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  1. #1
    ? steve fleming's Avatar
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    Default SOLCO Ltd ("SOO") sustainable energy co

    Does anyone have any thoughts on SOLCO Ltd ("SOO")??

    just reported 2Q06 positive operating cashflow of $300K on cash receipts for quarter of $5mil.

    sustainable energy and water company:

    - solar power systems
    - water purification systems
    - solar hot water systems
    - solar pumping systems

    -operates internationally through a licensee-type set-up where SOO sells rights to manufacture their products to international associates often retaining a free-carried interest in the associate

    -Hundreds of distributors Australia-wide, including their wholly owned Choice Electric, one of Australia’s largest and most respected distributors of solar powered solutions

    -revenue growth of 330 % in FY05

    -in November forecast revenue growth of 62 % in FY06 to $16 million

    -in December forecast on track to record maiden profit in FY06 on turnover of $18 million (admittedly maiden profit unlikely to be significant)

    -expects over the next year to make up to three substantial acquisitions to take turnover to the $50 million to $80 million range
    (looking at acquisitions in Australia with products that reduce household water and power bills)

    -budgeting for organic revenue growth of 50 % per annum to FY10 through expanded distribution, new products and technology sales

    -managing director Duncan Stone states "We believe our renewable energy power and water solutions are futuristic products. They’re cheap to produce and operate cleanly in a world in which the cost of energy and intolerance of pollution are ever increasing. I believe we’re set for long term growth over at least a ten year period based on market demand for decentralised, sustainable energy and water solutions. This fundamental market shift is complimented by external drivers such as the rocketing oil price, Kyoto protocol, and supportive government legislation for our products worldwide"

    -check out credentials of MD, Duncan Stone - " graduate of Australia’s elite leadership school the Royal Military College Duntroon where he completed an honors degree in civil engineering from the University of New South Wales. Duncan became the Australian Army’s lead design engineer completing a number of large international construction projects in the South Pacific as part of the federal Governments AIDAB program"

    -outsourcing the manufacture of some of the components of their hot water systems reducing overhead costs by $600,000

    -The World Bank has allocated substantial funds to locations such as Madagascar and the Congo, where SOO already have trial systems operating.

    -recently employed a water engineer who will be exploiting further opportunities in Africa

    -highly rated by both David Haselhurst (Bulletin) & Peter Strachan (Stock Analysis)

    www.solco.com.au/investors/announcements

    - recipient of federal government development grants

    - water purification will become a major contributor to growth - strategy is to find a substantial global water company which has difficulty accessing remote areas, such as Coca Cola or Vivendi, to roll out this business model in partnership with Solco

    - good relationships with Country Energy/ Ergon/Energy/Telstra etc

    -delivered PV systems to Queensland state schools on behalf of the Queensland Government,

    - good relationship with Triodos Bank : - World’s most respected Ethical Debt Provider who financed Maldives water trial

    -Major intl leading global ethical fund Henderson Global Investors - Sustainable Responsible Fund (SRI) as cornerstone shareholder with about 10% ( who bought in at 30 cents); number of other ethical/environmental type fund shareholders including AMP Sustainable Development Fund

    -Market cap at approx $15mil may seem on the high side given lack of profit to date, but given expansion potential, cap seems appropriate

    -note that Henderson Global Investors (major shareholder) believe Solco has the potential to be a billion dollar business of the future

    -Shares at 12 - 18 month lows, however recent acquisitions/developments/news have put the company i
    Share prices follow earnings....buy EPS growth!!



  2. #2
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    Wasn't this Solar Energy Systems (SES) before?
    Respect
    TOMMY

    Disclosure: trading in and out of many stocks, too many to update the list at the moment...

    DO NOT TRUST ANYTHING I SAY OR IMPLY... USE YOUR OWN BRAIN AND RESEARCH BEFORE MAKING ANY INVESTMENT DECISIONS.

  3. #3
    ? steve fleming's Avatar
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    Hi Tommy....yep...name changed in Decmeber 2004

  4. #4
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    quote:Originally posted by steve fleming

    Hi Tommy....yep...name changed in Decmeber 2004
    Hi Steve,

    Thanks, this was on my watchlist a long time ago but never bought any, then the ASX code "SES" on my watchlist was treated as "invalid"... the name change explains it all!

    Will dig into SOO again and see what is better this time...
    Respect
    TOMMY

    Disclosure: trading in and out of many stocks, too many to update the list at the moment...

    DO NOT TRUST ANYTHING I SAY OR IMPLY... USE YOUR OWN BRAIN AND RESEARCH BEFORE MAKING ANY INVESTMENT DECISIONS.

  5. #5
    ? steve fleming's Avatar
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    Default

    quote:Originally posted by tommy

    quote:Originally posted by steve fleming

    Hi Tommy....yep...name changed in Decmeber 2004
    Hi Steve,

    Thanks, this was on my watchlist a long time ago but never bought any, then the ASX code "SES" on my watchlist was treated as "invalid"... the name change explains it all!

    Will dig into SOO again and see what is better this time...
    Tommy, hopefully your "digging" will find that the prospects of SOO have improved significantly since it was SES!!!


  6. #6
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    Sold out around 30c mark. Despite good story graph is not a good look. SF you have stirred my interest again and will keep a watch.

    cheers

  7. #7
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    Looks interesting. Like this bit from the investor briefing...

    In the short term weÕre looking at acquisitions in Australia with products that reduce household water and power bills. We expect over the next six to 12 months to make up to three substantial acquisitions to take our turnover to the $50 million to $80 million range.

    Considering they had total revenue in 2004 of $10m and were forecasting $16m for 2005 (might be on track to beat that with first half sales of $9.6m).

    However, like many renewable energy type companies, the profit margins are going to be the crunch point. I value them at about 28 - 33cps, but with the risk attached and significant profits probably not till 2008, plus unknown capital requirements to support expansion plans, my call would be to just put them on the watch list for a bit longer.

  8. #8
    ? steve fleming's Avatar
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    Hi Foodee & Lizard

    Yep, Solco certainly sounds like a good story, but the market obviously thinks otherwise!!!

    IMO, Solco, having just reported record positive operating cashflow of $300K on cash receipts for quarter of $5mil, is in its strongest financial position for a long time...however the SP reacts by touching its yearly low!!!

  9. #9
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    Wow, the price came down quick on these. Chances of them being a good buy at these prices have improved a little, but still premature.

    Interesting announcement today - good to see the ASX querying something that was told to an individual shareholder... now if only they did that with all "the company told me..." titbits posted on forums!

  10. #10
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    I was surprised by the question and announcement. I thought the question would be to do with reasons for the falling share price and perhaps the directors incompetance at wasting their annual share purchase plan chance by not linking the application price to the market.

    Disclosure hold and never received the spp application anyway. Might top up on market, but this does not directly help the company.

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