Midas achieves net profit of RMB16.4 million for 3Q 2013

Midas Holdings Limited, together with its subsidiaries, reported net profit attributable to equity holders of RMB16.4 million for the three months ended September 30, 2013, turning around from a loss of RMB6.1 million for the corresponding financial period in the previous year.

Group revenue soared 48.5% from RMB202.7 million in 3Q2012 to RMB301.0 million in 3Q2013, primarily driven by the Group's Aluminium Alloy Extruded Products Division, which recorded a 50.0% jump in revenue to RMB287.5 million. This division accounted for approximately 95.5% of total revenue in 3Q2013.

Within the division, the Transport Industry, which also included the supply of aluminium alloy extrusion profiles for freight wagons, was the largest revenue contributor, accounting for 75.6% of its revenue in 3Q2013. The "Others" segment, which included mainly the supply of aluminium alloy rods and other specialised profiles for industrial machinery, contributed 18.0% of revenue to the Aluminium Alloy Division. Revenue contribution from the Power Industry accounted for the remaining 6.4%.

The Group's overall gross profit margin was 20.8% for 3Q2013, compared to 31.5% for 3Q2012. The decrease was mainly due to higher per unit production cost and a change in product mix at the Group's Aluminium Alloy Extruded Products Division. The Aluminium Alloy Extruded Products Division recorded gross profit margin of 21.0% for 3Q2013, compared to 32.1% for 3Q2012.

Other operating income, which mainly comprised interest income and disposal of scrap materials, was RMB2.1 million for 3Q2013, compared to RMB4.0 million for 3Q2012. The decrease was mainly due to lower interest income during the review quarter.

Selling and distribution expenses rose 1.5% to RMB13.2 million in 3Q2013, from RMB13.0 million in 3Q2012. Administrative expenses increased 3.4% to RMB25.7 million in 3Q2013, from RMB24.8 million in 3Q2012.

Approximately RMB16.8 million (3Q2012: RMB7.6 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's associated company, Nanjing SR Puzhen Rail Transport Co., Ltd, contributed RMB10.9 million in 3Q2013, turning around from a share of loss in the corresponding financial period. This was backed by increased train car deliveries during the review period.

As a result of the above, the Group achieved a Net Profit of RMB16.4 million. The Group's balance sheet remains healthy, with cash and cash equivalents strengthened by RMB337.0 million to RMB884.0 million as at September 30, 2013, from RMB547.0 million as at December 31, 2012.

Patrick Chew, Chief Executive Officer of Midas, said, "We are delighted that our core Aluminium Alloy Extruded Products Division and NPRT have made strong contributions to our financial performance for the review quarter. The overall operating environment has clearly improved notwithstanding some margin pressure."

"On the business development front, we are seeing exciting developments over the past few months, as our order book received a healthy boost of approximately RMB433.6 million, backed by contracts from international and PRC customers, as well as securing our first high-speed train contract since 2011. The return of high-speed train tenders is an encouraging development for the industry," Mr Chew added.

For the nine months ended September 30, 2013 ("9M2013"), Midas' Net Profit leaped 145.6% to RMB26.4 million, on the back of a 20.6% increase in revenue to RMB787.5 million. This compares against a Net Profit of RMB10.7 million and revenue of RMB653.0 million for the corresponding financial period.