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Advance SCT a Potential Turnaround Play?
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underdog2006
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02-Mar-2011 00:52
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IF THIS ARE NOT SIGNS OF A SIGNIFICANT TURN-AROUND, I AM NOT SURE WHAT WILL BE. EXCITING TIMES AHEAD! Advance SCT turns around with S$6 million in net profit for FY2010 and a much healthier balance sheet Singapore, 1 March 2011 Mainboard‐ listed Advance SCT Ltd (the Company) released its full‐ year results for financial year 2010 today. The Company has turned around from a loss of S$43 million in 2009 to a gain of S$6 million in 2010. The Company has revealed that given limited working capital, it has moved away from the low‐ margin business of trading in LME‐ warehoused copper cathodes into the more sophisticated business of demolishing derelict or abandoned factories. This has resulted in a smaller than expected increase in revenue but a significant jump in gross profit. According to Simon Eng, Chairman and CEO of the Company, better cost control, increased productivity and improved risk management have also contributed towards the higher profit margin. The Balance Sheet of the Company has improved significantly as well. The Net Tangible Liabilities has been reduced from $62 million to $13 million and the Company has now a positive Net Current Assets of more than $9 million. According to Simon Eng, the Company will achieve positive NTA within the first half of 2011. Earning Per Share (EPS) stands at 1.45 cents as at 31 December 2010, a reversal from a negative EPS of 13.2 cents for the year ending 31 December 2009. Total borrowings have reduced from more than $71 million in 2009 to less than $33 million in 2010, with only $37,000 repayable within one year. With the easing of repayment obligations granted to the Company by its creditors, the Company is in a good position to improve its performance further. Having acquired technical expertise and respectable track records in the demolition business, the Company intends to develop this area of business as a core activity in its recycling division. Besides a stronghold in Singapore, the Company has established a foothold in the United States of America and is exploring more opportunities in other developed economies. According to Simon Eng, there are also exciting developments in the Company’s smelting and refining division. Current efforts to resume the manufacturing of aluminium and copper products in Malaysia and China will likely yield positive outcome in the second half of 2011. |
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underdog2006
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02-Mar-2011 00:26
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EXCELLENT TURNAROUND! I was expecting at best a profit of $2-2.5mn for FY 2010 at best but to my great surprise, they have delivered a full year profit stream of $5.9mn of which $5.7mn came from continuing operations. The EPS comes up to 1.4 cents for continuing operations. Assuming a very modest PE ratio of 6.5 x, this will take value the company at over 9 cents per share. I am so excited for this company!!! |
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underdog2006
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13-Feb-2011 15:58
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I was reading page 27 of the Sunday Times today and came across the article " In Search of the Next Great Stock" . In it was mentioned that IBISWorld, a market researcher in long-range forecasting has tipped recycling facilities as one of nine industries to grow most quickly between now and 2019. The article had talked about multi-bagger stocks and I certainly look forward to Advance SCT being one in the next 1-2 years ahead! |
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underdog2006
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09-Feb-2011 20:25
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Copper prices are going through the roof and this bodes extremely well for a copper / metals play like Advance SCT. Better still they are expected to stay high and move further upwards in the near to mid term. Copper touched a fresh all-time high on Monday, Feb 7 consolidating its gains above $10,000 a tonne as expectations of a renewed wave of Chinese buying fuelled investor bullishness. Analysts and traders remain confident that copper prices will surge higher at some point during the year, on the back of an expected supply shortfall in excess of 500,000 tonnes – more than the total quantity of metal held in London Metal Exchange warehouses. Based on past years, the earnings release for FY10 should happen between the middle and latter part of Feb which could be anytime now. This should also be a key contributing factor to the strong share accumulation on anticipation of a strong performance for 2010 as the company continues to turn-around On its fair value, this is the way I see things. The company had attained a net income of $800k in 1H 2010 from a revenue stream of $17.3m. This translates into a net profit margin of 4.6% when copper prices. With the very significant run-up in copper prices, it would not be unreasonable to forecast net margins of 5% for 2011. The company had recently secured a sole supplier contract which will add I believe an additional $150mn in revenue in 2011 bringing the revenue forecast for FY2011 to at least $180mn before accounting for its new water business in China. Assuming a net margin of 5%, this will give a profit stream of ~ $9m. I estimate the total number of common shares to be around 800mn after its successful creditors' scheme (to clean up the balance sheet). In this case we should expect approximately 1.125 cents earnings per share. Advance SCT being a commodity and water play should be trading at PE of 8-10 x earnings per share. This will place the counter at 9-11.5 cents. The upcoming earnings release will be critical and if continues to do well following its 1H 2010 results, this should further validate its turnaround story and provide the catalyst for it to appreciate significantly from current prices. To further put things in persepctive, I note that in FY2008 when the company had net liabilities of $68.5mn and EPS loss of 25.4 cents, the share had traded largely in the 5-6.5 cents range post the earnings release back in Feb 2009 then. The current share price of 5-6 cents is not significantly above this range even though the company has been completely overhauled, its balance sheet cleaned up and it now making real money. So there is indeed good upside moving forward if its turnaround gets validated with increasingly enhanced financial performance. |
