DEMCO, an update.

Record revenues and likely profits in the history of DEMCO still likely this year.

Dont give up on DEMCO, evenwhile its green project have been delayed into early next year, this company will still likely report record revenue and likely record profits for this year.

I know DEMCO is a key selection here and many of us own these shares.  I am by far not giving up, despite the sloppy stock price of late.  In fact, at currently the price of 4.12, I rate it again with a strong buy. With DEMCO we need to look at it as an investment and be patient. DEMCO's stock price and free warrants performed very well up until August, but then corrected due to delays in their new green projects.  (Wind and Solar)

Mr. Pongsak was quoted in the Thunhoon Thai newspaper today that DEMCO's revenues, even without any wind project contribution today, will be a record for the company, or around 2.75 Billion Baht.  If so, this comes out to around 0.42 Baht per share and at that DEMCO is just now trading at a p/e of 9.8.

I find this a modest to low p/e especially since there is still strong expectation for the huge wind project next year, which will see its revenues double. While this is below the 5 bill. projected earlier for this year,  its only because the Wind Energy Holding company is awaiting the chosing of an equity partner to proceed. Remember, DEMCO is only the contractor for this wind projects, at a pre-set 15% net profit margin, not the owner. This profit margin is well above the companie's average.

DEMCO produces 70% of its own raw material for this, and so has a huge cost advantage over its competitors.  The wind energy project is potentially huge and so not just "a one off" project.  DEMCO still believes it will get at least 2 out of the total 7 wind project started early next year.  (I was told on the phone some 10 days ago, this will be finalized in November and started in January '11).

Solar cell, 30 megawatts, 3 bill Baht project. They got good feedback from EGAT to date on this. The pay back period of this is 6-8 years.  EGAT stands for Electric Authority of Thailand.

This project is ongoing for later next year and the following.  When Thailand finally get its act together on 3G, DEMCO will benefit from the this project, as they produce, sell and install the new major steel towers. 

This company is a leader in electrical engineering and likely to have many related jobs in this, as time goes on.  Nothing at all was mentioned that the electric adder rate was changed or reduced,  as some Thai language gossipi site reported.

I remain a DEMCO fan and view patience is in order evenwhile I don't know why the company stopped buying back more of their own shares? Perhaps they are awaiting the release of the 3rd Quarter earnings on or before Nov 15.

Best Regards,

Paul Renaud.