DEMCO connects to the grid the completed massive Wind Energy project.

PaulRen's picture
Company Visit

February 12 '13.

DEMCO (9.25) updates for us and I listen carefully.  A big day for shareholders.

Today exactly at high Noon the second major Wind Energy project "Huabong #2" was successfully connected to Thailand’s electrical grid. The January testing went well and all was right on schedule.  Bravo to DEMCO for that.

On February 12 the opening ceremony will be held as planned, lead by the Prime Minister herself as well as the Ministry of Energy.  Mails of you shareholders were forwarded to Wind Engergy Holding directly asking for DEMCO to get proper recognition.  So Demco’s logo will be featured and I was assured our company will get due recognition.  Thanks from us all for the good effort by some of you and me on asking for DEMCO to get some deserved credit -and be so identified as is fair and right.

The next phase of wind energy projects (#4 to #10) are on schedule and now in the planning state.  As expected all along they will start next year.  DEMCO however may decide to opt out on one part of a complicated engineering process on this, so to reduce the company risk.  This would still mean the same net profit margin (expected at 6-7%) but slightly less total revenue from those then previously expected.  (i.e. only about 10 to 15%, less).  This is not concerning as it reduces DEMCO's risk of completion on these, while still providing huge amounts of visible revenues for year 2014 to 2017.

3 G buisness is doing well and proceeding with DEMCO expecting higher the average profit margin on this. The company expects about 500 mill. Baht of revenues from 3 G this year.

The conversion of the DEMCO's Warrants #4 was 99.65% successful as expected and so just today the company received some 350 million Baht in new cash/equity, a nice vote of confidence.  This so will reduce the interest expense burden for this year. 

I now expect the net profit for calender year 2012 to be around 400 million or some 5% higher then recent bullish broker reports by Kim Eng and Tanachart.

DEMCO's stock so still trades at expected 2013 p/e of around 10-11, fully dilluted.  Remember this year's revenues should be even higher then last year's and the company expects to receive at least 150 mill. of tax free dividend from their minority stake in the now 2 operating mega wind farms, and as of today 100% connected to the grid Thai electrical system. (EGAT).  My buy view is so maintained.

Best Regards,

Paul A. Renaud.