlook of Midas remains mixed.

Due to a redistribution of internal resources, we are CEASING COVERAGE on Midas.

Source: OCBC Research - 5 Jan 2018