ADVANCE SCT: New businesses boost earnings
Labels:
Advance SCT
Broker House: DMG & Partners
Analyst: Lynette Tan
Price: $1.08
Target : $1.60 (12 Mth)
Analyst: Lynette Tan
Price: $1.08
Target : $1.60 (12 Mth)
Recommendation: BUY
Upside: 48.15%
Summary:
Advance SCT recorded net profit of S$7.0m in 1H07, up from S$1.9m in the earlier corresponding period. This was largely boosted by contributions from its new businesses. The 1st furnace of its smelter plant started operations towards end 1H07 and its 2nd furnace is expected to commence production in August 2007. This would further boost FY07 earnings. The construction of its copper refinery is on track and completion is expected in end 2007. Partial contribution from the refinery can be expected from FY08. Maintain BUY with a 12-month target price of S$1.60.
1H07 net profit surges 279%. The results were in line with our expectations. Strong customer demand and contributions from new businesses (recycling business and smelter plant) drove revenue growth of 152% YoY to S$204.8m. For the corresponding period in 2006, only 1 month of its recycling operations was consolidated. The 1st furnace of its copper smelter plant started trial operations in March 2007 (commercial production in May 2007), and contributed S$2.0m to 1H07 profit after tax. With this initial contribution from the smelter, 1H07 net profit jumped 279% YoY to S$7.0m.
Smelter to be fully operational by 4Q07. With its 1st furnace in full production, Advance SCT targets to commence trial production of its 2nd furnace in August 2007. Both furnaces are expected to be in full production by 4Q07, bringing Advance SCT’s smelting capacity to 60,000 MT per year. This is expected to contribute significantly to its 2H07 earnings, and boost the Group’s FY07 earnings.
Refinery plant on track. Construction of its copper refinery plant is progressing on track. Completion is expected in end 2007 and management intends to progressively commence production from early 2008. The refinery can be expected to go into full production by 2009.
Valuation and recommendation. Although net gearing for 1H07 is high as the Group borrowings to fund the working capital needed for the initial stages of its smelter operations. This is expected to fall as its smelter moves into full production. Maiden full year contribution from the smelter plant and initial contribution from the refinery plant are expected to boost FY08 earnings significantly. We estimate earnings of S$21.1m for FY07 (EPS: 8.5 cents) and S$33.6m for FY08 (EPS: 12.4 cents). Maintain BUY for a 12-month price target of S$1.60 or 13x FY08 earnings.
Upside: 48.15%
Summary:
Advance SCT recorded net profit of S$7.0m in 1H07, up from S$1.9m in the earlier corresponding period. This was largely boosted by contributions from its new businesses. The 1st furnace of its smelter plant started operations towards end 1H07 and its 2nd furnace is expected to commence production in August 2007. This would further boost FY07 earnings. The construction of its copper refinery is on track and completion is expected in end 2007. Partial contribution from the refinery can be expected from FY08. Maintain BUY with a 12-month target price of S$1.60.
1H07 net profit surges 279%. The results were in line with our expectations. Strong customer demand and contributions from new businesses (recycling business and smelter plant) drove revenue growth of 152% YoY to S$204.8m. For the corresponding period in 2006, only 1 month of its recycling operations was consolidated. The 1st furnace of its copper smelter plant started trial operations in March 2007 (commercial production in May 2007), and contributed S$2.0m to 1H07 profit after tax. With this initial contribution from the smelter, 1H07 net profit jumped 279% YoY to S$7.0m.
Smelter to be fully operational by 4Q07. With its 1st furnace in full production, Advance SCT targets to commence trial production of its 2nd furnace in August 2007. Both furnaces are expected to be in full production by 4Q07, bringing Advance SCT’s smelting capacity to 60,000 MT per year. This is expected to contribute significantly to its 2H07 earnings, and boost the Group’s FY07 earnings.
Refinery plant on track. Construction of its copper refinery plant is progressing on track. Completion is expected in end 2007 and management intends to progressively commence production from early 2008. The refinery can be expected to go into full production by 2009.
Valuation and recommendation. Although net gearing for 1H07 is high as the Group borrowings to fund the working capital needed for the initial stages of its smelter operations. This is expected to fall as its smelter moves into full production. Maiden full year contribution from the smelter plant and initial contribution from the refinery plant are expected to boost FY08 earnings significantly. We estimate earnings of S$21.1m for FY07 (EPS: 8.5 cents) and S$33.6m for FY08 (EPS: 12.4 cents). Maintain BUY for a 12-month price target of S$1.60 or 13x FY08 earnings.
Subscribe to:
Post Comments (Atom)
Post a Comment