MIDAS FY07 result

Revenue +34%
Cost of sales +35.1% (inline with the revenue growth)
Profit after tax +24.8% (income tax increased)
Borrowing +11.9% to 15,413k
Operating cashflow +22.6%
Cash at end of year 51,666k (more than enough to cover borrowing)
EPS +18.9% to 3.78 cents
NAV 22cents
Gross Profit margin 32.1%

Profit margin and revenue growth remained impressive, but the mild EPS growth might explain the stock de-rating. In general, I would consider this to be a good result. As they secure more train projects, and if the cost remain under control, we might see faster growth in coming years. They managed to secure both local and overseas project, should be a testimony to their ability. Especially the product is awarded “2007 China's Top Brand”. Subsidiary NPRT and cooperation with Chinalco should keep growing.

Given today's closing price of 0.845. The historical PE is 22. Insider buying should give the share price some support. China railway outlook still remain robust. With current down beat environment and relatively high valuation (although cheap compare to HK listed peers), prefer to hold first.