DEMCO goes for 3.05 baht a share; IPO set on December 4th and 6th
Pay 40% dividends on strong earnings and bright business prospect Demco Plc. sets to offer its IPO share at baht 3.05 each during the booking period on December 4th and 6th. Asia Plus Plc., its financial advisor expects a fifty-million shares sell-out because of Company’s strong fundamental.
Demco shares, sold at 5.62 times P/E; comes with a 36% discount, when compared with MAI’s average P/E of 8.76 times. (based on data on November 27th, 2006)
Ms. Praphee Puipunthavong, Chief Executive Officer of Demco Public Co., Ltd., a leading Electrical Engineering and Telecom System Provider, said during its Underwriter’s Appointment Ceremony that the company would offer 50 million IPO shares for both institutional and retail investors at baht 3.05 each. The IPO period is set on December 4th and 6th with a first trading day set in middle of December. “We are confident that we receive positive feedback from the investment community as it has consistently achieved strong financial results. The company generated a baht 86 million profit for this year first 9 months, a 56% jump over the result in same period last year. Furthermore, the combined investment value of Electrical Engineering projects by the Government’s Electric Generating Authorities will reach baht 40,000 million per year.” Ms. Praphee said. Meanwhile, Mr. Pradej Kitti-itsaranon, Demco’s Managing Director revealed further that the company would use the fund received from the IPO for additional working capital as business continued to expand. Part of the fund would also be used to repay its already-low short-term debts. “We achieved an 8% net profit ration in the first 9 months this year, compared with a 5% ratio in this period last year, which we earned baht 55 million. This resulted from an increase in sales of steel structures, an increase in project works in private sector which have higher yield and the company’s improved capability in cost management.” Ms. Praphee explained. Mr. Pradej Kitti-itsaranon, Demco’s Managing Director revealed further that the company generated 795 million baht or 76% of total revenues from Electrical Engineering and achieved 235 million baht or 22%, from sales revenues, derived mainly from the Telecommunications steel structure. “We will offer our 50 million IPO shares to investors and start trading in the MAI market in early December. The fund raised will be used for expanding our manufacturing capacity and improving the production efficiency. In addition, we will repay our debts and expand our working capital.” “We focus on providing turn-key Electrical Engineering projects such as constructing a High-Voltage 230-KV Electric Transmission Network, building a Substation, low-voltage electric network, installing Mechanical & Engineering system and telecom poles. In addition, it also manufactures Steel structures for mobile phone operators. Both Electricity and Telecom markets are expanding to cope with increased consumer demands.” Added Mr. Pradej. Mr. Udomsak Chakeyavanich, the Managing Director of Asia Plus Securities Plc., said that DEMCO appointed the company as a Lead Underwriter and appointed Bualaung Securities Plc., Thanachart Securities Plc. and IV Global Securities Plc. as the Co-Lead Underwriters in selling its 50 million shares. The company believed DEMCO shares would be well-received in the market as it had strong business fundamental and operated in a growing Electrical Engineering business. Its IPO price of baht 3.05 per share showed a P/E of 5.62 time; offering a 36% discount when compared with the average MAI’s stocks traded at 8.76 times P/E. (based on information on November 27th, 2006). Of its 50 million shares, 38 million shares would be offered to retail investors, 10 million shares to Institutional Investors and 2 million shares to company sponsors. Demco Public Company Limited was founded on June 1st, 1992 by a group of senior electrical engineers from the Provincial Electrical Authority and the Electricity Generating Authorities of Thailand, led by Pradej Kitti-itsaranon. With its successful 14- year experiences, the company can provide One-stop Full-scale Electrical Engineering and Telecommunications services to both large Public Electricity Operators and large private firms in Electricity, Energy and Telecommunications Industries.