Midas Holdings Limited announced its financial results for the 3 months and 9 months ended September 30th 2011.
Group revenue rose 4.6% from CNY 248.0 million in the 3 months ended September 30th 2010 to CNY 259.3 million in Q3 2011. The Group's Aluminum Alloy Division recorded 5.0% increase in its Q3 2011 revenue to CNY 248.3 million which accounted for approximately 95.8% of total revenue.
The Transport Industry remains the largest revenue contributor to the Group's Aluminum Alloy Division accounting for 80.5% of the division's revenue in Q3 2011. The others segment which included mainly the supply of aluminum alloy rods and other specialized profiles for industrial machinery contributed 19.3% of revenue to the Aluminum Alloy Division. Revenue contribution from the Power Industry accounted for the remaining 0.2% of revenue.
The Group's overall gross profit margin declined from 35.7% in Q3 2010 to 33.5% in Q3 2011, mainly due to an increase in production cost. Selling and distribution expenses increased by approximately RMB3.6 million in Q3 2011 driven mainly by an increase in staff costs and higher transportation costs as compared with Q3 2010.
Administrative expenses increased by about CNY 5.3 million in Q3 2011 mainly due to higher payroll costs arising from an increase in headcount to cater to the Group's expansion plans higher depreciation as well as increases in traveling and property taxes.
Finance costs comprised interest for bank borrowings, bank charges and financing costs relating to discounted notes receivables. Finance costs increase mainly due to more bank borrowings, higher interest rates and lesser interest on bank borrowings being capitalized. Approximately CNY 2.7 million of the interest on bank borrowings that are used to finance the construction of property, plant and equipment for our new production lines were capitalized.
The Group's share of loss from its associated company Nanjing SR Puzhen Rail Transport Company Limited amounted to approximately CNY 3.6 million in Q3 2011. This was largely due to fewer train cars delivered to its customers during the period under review. As at September 30th 2011 the Group remained in a healthy financial position with cash and cash equivalents of CNY 851.9 million.
In 2011, the PRC railway industry has been affected by several incidents. These incidents have dampened the near term outlook of the PRC railway industry and affected the Group’s operating environment. Revenue generated from PRC railway industry contributes approximately 70% to 80% of the Group’s total revenue. Therefore, the Group is affected by macro factors and government policies, such as changes in the Chinese government infrastructure spending and personnel changes which are beyond its control.
Nevertheless, the railway network development in China remains an integral component of the country’s economic growth strategy. Recent media reports highlighted the Chinese government’s resolve to continue to provide support to the Ministry of Railways and implement policies to lower the MOR’s financing costs. Major listed entities related to the PRC railway industry are also raising funds from the capital markets.
Mr Patrick Chew CEO of Midas said that “Going forward, we will focus on improving our cost structure and enhancing our operational efficiency to meet the challenges posed by the challenging operating environment ahead. We remain optimistic of the medium to long term development of the PRC railway industry. We will continue to monitor the situation and work closely with our partners.”
