Secures contracts worth Rmb86m. Within a span of less than three weeks, Midas announced yet another set of projects wins as its subsidiary Jilin Midas Aluminium Industries secured contracts to supply aluminium alloy extrusion profiles worth a total of Rmb86m which are expected to be fulfilled from 2H09 onwards. Out of this amount, Rmb54m would be for the Saudi Arabia Metro project and the Iran Metro project which was secured through its customer Changchun Railway – this also represents Midas’ first foray into the Middle Eastern market. The remaining Rmb32m is slated for the Changchun Light Rail project (also through Changchun Railway) and the Guangzhou Line 3 Airport Line project (through CSR Zhuzhou Electric Locomotive).
Order book is now around S$323m. These new contract wins amount to just 5.7% of Midas’ present order book at Rmb1.5b although we believe that they are noteworthy as they represent the company’s first foray into the Middle East. Going forward, management has also guided that they would continue to build on its strong track record to capitalise on opportunities seen in the foreign markets.
Recommendation. We have previously already assumed such contract wins in our FY09 earnings forecast. While our current BUY recommendation remains, our target price of S$0.855 is under review pending further discussions with management.
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