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Midas Posts First Quarter Net Profit of RMB15.3 Million
Edited by : AL CIRCLE
3 min read
Midas Holdings Limited ("Midas" or the "Company", together with its subsidiaries, the "Group"; SGX-ST stock code: 5EN; SEHK stock code: 1021) today announced its financial results for the three months ended March 31, 2012 ("1Q2012").
Group revenue was 22.3% lower at RMB230.4 million, as compared to RMB296.5 million in the corresponding financial period ("1Q2011") on lower contributions from the Group's core Aluminium Alloy Division. The Aluminium Alloy Division accounted for RMB221.8 million or 96.3% of total revenue in 1Q2012, as compared to RMB288.7 million or 97.4% of total revenue in 1Q2011.
Within the Aluminium Alloy Division, the Transport Industry accounted for 64.8% of the division's revenue, with the Power Industry and Others segment contributing 4.7% and 30.5%, respectively.
In line with the lower revenue, cost of sales in 1Q2012 declined 16.4% to RMB162.5 million from RMB 194.4 million in 1Q2011. Correspondingly, gross profit for the period was 33.5% lower at RMB67.9 million, as compared to RMB102.1 million in 1Q2011. Overall gross profit margin in 1Q2012 was 29.5%, compared to 34.4% in 1Q2011. Gross profit margin for the Aluminium Alloy Division, the Group's largest business segment, was 30.0% in 1Q2012, as compared to 35.0% in 1Q2011.
Selling and distribution expenses rose by approximately RMB2.5 million in the quarter under review, driven mainly by higher marketing and transportation costs as compared with 1Q2011. Administrative expenses rose by approximately RMB4.0 million in 1Q2012 as the Group increased headcount to realise its expansion plans as well as higher depreciation, travelling and utilities expenses.
Finance costs rose RMB10.8 million to RMB13.6 million in 1Q2012 mainly due to additional bank borrowings and lesser interest on bank borrowings being capitalised. Approximately RMB1.5 million (1Q2011: RMB8.6 million) of the interest on bank borrowings that are used to finance the construction of property, plant and equipment for the new production lines were capitalised.
The Group's share of loss from its associated company, Nanjing SR Puzhen Rail Transport Co., Ltd., ("NPRT") amounted to approximately RMB4.6 million in 1Q2012. This was largely due to fewer train cars delivered to its customers during the period under review.
As a result, the Group reported a net profit attributable to shareholders of RMB15.3 million in 1Q2012, as compared to RMB60.4 million in 1Q2011.
As at March 31, 2012, the Group remained in a healthy financial position with cash and cash equivalents of RMB670.6 million.
Outlook
The lingering impacts of the 2011 railway incidents in the PRC have continued to limit the recovery of the PRC railway sector. While the domestic railway sector has since exhibited some signs of recovery, uncertainty over the rate of recovery continues to place pressure on near-term demand.
Nevertheless, the Group remains cautiously optimistic on the outlook of the PRC railway industry over the mid to long-term underpinned by the railway industry's importance as an integral component of China's economic growth strategy.
Mr. Patrick Chew, CEO of Midas, said, "Our operating performance in the first quarter should be seen against the backdrop of an industry-wide slowdown in the PRC railway sector and higher operating costs, which resulted from our expansion plan. While we believe that the prospects for the PRC rail transportation sector remain intact, it remains our strategy to actively pursue viable options of growth in other product segments and opportunities in the export markets.
"While orders have slowed since the rail incidents, the recovery of the PRC rail sector is inevitable, as rail transport remains the most efficient and affordable mode of transportation in the PRC. Backed by our established track record and capabilities, Midas is poised to ride on the recovery wave."
Group revenue was 22.3% lower at RMB230.4 million, as compared to RMB296.5 million in the corresponding financial period ("1Q2011") on lower contributions from the Group's core Aluminium Alloy Division. The Aluminium Alloy Division accounted for RMB221.8 million or 96.3% of total revenue in 1Q2012, as compared to RMB288.7 million or 97.4% of total revenue in 1Q2011.
Within the Aluminium Alloy Division, the Transport Industry accounted for 64.8% of the division's revenue, with the Power Industry and Others segment contributing 4.7% and 30.5%, respectively.
In line with the lower revenue, cost of sales in 1Q2012 declined 16.4% to RMB162.5 million from RMB 194.4 million in 1Q2011. Correspondingly, gross profit for the period was 33.5% lower at RMB67.9 million, as compared to RMB102.1 million in 1Q2011. Overall gross profit margin in 1Q2012 was 29.5%, compared to 34.4% in 1Q2011. Gross profit margin for the Aluminium Alloy Division, the Group's largest business segment, was 30.0% in 1Q2012, as compared to 35.0% in 1Q2011.
Selling and distribution expenses rose by approximately RMB2.5 million in the quarter under review, driven mainly by higher marketing and transportation costs as compared with 1Q2011. Administrative expenses rose by approximately RMB4.0 million in 1Q2012 as the Group increased headcount to realise its expansion plans as well as higher depreciation, travelling and utilities expenses.
Finance costs rose RMB10.8 million to RMB13.6 million in 1Q2012 mainly due to additional bank borrowings and lesser interest on bank borrowings being capitalised. Approximately RMB1.5 million (1Q2011: RMB8.6 million) of the interest on bank borrowings that are used to finance the construction of property, plant and equipment for the new production lines were capitalised.
The Group's share of loss from its associated company, Nanjing SR Puzhen Rail Transport Co., Ltd., ("NPRT") amounted to approximately RMB4.6 million in 1Q2012. This was largely due to fewer train cars delivered to its customers during the period under review.
As a result, the Group reported a net profit attributable to shareholders of RMB15.3 million in 1Q2012, as compared to RMB60.4 million in 1Q2011.
As at March 31, 2012, the Group remained in a healthy financial position with cash and cash equivalents of RMB670.6 million.
Outlook
The lingering impacts of the 2011 railway incidents in the PRC have continued to limit the recovery of the PRC railway sector. While the domestic railway sector has since exhibited some signs of recovery, uncertainty over the rate of recovery continues to place pressure on near-term demand.
Nevertheless, the Group remains cautiously optimistic on the outlook of the PRC railway industry over the mid to long-term underpinned by the railway industry's importance as an integral component of China's economic growth strategy.
Mr. Patrick Chew, CEO of Midas, said, "Our operating performance in the first quarter should be seen against the backdrop of an industry-wide slowdown in the PRC railway sector and higher operating costs, which resulted from our expansion plan. While we believe that the prospects for the PRC rail transportation sector remain intact, it remains our strategy to actively pursue viable options of growth in other product segments and opportunities in the export markets.
"While orders have slowed since the rail incidents, the recovery of the PRC rail sector is inevitable, as rail transport remains the most efficient and affordable mode of transportation in the PRC. Backed by our established track record and capabilities, Midas is poised to ride on the recovery wave."
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