Towards Financial Freedom
MIDAS HOLDINGS - NPRT secured RMB860m metro contract
The news: Midas announced that Dongguan Rail Transit has awarded a RMB860m metro contract to its 32.5%-owned associate, Nanjing SR Puzhen Rail Transport (NPRT) for Dongguan Rapid Railway R2 Line Project. NPRT will supply 20 train sets (or 120 train cars) with delivery expected to take place from 2013 to 2015.
Our thoughts: In our financial model, we have assumed NPRT to win RMB1.5b of new orders per year. This latest contract brings NPRT's total order win to RMB1.4b YTD12, which is within our expectations.
We estimate the follow through to Midas to be 1) a potential contract win worth between RMB30-40m from NPRT and 2) income from associate of between RMB6-10m. This would result in a total profit of some RMB10-14m, which will be recognised progressively from FY13 to FY15. Nonetheless, we note that NPRT did not have a consistent profitability track record as its quarterly contributions had fluctuated between a RMB5m loss to a RMB6m profit since 1Q11. Maintain NEUTRAL at TP of S$0.29.
Source: OSK
Our thoughts: In our financial model, we have assumed NPRT to win RMB1.5b of new orders per year. This latest contract brings NPRT's total order win to RMB1.4b YTD12, which is within our expectations.
We estimate the follow through to Midas to be 1) a potential contract win worth between RMB30-40m from NPRT and 2) income from associate of between RMB6-10m. This would result in a total profit of some RMB10-14m, which will be recognised progressively from FY13 to FY15. Nonetheless, we note that NPRT did not have a consistent profitability track record as its quarterly contributions had fluctuated between a RMB5m loss to a RMB6m profit since 1Q11. Maintain NEUTRAL at TP of S$0.29.
Source: OSK
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