MIDAS HOLDINGS

if the co continues to make loss, will profit warning be issued ?

Zen, your top recommendation is now 53 cents. Patience really pays! But you are very quiet now regarding Midas. Sold already?

Market talk is that China Railway Corp will be launching CNY50-60b worth of train purchases soon (probably Aug or Sep), of which ~CNY25b may come from the high-speed side.
OCBC report: Maintain BUY, but FV raised from S$0.54 to S$0.65

zen had been calling for buy and accumulate since june/ july when price only 44c ...

it is reward time

Is it sad + bad news?
RESIGNATION OF CHIEF FINANCIAL OFFICER.

Stock price down 1.5 cents today at 50.5 cents.

Official announcement said no disagreement between CFO and mgt. Maybe he needs to take a break after 10 hectic years with this fast=-paced company?

OCBC : We managed to speak to the CEO of Midas Holdings, Mr. Patrick Chew, after the announcement on the resignation of the CFO, Mr. Tan Kai Teck. He reassured us that the resignation was entirely due to personal reasons.

While we are disappointed with this development as the ex-CFO had been working at Midas for almost 10.5 years, we believe that Midas will seek to minimise disruption by having the Financial Controller take over the financial management duties until a new CFO is found.

Midas’ share price corrected 3.9% yesterday, which we believe was due to this announcement and the weak market sentiment in general.

Meanwhile, we note that further positive news had taken place in China’s railway sector recently. The China Railway Corporation (CRC) finally opened the tender for a total of 91 high-speed railway (HSR) train sets (250km/h model) after a long hiatus. We expect Midas to win HSR contracts in 4Q13 from its customers, which will likely be a re-rating catalyst for the stock.

Hence, we believe that investors should focus on Midas’ recovery story, which we expect to be fuelled by new order wins from the HSR, metro and international railway segments.

Maintain BUY and S$0.65 fair value estimate on Midas.

Why Lim & Tan Securities reaction is : We cease coverage?


Midas’ CFO (Mr Tan KT) who has been with the company for 10 years and 5 months has quit abruptly with his last day effective on 21 Aug’13.

 He holds 498,000 shares in Midas and has been responsible for the financial management and
reporting functions of the group.

 Midas is currently seeking a suitable replacement
for Mr Tan KT and Mr Liaw KF, the company’s financial controller will assume the responsibilities until a new CFO comes on board.

 Mr Tan KT has been our key point of contact since
our initial coverage of the company in 2005 and having been with the company for 10 years and 5 months, his abrupt resignation is not good.

 Historically, abrupt resignations of CFOs has not
been good for companies in general and could signal
problems ahead.

 In Midas’ case, the high profile accident 1+ year ago
and as well as high profile corruption case of the
railway minister is still fresh in investors memory.
 And Midas is trading at 37x 2013 consensus forecast
against its key customers such as China CNR’s 12x
2013 PE and China CSR’s 15x 2013 PE means the
stock is not cheap.

 Due to the abrupt resignation of Mr Tan KT, we are ceasing coverage on the company henceforth and our last HOLD recommendation would no longer be relevant.