Midas net profit balloons to RMB14.9m

From merely RMB1.6m in 2Q2012.

Midas Holdings Limited (Midas) reported net profit attributable to equity holders (net profit) of RMB14.9 million for the three months ended June 30, 2013 (2Q2013), from RMB1.6 million for the corresponding financial period (2Q2012).

Group revenue rose 29.2% from RMB219.8 million for 2Q2012 to RMB284.0 million for 2Q2013. The Group’s Aluminium Alloy Extruded Products Division recorded a 29.8% increase for its 2Q2013 revenue to RMB272.7 million, accounting for approximately 96.0% of total revenue.

Within the division, the Transport Industry is the largest revenue contributor, accounting for 66.7% of its revenue in 2Q2013 which also included the supply of aluminium alloy extrusion profiles for freight wagons. The “Others” segment, which included mainly the supply of aluminium alloy rods and other specialised profiles for industrial machinery, contributed 24.6% of revenue to the Aluminium Alloy Division. Revenue contribution from the Power Industry accounted for the remaining 8.7%.

The Group’s overall gross profit margin was 22.5% for 2Q2013, compared to 31.5% for 2Q2012. The decrease was mainly due to a change in product mix at the Group’s Aluminium Alloy Extruded Products Division, which reported gross profit margin of 22.7% for 2Q2013, compared to 32.3% for 2Q2012.

Other operating income, which comprised interest income and disposal of scrap materials, rose 144.1% to RMB9.6 million for the review quarter, from RMB4.0 million for 2Q2012, due to higher income from disposal of scrap materials.

In line with the higher business activities, selling and distribution expenses rose 51.9% to RMB10.7 million for 2Q2013, largely due to an increase in transportation costs. Administrative expenses rose 12.5% to RMB26.8 million in 2Q2013, from RMB23.8 million for 2Q2012, due mainly to higher operating costs and start-up costs at both our Luoyang Aluminium Alloy Extruded Products Division and Aluminium Alloy Plates and Sheets Division.

Approximately RMB10.7 million (2Q2013: RMB9.4 million) of the interest on bank borrowings that were used to finance the construction of property, plant and equipment for the new production lines were capitalised.

The Group also recorded a share of profit from its associated company Nanjing SR Puzhen Rail Transport Co., Ltd (NPRT), which contributed approximately RMB3.1 million for 2Q2013, swinging around from a share of loss in the corresponding financial period. This was mainly the result of increased train car deliveries during the review period.

As a result of the above, the Group reported a net profit attributable to shareholders of RMB14.9 million. The Group’s balance sheet remains healthy, with cash and cash equivalents of RMB416.7 million as at June 30, 2013.

Patrick Chew, Chief Executive Officer of Midas, said, “The improved financial performance for this quarter was the result of improving demand for the Group’s products and our efforts to capture business opportunities both in the PRC and in regional markets. In view of the increased confidence in our business prospects and growth and as a gesture of our appreciation to Midas shareholders for their support, the Board is pleased to declare an interim dividend of 0.25 Singapore cent per ordinary share.”

For the half year ended June 30, 2013 (“1H2013”), the Group reported a Net Profit of RMB10.0 million, on the back of an 8.0% increase in revenue to RMB486.4 million. This compares against a Net Profit of RMB16.9 million and revenue of RMB450.2 million for the corresponding financial period.