SGD New Issue Review : Midas 2.5Y 6%


Issuer:   Midas Holdings Limited
Status: Senior, unsecured
Rating: Unrated
Format: Reg S, Bearer, S274 & 275 of Singapore SFA, issued off the SGD500m Multicurrency MTN Programme
Tenor:   2.5 years
Issue Size:  TBD
Price Guidance: 6% area
Issue Date: [ ] May 2014
Maturity Date: [ ] Nov 2016
Payment: Semi-annual, Actual/365 (fixed)
Redemption at the Option of Noteholders upon Cessation or Suspension of Trading of the Issuer’s Shares:  As per the Programme
Redemption for Taxation Reasons: As per the Programme
Details: SGD250k denoms / Singapore Law / CDP / SGX-ST

– New Midas holdings SGD 2.5Y announced at the back of reverse enquiry
– Initial price guidance: 6% area

Midas 5.75 2017 @ 5.75%
Tat Hong 4.5 2018 @ 4.70%

Credit Highlights:

– Midas Holdings Limited (Midas) was incorporated in Singapore on 17 Nov 2000 and listed on SGX-ST in 2004 and Hong Kong Stock Exchange in 2010

– Midas is one of the leading manufacturers of aluminium alloy extrusion products for the rail sector in China. The group also exports its aluminium alloy extrusion products for use in Asian, European, Middle Eastern, Russian and South American train projects

– Midas has a dominant market share in China rail sector and is well positioned to benefit from positive momentum in the railway industry

Comments :

This was what I wrote in January.

Remember the post I removed from the site ? Well, Midas pays a dividend yield of only 1.11%.

Stock price suffering despite turnaround in earnings recently.

“Midas 1Q Net 11.5m Yuan vs Net Loss of 4.88m Yuan Yr Ago
May 9 (Bloomberg) — 1Q revenue rises 46.7% year on year to
296.9m yuan, co. says in a filing to Hong Kong stock exchange

Graph of Net Profit and EPS (the numbers for 2014 and 2015 are projected).

Midas Net Profit Graph

Not my cup of tea, I repeat what I said in Jan. That they are issuing a 2.5Y at 6% when they managed a 3Y at 5.75% then says something about demand.

I am guessing that pte bank liquidity will soak this one up but I am not optimistic and I believe now is not the time to be entering into the junk bond market, or Singapore’s low yield version of a high yield market and I am much more prejudiced than I was earlier this year.

The old Midas 5.75% 02/2017 trading at 99.25/99.75 for all the lack of liquidity in it and I do not believe it rallied above its issue price of 100 since Feb although I cannot be certain.

Still I will not expect any negative headlines for Midas, given that banks do their due diligence pre issuance and I do not want to be blamed if anyone misses out on a 6% coupon.

Good luck folks.