DEMCO's 3rd Q, is one fabulous report well ahead of my own high expectation.
I just went through it with a fine tooth comb...., on line 675 of the financial notes it states the company sold back 1% of is Aelous shares to WEH at 46.1 Baht per share, this is 60% premium over the price DEMCO paid in June of 2012. Now ask: why would WEH pay such a premium so soon after, likely because its a success already! This was reaffirmed with DEMCO's 100 mill gain on associate company (see below). Both parties likely tabulated a present market price on some formula. While we don't see the reason they sold this smallest % back (likely some fine tuning), but fact is fact its worth more because the winds are blowing down to current good yield, this after a slow start.
Demco 3rq resumes high profit momentum and so reaffirms its growth trend.
We note DEMCO just got some 100 mill. in tax free dividends from its Aelous investment in the 3 Q. Wow.. so now we see its investment is gearing up to substantial regular annual income from its first mega wind farm; this beyond the 6-7 bill. of revenues it can generate from its core operations. And for the 4th Q. '13, the company guides us to 2.1 Bill in revenues so it should be even greater, with very likely an additional 30 mill Q. payment from Aelous vs. 60 mill. in Q3.
Consider its net profit margin of 6% of 2.1 Bill plus 30 mill. net from Aelous = 160 net profit, or close to 0.30 per share for 4th Q. (0.44 +0.30 = 0.74 EPS for calender 2013). So 0.75 Baht per share is my estimate for all of year 2013.
The bottom line is so impressive that the 2 main brokers analyst which cover DEMCO must now up the EPS for this year to say at least around 0.70 per share, or 40 to 50% higher then they currently estimate and so hence their new price target should be much higher.
Best Regards,
Paul A. Renaud.
www.thaistocks.com
