Coincidentally I received 2 queries over last few days on Advance SCT. I will write what I know and feel about this company even though I don't hold this counter currently.
I think the Company has been quite successful in transforming itself from a conventional pcb business to now an integrated cooper refinery. Together with the recycling plants and joint ventures etc, the integrated supply chain looks promising and is likely to spur for explosive growth going forward. The current low profit margin and ROE will only get better when all new businesses put together.
Many would say the main risk for this kind of cyclical business is the price of cooper. The exposure to a single commodity makes it vulnerable to price weakness.
I bid to differ:
1.) I believe the Company is fully aware of this risk and has spread its business by different countries such as China, US, Middle East, Vietnam and Europe. In addition, the Company has also involved in the alternative clean energy and exploring other new technologies.
2.) As they are more a recycling firm, they typically enjoy high margin by turning scraps into saleable cooper which fetch good value. The profit margin will not be as thin as pure commodity
traders.
Lastly, the 2 key personnel, Terence Tea and Mr Seah have good industry experience and they have been buying the Company's shares whenever we see significant price weakness. Many analysts have target price of about S$1.60 (more than double current price!). So the rest is up to you.
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