Vard Holdings Limited’s (VARD) 1Q14 revenue declined slightly by 2.7% YoY to NOK2.67b, or 21.3% of our FY14 forecast. PATMI slumped 51.1% YoY to NOK92m, forming just 15.5% of our full-year estimate. Although we expect a much stronger 2H, this set of earnings still came in below our expectations. We believe VARD’s Brazilian shipyards continued to rake in losses during the quarter. On a positive note, VARD managed to secure a very large order intake of NOK5.53b (eight vessels) in 1Q14, thus boosting its order book value to NOK21.84b as at 31 Mar 2014. Nevertheless, management cautioned that this round of order wins should be considered as exceptional. We will provide more details after the analyst briefing later. Our Hold rating and S$0.84 fair value estimate is under review.
Midas Holdings announced last evening that it has secured contracts for high-speed train car body components from CNR Changchun Railway Vehicle Co. Ltd (subsidiary of China CNR) worth CNY146m. Under the terms of the contract, Midas will supply aluminium alloy extrusion profiles and certain fabricated parts for high-speed trains which will operate at speeds of up to 350 km/h. Delivery is slated for
2014. We believe this is part of China Railway Corporation’s (CRC) second round of high-speed train car tender, of which Midas has already won CNY318m of orders (announced on 7 Apr 2014) from CNR Tangshan Railway Vehicle Co. Ltd (another subsidiary of China CNR). The combined value of these contracts amounts to CNY464m, and comes ahead of our CNY325-380m expectation. YTD, Midas has clinched CNY536.9m of orders. We expect the market to react positively to this latest news. Maintain BUY with S$0.66 fair value estimate on Midas.
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