DBSVickers Report - 29 Nov 2007

Midas Holdings Nanjing Puzhen Plant Visit: Gathering Speed

Story: We paid a visit last week to Nanjing SR Puzhen’s new production plant.

Point: The new production plant, with an initial capacity of 250 metro cars per annum, is on track for completion by December and commercial production should begin in 1Q08. With this enhanced production capacity, we believe that Nanjing SR Puzhen can go to bid for more contracts to add on to its current order book of RMB3.5bn to help underpin Midas’ earnings growth (at the associate level) over the next three to five years.

Relevance: We continue to favour Midas as a firm beneficiary of China’s booming railway sector and its robust demand for metro & high-speed trains and parts. Maintain BUY and our target price of S$1.84, which is based on 24x FY08 PER.