- We are reinstating our BUY recommendation on Midas after having downgraded it to HOLD in mid July '12 as we believe that the China government's announcement yesterday to approve 25 new urban railway projects worth more than Rmb800 billion in 18 cities over the next 2 years as well as increasing its railway budget for the 3rd time this year to Rmb496 billion (from Rmb 470 billion) means that it is a question of 'when' and not 'if' the 2-year drought in the high margined high-speed rail contracts resume.

- And while awaiting for the high speed rail contracts to resume, Midas' 32.5% owned associate company Nanjing SR Puzhen Rail Transport Co (NPRT) is benefitting from numerous contract wins (totalling Rmb 3.25 billion this year alone), bringing their order books on hand to a record Rmb8.447 billion to be delivered over the next 2-3 years.  Being a preferred aluminium extrusion supplier to NPRT, the metro train contract wins will benefit Midas in the next 6 months.

- Midas is also winning contracts from the maiden power industry in China with Rmb123mln worth of new contracts announced earlier this week, increasing their order books by 21% to Rmb723mln.

- Consensus is expecting Midas' earnings to rebound 133%  in 2013  to Rmb182mln,   translating to a, prospective PE of 12x, down from 2012's 27x.

Source: Lim & Tan - 7 September 2012