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06-10-2011, 05:55 PM
There is a 2010 IPO document which gives a good overview of the industry.
http://midas.listedcompany.com/newsroom/...6E66.2.pdf
Basically, the barriers of entry are not strong enough in my opinion as it only takes 2 year for other players to break into the industry. The problem with Midas is that it does not have large funds to vertically integrate and thus see the market share being eroded for the past 3 years. Chalcom, largest alumnium marker, has indicated interest in the AEP market for trains and should be a major competitor by 2013. The decision to expand horizontally is a risky move in my opinion as Midas is betting on overseas market to export its train which makes pricing the only negotition tool (meaning reduction in margins)
The possibility of Midas re-rating maybe due to consolidation or takeover from other companies which has larger pool of funds, influence and vertically integrated. So i think it might be a long wait.
http://midas.listedcompany.com/newsroom/...6E66.2.pdf
Basically, the barriers of entry are not strong enough in my opinion as it only takes 2 year for other players to break into the industry. The problem with Midas is that it does not have large funds to vertically integrate and thus see the market share being eroded for the past 3 years. Chalcom, largest alumnium marker, has indicated interest in the AEP market for trains and should be a major competitor by 2013. The decision to expand horizontally is a risky move in my opinion as Midas is betting on overseas market to export its train which makes pricing the only negotition tool (meaning reduction in margins)
The possibility of Midas re-rating maybe due to consolidation or takeover from other companies which has larger pool of funds, influence and vertically integrated. So i think it might be a long wait.