DEMCO all on target.

PaulRen's picture
Company Visit

I just spoke to DEMCO(3.54) and have the following update for us.

Revenue guidance for the 1st quarter ’12, is around 1.2 to 1.3 Billion Baht and while the numbers for March are not yet finalized, it looks like net profits will “comfortably be above the 4th Q. of last year”, due to no bonus payments and no further impairment by Aelous company in this Quarter. (Last Q there was a 11 mill. Baht impairment charge).  There will be no more Aelous impairments and no bonus payments which are only a year end event, as usual here.  Remember also DEMCO's corporate tax rate will drop this year to 23% from 30% for last year, as it will for all SET listed companies.  The company has stated the net profit margin should be 5% for calendar 2012 so I see the likelihood of a nice net profit increase from the already high base. As expected.  In the 4th Q. of last year DEMCO reported 32 mill. Baht of net profit and in the 1st Q of 2011, the company reported 27 mill. Baht of net profit.  DEMCO’s 1 Q. should be reported by May 18th.

For all of last year, DEMCO had 3.3 Bill. Baht of revenues and the company has projected 5 Bill. of revenues for this year, hence the 1 Quarter of this year, is right on target.

Hoyabong #3 is now 60% complete and the company will transfer 45 finished foundations to SIEMENS in 2-3 weeks, so for them to start erecting the massive Wind polls/towers and turbines, starting early next month.  SIEMENS will erect 2 100 meter polls and turbines every week -and so in 22-23 weeks this first phase will be complete. (There are a total of 90 turbines for Hoyabong #3 of 180).  Starting in July, DEMCO will start selling electricity to EGAT and the meter will start running!   It does not make sense to start selling electricity much before because as soon as the first watt of electric is delivered to EGAT, the 3.5 Baht for 10 year period adder rate starts.

The company confirms that everything is on schedule and there are no delays or problems.  The first huge turbines will be delivered by end of April in Bangkokl

Best Regards and Happy  Sogn Kran (Thai New Year).

Paul A. Renaud.

PS.  At 3:44  PM, as I was loading up this article, we felt a mild earth quake shaking here for about 4 minutes, at the center of Phuket.  The black cat run right out the door. We just hear there was a 8.9 quake off Aceh Indonesia? 



Posting in our lounge today:
There is some debate on which green energy is cheaper, wind or solar. Surely solar has been all the rage, and gets all the attention in Thailand of recent, as such projects are much easier to pull off. Solar panel prices have collapsed due to China mega production for exports and EU drop off in demand and falling raw material costs. In the "Bloomberg Business Week" of March 19, page 68, there is an article on "Firing up China's Solar Market". It there states:

"Today, producing a kilowatt hour of solar power costs about 17c, he says, vs. 12 c for wind and prices are falling fast".

This is a quote is from China's JA Solar's Ming Yang VP for business development. I found that interesting statement as it comes from a Solar industry executive and post the huge drop in prices on solar panels. I read elsewhere not long ago that wind patterns are very similar in China as they are in Thailand.