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bsiong
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06-Jan-2011 09:17
Yells: "The Greatest Wealth is Health" |
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Advance SCT Ltd (the "Company", and together with its subsidiaries, the "Group") refers to the Company's earlier announcements dated 20 December 2010 and 5 January 2011, relating to the hearing date for application for the approval of the schemes of arrangement of the Company and Tsing Yi. The Company wishes to announce that the Applications were heard on 5 January 2011 and the Court has ordered that the proposed schemes of arrangement dated 15 September 2010 be approved with modifications. The Company will be taking the necessary steps for the implementation of the schemes of arrangement, including without limitation obtaining the approval of the shareholders of the Company at an extraordinary general meeting to be convened for the issue of redeemable convertible notes and the shares arising from the conversion or redemption of the convertible notes or payment of interest thereon, including the issue of the redeemable convertible notes to restricted placees as set out in Rule 812 of the Listing Manual of the SGX-ST and the conversion price being at a discount of more than 10% in applicable circumstances as set out in the schemes of arrangement. |
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FearValueGreed
Master |
05-Jan-2011 01:22
Yells: "Long Term Timing X Capital = Well Deserved Payout" |
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let itdrop to 4.5 cents then buy dun worry this one will not fly to sky yet] need some time to start turbo engine. But this crap I bought it at $1 in his heyday. lucky sold at its peak. So got 20 time upside if you believe the turn around, But I think 20cents more likely |
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underdog2006
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04-Jan-2011 23:49
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A brief profile of Qingyuan Shengli Copper Material, Advance SCT's most recently announced customer win involving an exclusive sole supplier contract worth $150mn / year. A promising Chinese copper manufacturing player. Profile of Qingyuan Shengli Copper Material 广东省清远市胜利铜材有限公司成立于1992年（前身为清远市胜利有色金属材 有限公司），是生产经营Φ0.11mm----Φ8mm各种规格型号电工裸圆铜线、镀锡线、电解铜、及无氧铜杆的专业厂家。 公司座落于清远市清城区石角镇循环经济产业园，占地面积106500㎡，其中：生产厂区89378㎡，办公、生活区6300㎡，绿化面积3800㎡，预留发展用地7022 ㎡。 公司现有员工230人，其中高、中级工程技术人员38人。现有固定资产总值8000万元。公司于2005年投入2980万元对主要生产设备进行技术改造，拥有国内最先进的连铸连轧机，年达产5万吨。 清远市胜利铜材有限公司是民营企业、中国再生资源回收利用协会会员单位、清远市重点扶持民营企业、清城区民营企业纳税大户、清城区骨干民营企业、清城区“优秀民营”企业，荣获广东省私营企业“光彩之星”、广东省“青年文明号”荣誉称号、荣获广东省科学技术厅“高新技术企业”、广东省工商行政管理协会“诚信服务、守法经营”企业荣誉证书等。 |
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underdog2006
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03-Jan-2011 09:49
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From CIMB Trading Desk Today: Advance SCT has secured a sole and exclusive contract to supply at least 1,000 metric tonnes a month of first grade copper scraps to Qingyuan Shengli Copper Material Co Ltd (Shengli). Advance SCT said that at current copper prices, the contract could potentially add more than S$150m (US$116m) to its revenue in 2011. This figure is almost 3.5x of its FY09 revenue (S$43.4m) and 8.7x of its 1HFY10’s turnover (S$17.3m). The news could attract positive trading interest for its shares. |
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underdog2006
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01-Jan-2011 02:14
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This news release by Advance SCT earlier today could be the catalyst to get it off to a great 2011! This is precisely the kind of anchor customer it needs to grant it an exclusive contract that will keep its pipeline full for the foreseeable future. This is a massive contract win, no doubt about it; the kind of strategic deal / alliance that will provide the company its springboard for growth. I plan to do a more detailed analysis of the company's financials over the holiday weekend but a quick and simple calculation presents an extremely exciting share appreciation story for 2011. Post its operational stability attained in 1H 2010, the company had reaslized a net profit margin of 4.6% based on a net income of about $800k derived from a revenue stream of $17.3mn. On the back of this sole supplier contract which will likely add an additional $150mn in revenue in 2011, the revenue forecast for FY2011 should approximate $180mn. Further assuming a net margin of 4%, this will give a profit pool of ~ $7.2m or 0.02 cents earnings per share based on outstanding common shares of 368m. Commodity and water plays are all trading at PEs in the teens. Assuming a modest PE of 6-8 x earnings per share, Advance SCT could be trading at 12-16 cents as its prospects continue to improve into the new year. This turnaround may just happen sooner than I had expected! |
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underdog2006
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01-Jan-2011 02:12
