SG: MARKET PULSE: Midas Holdings, KS Energy (16 Aug 2013)

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.65

Stock Name: KS Energy
Company Name: KS ENERGY LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.50

MARKET PULSE: Midas Holdings, KS Energy

16 Aug 2013

KEY IDEA Midas Holdings: Rising from the ashes Midas Holdings' 2Q13 results came in above our expectations, with revenue and PATMI soaring 29.2% and 834.1% YoY to CNY284.0m and CNY14.9m, respectively. The spike in earnings was largely driven by a turnaround from its associated company NPRT. Although 1H13 PATMI of CNY10.0m (-40.8% YoY) forms only 28.6% of our FY13 projections, we are expecting 2H13 PATMI to improve significantly on a HoH basis. There have also been more positive developments happening in the railway sector in China recently, and we expect Midas to benefit from this. We raise our FY13 revenue and PATMI forecasts by 12.6% and 16.0%, respectively. Ascribing a higher P/B target peg of 1.3x due to a brighter industry outlook and rolling forward our valuations to blended FY13/14F BVPS, we raise our fair value estimate on Midas from S$0.54 to S$0.65. Reiterate BUY. (Wong Teck Ching Andy) MORE REPORTS KS Energy: S$1.6m net profit in 2Q13 KS Energy (KSE) reported a 29.4% YoY rise in revenue to S$196.2m and a net profit of S$1.6m in 2Q13 vs. S$0.7m in 2Q12, such that 1H13 revenue and net profit accounted for 54% and 42% of our full year estimates, respectively. Gross profit margin was lower at 22.8% in 2Q13 compared to 27.5% in 2Q12, as the distribution division had executed more larger-scale projects that had comparatively lower margins. Looking ahead, management believes that the distribution business will continue to be an important contributor the group's overall performance this year. For next year, more jack-up rigs should join the fleet. We are positive on KSE's strategy to focus on anchoring its business in Indonesia and other parts of SE Asia, from where it can continue to grow to the rest of Asia. However, the group remains in a mode of recovery and time will be needed for more significant leaps in earnings. Maintain HOLD with S$0.50 fair value estimate. (Low Pei Han)

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