2Q09 revenue of S$38m and net earnings of S$9.4m (+10% yoy and 11% qoq) were in line with our expectations, as well as consensus. Profit growth was driven mainly by the aluminium alloy extrusion business, and despite lower contribution of only S$213k from associate Nanjing Puzhen (NPRT) in this quarter vs. S$953k a year ago.

At half time, earnings are up by 11% yoy to S$18m, on track to meet our full year forecast. So far, a strong performance from the alumunium alloy extrusion business is helping to offset a weak contribution from NPRT. However, we are expecting a much better showing from NPRT in 2H09 as they are expected to deliver over 200 carriages during this period.

Prospects for Midas are bright given its strong order book of RMB1.5bn for its core business and >RMB4bn for its associate NPRT. Meanwhile, both Midas and NPRT are expanding quickly to meet an anticipated demand for its products as China continues to rapidly develop both its high-speed railways and metro networks.

Maintain BUY, TP S$1.10 based on 20x FY10 earnings. Re-rating catalysts include further contract wins for both Midas and NPRT.