Midas

While You Were Sleeping

 

US markets: Positive

 

Dow futures: -15 (as at 8am Singapore Time)

 

US Wrap: The less than forecasted fall in retail sales figures allayed fears over

 

the economy, bringing about the greatest gains in nearly two months for the

 

oversold US market. However, analysts are not expecting this broad rally to

 

stay as concerns over debt problems in Europe and US, along with the

 

expiration of the US Federal Reserve’s bond-buying programme at the end of

 

this month, continue to hover. The Dow gained 123.14pts (+1.03%) to

 

12,076.11, the S& P rose 16.04pts (+1.26%) to 1,287.87 while the Nasdaq

 

advanced 36.03pts (+1.48%) to 2,678.72.

 

The Day Ahead…

 

Scoop of the Day: As the new 1,318km Beijing-Shanghai express line

 

commences its operations, expected by late Jun11, investors will likely shift

 

their focus back to the China railway infrastructure sector, which has been

 

affected by uncertainties over the industry outlook. With MOR’s recent positive

 

media statements that China railway construction will continue to accelerate

 

over the next five years (i.e. 30,000 km of new lines, investments will total

 

RMB2.8t, and nationwide operational mileage to reach 120,000km) and as

 

new contracts are awarded, we believe sentiments towards the sector might

 

soon improve. At trough valuation of 1.4x P/B, we believe Midas’ share price

 

could see inflection point should order win announcements gather momentum.

 

Midas’ order book tallied at RMB1.2b (4Q10: RMB1.3b) as of 1Q11, with

 

RMB228m new order wins announced year-to-date. We continue to like Midas

 

for its dominant market position and deem current risk/reward trade-off as

 

attractive. Maintain BUY at TP of S$0.98, pegged to 18x FY11F P/E. (Tan Han

 

Meng, CFA, CPA)

 

WHAT’S INSIDE?

 

Insider Trade Highlights 14 Jun 11

 

Diary of Events

 

15 June 2011