SGD New Issue Review : Midas 3Y

MIDAS 3Y SGD SENIOR

-NEW 3Y SGD SENIOR ANNOUNCED
-PX GUIDANCE AT HIGH 5% AREA

COMPS:

TAT HONG  4.5% 2018    4.46%
SHUI ON DEVELOPMENT  8% 2015    3.40%

CREDIT HIGHLIGHTS:

– Midas Holdings Limited (Midas) is 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

Not my cup of tea. A mid size Chinese company with market cap of SGD 590 million, listed both in Singapore and Hong Kong, showing stable revenues for the past 4 years, decent financial ratios and a growing balance sheet.

A new jv project worth RMB 1.11 bio announced early this year should see them rushing to tackle their dependence on short term borrowings, raise some bonds to boost their long term liabilities that would beautify their balance sheets.

I have not kept abreast with the latest developments in the debt ridden Chinese rail industry where Midas operates in, and scanning the news we note that China Rail Group’s president committed suicide on the 6th of Jan this year, demonstrating the state of affairs in the business environment. http://qz.com/163692/chinas-heavily-indebted-state-railway-reportedly-loses-president-to-suicide/

At a high 5% (I am assuming 5.75%, at least), I suppose they are not trying to keep too much change on the table and would appear to be a reasonable start for their foray into the bond market which makes the rest of the deals this year look a tad stingy.

Verdict : Neutral.