Electricity shortages looming. Pure Plays.
inadequate and perhaps less then reliable. We own the right stock to take advantage of this newly addressed serious concern.
an electric shortages this April and beyond when Burma services its gas pipeline and so
shuts it down for a few days. This has awoken the reality that the country has
an energy shortage, relies too much on lessor neighbors even while
Thai
electricity demand is increasing some 6-7% a year. This means that in 10-12 years Thailand's total
electric consumption will double. How
will it get there?
topic to our attention long before it hit the National newspapers of late. This debate has now reached the national
agenda and many are talking about ity.
"Clean coal" is a touted option and will likely feature
prominently. Natural gas is cleaner and
cheaper but Thailand is peaking out on this.
Clean coal is hardly as clean as its name implies.
DEMCO and GUNKUL are now viewed as pure plays to this presently topic very
much in the news. As I long and convincingly have written here for some time. I always liked DEMCO
better and did a comparison of the 2 about a year ago. Since the end of last February, DEMCO has well more then tripled in value vs.
GUNKUL which is up 55%, a huge difference.
Currently QTC and DEMCO are my prominent picks on this new growth
industry which more are discovering now to be fact. DEMCO’s 80% price increase since the start
of this year is in part because of the new Rojana mega 2 Bill. project announced and also
in good part because more investors are seeing here a company which will
benefit and lead in being part of the clean electric supply solution. DEMCO has over 150 experienced engineers (up
from 80 barely 2 years ago) which just put together on time and in full, SE Asia’s
biggest Wind energy project. Clearly
this company is now the new national expert and its market cap. is soaring which is attracting institutional
investors. Yesterday despite the SET
correction of 17 points, DEMCO still managed to go to a new all time high price,
on heavy volume. The momentum continues.
This morning QTC (6.75), just announced a 0.31 Baht dividend
which is higher then the expected 0.25 it hinted on a few weeks ago to me and to
the press at the time. This shows QTC is
confident of its earnings progression and future bright prospects. As of this writing I did not see its earnings
announcement yet which must be
imminent. IF you assume QTC a p/e of 15
this year at some point, you come to a price of 9.50. My earnings
per share estimate is 0.65 Baht for this year for QTC. So its still a buy in my view and despite its
nice price advance since I brought it up here with a maximum bullish view stated
in our lounge. There could also be some free warrants coming as well.
DEMCO (13.60) may climb still higher as long as its daily volume
levels hold up. We have very much been
the early bird on DEMCO and so I can’t blame some members to take some money
off the table now; the new valuation must be soaring as a percent of your
portfolio’s. But with a 1.05 Baht earnings per share now
nearly assured for this year (due to the massive new Rojana Solar project which
will be completed in a few months) we can here also reasonable expect a p/e of
15 (why not it’s a stable high growth industry) and so 14-15 Baht remains the
near target.
Note all how this is the first time
I mention a price target for DEMCO, obviously nobody knows. If
DEMCO teams up on some projects with GUNKUL or other major announcements more
can be in the making which means I would still keep some. Unlike the very few brokers whom cover DEMCO
in the past and to this date, I always refrained from mentioning any target price
as I knew one day it would surprise us all. Presently is that day.
Best Regards,
Paul,
