Demco off to a flyer on MAI debut
The stock of Demco, a turnkey service provider, yesterday successfully debuted as the final stock for this year with an 18-per-cent rise above the initial public offering (IPO) price of Bt3.05 per share.
Demco was traded on the Market for Alternative Investment (MAI) with an opening price of Bt3.18 per share, a rise of 4.26 per cent from the IPO price. The stock then rose continually to its peak of day trading at Bt4.04, or 32.45 per cent above the IPO price. Demco closed yesterday at Bt3.60 per share, up 18 per cent from the IPO price. Pradej Kitti-itsaranont, managing director of Demco, said yesterday that Demco's rising price was due to a rather cheap IPO price, which was a discount of around 30 per cent for investors. Demco's price-to-earnings ratio (P/E) is 5, compared with the overall P/E ratio on the MAI of 8. He said his company was likely to experience sales growth of 20 per cent next year from this year's sales of Bt1.05 billion and net profit of Bt85.54 million. The company has already signed contracts to realise profit of around Bt1.2 billion. The company expects to raise funds of around Bt152.5 million from the stock market and this would be used in the first quarter next year as Bt76.25 million for cash flow, and Bt53.38 million for debt repayment. The remaining Bt22.88 million would be used to invest in new machine tools in order to boost production capacity from 6,000 tonnes a year to 12,000. Udomsak Chakreyavanich, president of Asia Plus Securities, said yesterday that due to the discount of the Demco IPO price, the trading price on the first day rose above the IPO price. The company's performance has been one of continual growth. In the first nine months of this year, Demco's net profit was recorded at Bt85 million, while net profit for 2005 was Bt44.43 million. The growth potential of the company, Udomsak said, can be evaluated from its investment in government projects. The company's business depends largely on electricity projects of both the government and the private sector. Chanitr Charnchainarong, president of the MAI, said yesterday that Demco was the last company to be listed on the stock market this year. Next year, Ubis (Asia) would be the first company to list, at the end of January. He hopes more logistics firms will list following the success of Eternity Grand Logistics.
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