economic recession continued to weigh on its performance.. We continue to favour companies

Earnings growth to accelerate from 2H CY10

Rotary's earnings growth to gain momentum in 2H CY10. The catalyst

driving Midas' growth is primarily its capacity expansion, which will lift the

group's production capacity to 50,000 tonnes from the current 20,000 tonnes

by end-2010. Its order book stands at RMB1.3b and the group is poised for

more contract wins amid China's booming rail investments. Rotary's earnings

will be driven by the landmark S$1.1b SATORP project it clinched in July

09. This project started contributing to earnings in 4Q09, and we expect

earnings growth to gather momentum from 2H10 onwards as the project

progresses into full steam. Rotary's order book stands at a robust S$1.3b

and the pipeline is expected to boost earnings till FY13. The group remains

active in bidding for more projects, and news of further contract wins could

serve as near-term catalysts for the stock.. We expect Midas' and

Preferred picks: Midas, Rotary.

medium-term prospects of infrastructural-related plays as flow-through effects

of recent capital expenditure should translate into earnings growth

momentum. We prefer companies with healthy earnings visibility and strong

order books.

We maintain our

Rotary [fair value S$1.44] on their rosy earnings prospects and potential for

more contract wins. In addition, Midas' potential dual listing should sustain

interest and valuations.

Tat Hong remains a

earnings are expected to remain under pressure. While it is well-positioned

to tap on infrastructure-related projects in the medium term, we expect its

recovery to lag the economic recovery. We are generally optimistic over theBUY ratings on Midas [fair value S$1.30] andHOLD [fair value S$1.02] as its(Lee Wen Ching)