Midas Holdings Limited - What profit margins does it expect to make from these two orders?

21/1/2014 – Midas Holdings started the year with a bang with its January 6 announcement of two contracts worth CNY1.11 bln by its joint venture company, Nanjing SR Puzhen Rail Transport Co., Ltd.

The first of the two contracts was awarded by Suzhou Rail Transit Co. Ltd., for the order of 17 train sets (85 train cars) for the Suzhou Rail Transit Line 2 Extension.

The second contract was awarded by Nanjing Metro Co., Ltd., for the supply of 13 train sets (78 train cars) for the Nanjing Metro Line 1.

Nanjing SR is expected to deliver them between 2015 and 2016 for these orders.

Midas is listed on the bourses of Singapore and Hong Kong, and has a 32.5% stake in Nanjing SR.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. What profit margins does it expect to make from these two orders?

Question

2. How is it protecting itself from reputation risk?

There's no denying the success of Midas in China.

But questions have been raised over the country's railway industry in general.

In July last year, the former Railways Minister Liu Zhijun, who drove the rapid development of China's high speed rail network from 2003 to 2011, was given a suspended death sentence for abuse of power and US$130 mln in bribes.

A South China Morning Post article gives more context to China's railway system development.

Now, the two latest contracts are for MRT-like trains, not high speed rail.

But it would certainly be useful for Midas to describe what it's like to do business in the sector, and what cost and quality pressures it's under.

(Total number of questions in the full story: 3)

We have sent these questions to the company to invite them for an on-camera interview, and/or seek their written response.

Sofar, we have not had a reply (which is why you are seeing this message).

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