Midas enters into joint venture in China to manufacture metro trains

Midas Holdings announced yesterday that it has entered into a joint venture with 4 China-based companies to develop, manufacture and sell metro trains. The JV company will be named as Nanjing Puzhen Rail Transport Co. and Midas Holdings is expected to hold a 32.5% interest in the company by investing up to RMB148.7 million out of a total investment of RMB407.6 million.

Midas business in manufacturing aluminium and plastic parts for train carriages have been certified by Alstom, and this has boosted its capability. In the 2004 Annual Report, the company have even started to venture into European markets. With the increasing urbanization in China, its move into this venture will help the company to continuously grow its business and keep a steady stream of orders. The major downside is that Midas main business relies on aluminium alloys and the price of such alloys has increased considerably since 2004. Thus should Midas manage to diversify its earnings, and manage costs increase well enough, the company's share price should appreciate. This is also from the fact that the company gave out hefty dividends last year on top of a stock split in mid 2004.