MIDAS: Buy, 50-c target; CENTURION: Falling occupancy to come:
China Railway Corporation (CRC) recently announced the tender for 776 sets of cab integrated radio communication equipment (CIR), implying that the total number of multiple units (MUs) likely to be released for tenders in 2014 is 388 since two CIRs are needed for each MU with eight carriages.
The total value expected is ~CNY70b and likely to be shared between China CNR Corporation (CNR) and CSR Corporation (CSR).
We believe Midas Holdings (Midas) is poised to benefit since the majority of its revenue is generated through contracts with CNR and CSR.
Furthermore, we believe winning a global award (overall 2014 winner of ‘Carbody’ category) from Siemens’ Rail Systems Division allows Midas to have more international recognition and improves its position to compete in the global railway market.
The award also gives Midas an edge over its competitors to win new contracts from Siemens in the future.
We believe it is still too early to determine any impact from the award and with the recent tenders already factored in our model, we maintain BUY with an unchanged fair value of S$0.50.
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