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Advance SCT secured sole supply contract in China and restarted aluminium smelter in Malaysia Singapore, 31 December 2010 Mainboard listed Advance SCT Ltd (the Company) announced today that it has secured a sole and exclusive contract to supply at least 1,000 metric tonnes a month of first grade copper scraps to Qingyuan Shengli Copper Material Co Ltd (“Shengli”). At today’s price of copper, the contract could potentially add more than S$150 million to the Company’s revenue in 2011. The Company started supplying copper scraps to Shengli since August this year. According to Mr Simon Eng, Chairman and CEO of the Company, Shengli has been impressed by what they have seen in the new relationship with the Company, in particular its ability to source internationally. On the other hand, the contract with the Company takes away the uncertainty of raw material supply, thereby freeing Shengli’s management to focus on expanding its current production capacity of 1000 metric tonnes of copper wires a month. Mr Eng revealed that the Company is exploring other areas of cooperation with Shengli, riding on the latter’s infrastructure in Qingyuan, Guangdong province, and excellent reputation. The Company has also restarted its aluminium smelting plant in Malaysia this month, through a wholly‐owned subsidiary Advance SCT (Malaysia) Sdn Bhd. The smelter will produce 200 to 400 tonnes of aluminium ingots a month in 2011. |
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underdog2006
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30-Oct-2010 00:50
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Advance SCT is extensively profiled in this weekend's The Edge magazine where Simon Eng the CEO had clearly shared his strategy for repositioning and resturcturing the business for growth. The company's restructuring will be completed by the end of this year (and so I expect more news to be forth coming) in the coming weeks / months. He also shared about the company's ventures into water treatment in the China markets. Advance SCT's recently acquired 3 water treatment plants in China are licensed to operate until 2037. 2 of the plants have a combined minimum guaranteed net cash flow of RMB 5.7mn per year. The company will have a recurring stream of income from the 3 operating treatment plants no 30 year Build Operate and Transfer (BOT) projects with municipal and local governments. The acquiisiton of these profitable plants by Advance SCT is indirectly a back door listing onto SGX. Simon Eng is highly connected in China. He was previously President of United Engineers Group's China business between 2004 and 2007, focusing on the power generation and environment engineering sectors before venturing into the China water treatment plant sectors. Simon was also a Public Service Commission overseas scholar and was with the Civil Service - including being a senior officer at the Ministry of Defence and as a diplomat at the United Nations in NY. He had only come onboard as CEO of Advance SCT in Mar last year and clearly is already taking progressive steps at turning this company around. Again I can serious see this company turning around and the fact that The Edge is even taking 2-3 pages to profile this company is a very good sign. My only regret is not acquiring more of its shares at 3.5 cents. This could be a multi-bagger I believe. |
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underdog2006
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14-Oct-2010 01:01
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Options were issued to senior management at 5 cents exercise price. This bodes well for the management's confidence in the company and I think the share price could head higher from this level. The stock is fast accumulating and should see more upside as the broad market catches on. The next catalyst should come in terms of an analyst coverage or new business wins / strategic tie-ups in the key markets (e.g. China, Malaysia) the company wants to play in. The water and wastage treatment play is really very interesting!!! |
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carsem
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13-Oct-2010 17:21
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I have strong feeling on this counter and this counter should reach 10 cents at the end of the 2010..... Good luck for those vested this share..... |
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underdog2006
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07-Sep-2009 18:46
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In view of its on-going re-structuring efforts leading to some degree of operational stability, securing of bridging loans for financing and the rapid climb in copper prices (from slightly above US$1/ pound in Dec 2008 to now close to US$2.8/pound). The latter reason alone is interesting as a consideration. |
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upforever
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05-Sep-2009 13:15
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Advance SCT is badly hit by the demand of copper products. Watch out demand for copper products, when it arises, this company will fly. |
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underdog2006
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04-Sep-2009 22:41
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Hi all, I have been observing Advance SCT for the past couple of months, slowly understanding the business it is in to gain an appreciation of its plans and prospects. Clearly, this company has struggled greatly over the past 1-2 years and the macro environment has not helped it either. Nevertheless, I am starting to gain a view that this could be a solid turnaround play in the year ahead as the economic conditions improve. Would appreciate it if those vested could shed their views on the potential or risk of investing in the company. Thanks! |
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