Midas could repeat 142% order feat

Fat orderbook gives glimpses of fatter gains.

According to CIMB, it expects near-term price catalysts from high-speed train car orders. They also said they found comfort in newly-identified growth areas of the aviation, shipping and automobile industries.

Here's more from CIMB:

The timing of contract wins was a recurring question throughout our NDR. Management guided that major clients in China are starting negotiations with suppliers, which could suggest impending high-speed train car orders.

We can see the potential of Midas riding on the wave of high-speed railway contracts, as it did in 2009. This will come from new train car orders to meet the planned 45k km express railway network by 2015.

In our estimation, China still needs at least another 22k-31k train cars. Given that it takes two to three years to deliver a train set, we think that orders could come in fast and furious in 2013 for the express railway network to be operational by the target date.

Midas also sees strong potential from international and metro contracts that have been supporting its orderbook in 2012.

Midas is the market leader in aluminium profiles manufacturing for the passenger railway industry. This was possible as it ventured into aluminium profile manufacturing in the early-2000s when China was still importing aluminium profiles and Midas gained first-mover advantage when the central government increased local content in train manufacturing.

Management now sees similar trends in the aluminium sheet/plate manufacturing segment, specifically for industries like aviation and automobile. We think that a successful diversification could raise Midas’s longer-term growth profile.

Midas gained 142% in 2009 after bagging a slew of orders. With its price-to-orderbook multiple at the pre-order 2009 levels, we could well see a similar price trajectory in 2013 when the orders return.

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