SINGAPORE (July 12): Midas Holdings is doing everything to shed its disastrous failures in 2011.

At what was the golden age for Midas in May 2007, shares in Midas soared to an all-time high of $2.13 a share. That year, it posted earnings of RMB161.1 million ($32.5 million) on the back of RMB708.9 million in revenue, and generated free cash flow of RMB107 million.

Even when the global financial crisis hit, it was business as usual at Midas. Contracts rolled in, particularly through its 32.5% associate company, then known as Nanjing SR Puzhen Rail Transport (NPRT), as the Chinese government poured billions into the country’s infrastructure in a bid to stave off the effects of the crisis.

Earnings grew and, in FY2010, it reported record earnings of RMB241.1 million and a turnover of RMB1.03 billion.

In 2011, however, things went south for Midas when the Chinese rail sector was hit by disaster and a corruption scandal. Beijing halted investment in high-speed rail projects and Midas’ earnings crashed. Since then, China’s economic growth has slowed. And, some industry analysts are projecting that rail sector investments are slowing.

But in recent years, it has been expanding out of China and diversifying into other transport sectors to drive growth. More recently, the manufacturer of aluminium alloy components used in China’s trillion-dollar railway sector announced that its associate had been awarded RMB3.3 billion worth of metro and tramway contracts.

Despite all the good news, Midas’ share price still trades at about 0.5 times its book value and 17 times forward earnings. Why is that happening? Will its share price take off? What should investors take note of?

Find out what market watchers recommend in The Edge Singapore (week of July 11, page 26 “Stock trading at depressed 0.5 times book value despite new developments”), available at newsstands today.