The SET is bullish due to high liquidity.

SET at a new high in 16 years and DEMCO up tripple digit over the past 12 months.

I came back relaxed and upbeat after some 20,000 miles of traveling which took me as far North as I have ever been.  The “Isles of Sky” in Northern Scotland is a breathtaking escapade into what seemed to me the end of the world.

It was greatly satisfying to then return to my previous home and origin (Switzerland) from my labours far afield -and be able to enjoy some of the best what my mother country has to offer. 

Responsible investing for superior returns and then sharing this with others, while contributing to my profession, has long been my motto here.  Besides personally enriching, I think this time I really changed some lives with my table pounding DEMCO persuasion. We here all had allot of time with good insights to accumulate a substantial position last year & earlier this year, in this true winner.  DEMCO’s stock price has soared some 120% over the past 12 months plus some decent dividends on top.  All despite various brokers downplaying, even misreporting and/or totally ignoring this star.  Earlier this year I shared some of my DEMCO insights/research with various institutions and elite investor groups, most of them yawned.  Today they kick themselves for having missed it.  ETF’s may be all the vogue in the West and advocated by so called wealth advisors, but they by definition miss stocks like this star.  A recent edition of the Financial Times reports how ETF’s are growing leaps and bounds in popularity, but of course without mentioning their dire shortcomings.

"If you are standing upright, don't worry if your shadow is crooked."  Ancient Chinese Proverb.

I know that we as a group/members are the largest single NVDR investors’ in DEMCO. So an absolute killing was made on this one. :)  NVDR’s of course is the designation of Thai stocks foreigners most often invest here on the SET and surely some of our Thai members own a good portion as well.  Some of you have converted their NVDR shares into Foreign held shares which so give them the right to vote...  some have even taken physical delivery of their shares' certificates so not to be tempted to sell them out too soon.  I have just recently stated in our member lounge (an important tool here to share regular short comments by members and myself) that this core selection is still not expensive as I can see the company earning 1 Baht a share next year, which would mean its’ p/e ratio is only around 8, or too low in my view.  The company has very good earnings visibility for the next several years and no plans for any capital increase next year!  My earnings projection of 1 Baht per share should translate into a 0.40 Baht dividend and so yield 5% on the current price of 7.80.  This is around 1/3 above the SET average dividend yield.

DEMCO last stated it expects 6.4 Bill of revenues next year, so this should translate into around 400 mill. in net profit for 2013.  Add to this their expected 150 mill. in tax free dividends from the now near completed first major wind project and you come to a projected net profit of 550 mill Baht, 1 Baht a share.  The recently announced 5% hike in basic electric rates throughout Thailand only helps this company achieve my realistic projections. The stock price will fluctuate as all do but I can see a double digit price in 2013.  DEMCO just recently announced a restructuring to enhanced its focus on green energy.  In time due to trading volume, higher market cap and being in a desirable industry will only enhance its p/e rating.  None of my projections include any carbon credits which DEMCO one day should derive some additional financial benefits from.
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Markets are always liquidity driven which means SET bullish as there are huge global liquidity.  This in time will likely result in a bubble but we are far from there yet.

While I was a bit SET cautious a few weeks ago, I came back thinking the SET index should climb more as there are vast amounts of liquidity both here and around the world.  Global interest rates will stay low and for longer then even previously expected and this is good for stocks. Especially so our high dividend paying ones.  While there is always a possibility of a correction I so am SET upbeat/bullish.

SMT (10.90) was a turnaround stock I dared to favorably here mention which also of late had a nice recovery.  I think this can continue some and I remain SMT bullish as well evenwhile its a riskier choice. The company will tour its factories to signed-up investors on September 24 so to show its ready to come back in a big way.  Up to 100 seats will be booked through their Thai marketing officers (deadline Sept.19) for a visit in person to see their new factory and why it won't flood again.

PYLON (4.78) has returned as I sensed it would, this after advocating getting back in, post its price correction at mid year. I still favor their Warrants-1 as I think they are undervalued as compared to its stock price.  I plan to visit APURE and HYDRO later in October. APURE (2.04) I somewhat “pound the table on” as it should benefit from the Western drought and so rise in food commodities.  In the meantime hold on to your DEMCO remains my view, despite its substantial price surge already to us early birds.  I still rate DEMCO a buy.  Some of you have mentioned TRC as the next star, but here I have an elephant memory problem because this company disappointed me/us some in 2008 when what they projected just did not come to reality. In my view TRC in the past likes' to talk up its company's prospects.

Of late I was delighted to get at last a few new member referrals by some of you, which today shows yet again: membership here has for long proven to be an overall wise investment, besides if may say so, good education in how to go about realizing far better then ETF returns. 

Look forward next week to my updated model portfolio. The current one is ending this Sept 19.

Best Regards,
Paul A. Renaud.
www.thaistocks.com

PS. The 2 pictures are from Isles of Skye in Northern Scotland.  Later during this visit I spend some time in Edinburgh the largest city in that wonderfull & friendly country.