Midas Holdings net profit down a staggering 85.1% to RMB 27.8 million

PRC rail sector slowdown proved decimating.

Midas Holdings Limited (Midas) reported profit attributable to equity holders (net profit) of RMB 27.8 million on the back of group revenue of
RMB869.5 million for the full year ended December 31, 2012 (FY2012), down from from RMB 187.4 million in FY 2011.

The Group’s gross profit decreased to RMB251.3 million in FY2012, from RMB362.0 million in FY2011. Correspondingly, gross profit margin for FY2012 was 28.9%, a decrease from 33.5% in FY2011. In line with the slower business activity for the year, resulting in higher per unit production cost, gross profit margin at the Aluminium Alloy Extruded Products Division decreased to 29.4%, from 34.2% in FY2011. 

Mr Patrick Chew, Chief Executive Officer of Midas, said, “Our performance in FY2012 should be seen against the backdrop of a sector slowdown in late 2011 and 2012. In view of these challenges, we proactively identified new business opportunities and successfully secured a series of new orders, from both overseas and domestic customers during the year.”

The Group’s core Aluminium Alloy Extruded Products Division, which accounted for 95.4% of group revenue in FY2012, registered a 20.2% decrease in contributions to RMB829.6 million. Within this division, the Transport Industry remained the largest revenue contributor, accounting for 57.1% of its revenue, whilst the Power Industry took up 7.4%. The “Others” segment, comprising mainly the supply of aluminium alloy rods and other specialised profiles for industrial machinery, contributed the remaining 35.5%.

Still, the Group remains bullish on a recovery. The company said the PRC rail transportation industry is expected to grow in 2013, underpinned by the
PRC Government’s support to grow China’s transportation network.

"The Ministry of Railway had in January 2013 announced the Government’s plans to invest approximately RMB650 billion into the railway sector, of which approximately RMB520 billion is planned for the development of railway infrastructure," Midas Holdings said

"The PRC metro train sector is also expected to see increased activities in 2013, with the National Development and Reform Commission (“NDRC”) approving an additional two metro projects worth a combined RMB49 billion in November 20122. The latest project approvals comes on top of an earlier announcement by the NDRC in September that it has approved project plans and feasibility studies for 25 metro projects with estimated investments valued at over RMB700 billion 3, which represents a strong pipeline of opportunities for industry players." it added.

"In view of the above, while lingering concerns from the sector slowdown in late 2011 and 2012 are expected to have continued impact on the Group’s near-term operating performance, the Group remains cautiously optimistic on the outlook of China’s railway industry over the medium to long-term," it said further.