Advance SCT
On track for supernormal growth

Our latest visit to Advance SCT (ASCT) indicates that its transformation into an
integrated copper supply chain manager is well on track:

Copper smelter up and running. 80%-owned TTM Industries operate a copper
smelter with production capacity of 60,000MT/year in Port Klang, Malaysia. The
first furnace commenced production of 3mm and 8mm copper coil in Mar 07 and
capacity utilisation hit 80% in Jun 07. The second furnace will ramp up
production in Aug 07 and capacity utilisation is expected to reach 80% in Sep 07
due to experience gained from the first furnace.

Progress at the copper smelting plant was better than anticipated. Advance SCT
is already shipping copper coils to large multinational customers such as Mitsui,
Nanya and Chang Chun, who are major suppliers for copper foil used by the
PCB industry. The company has also secured Tai Sin Electric Cable as a new
customer. Management is confident that TTM Industries will be able to achieve
guaranteed net profit of S$8m for the 12-month period ending Mar 08.

TTM Industries was awarded pioneer status for five years. Subsidiary Tsing Yi
Enterprises was also awarded Global Traders Programme from IE Singapore,
which provides concessionary tax rate of 10% for offshore trading income.

Warrants provide leveraged play. Advance SCT has proposed a renounceable
rights issue of up to 79.3m warrants at issue price of S$0.08 on the basis of
three warrants for every ten existing shares. Each warrant can be converted to
one Advance SCT share at exercise price of S$0.87 within three years.
Proceeds from the exercise of warrants will be utilised for repayment of its
S$60m transferable loan facility.

Insider buying. Mr Seah Hock Thiam, Executive Director of Advance SCT and
founder of Green World Holdings, bought 450,000 shares on 7 Jun and another
500,000 shares on 11 Jun. This indicates that the management team has great
confidence in future prospects for Advance SCT.

Unique integrated business model. Advance SCT captures the full value chain
from recycling, smelting, refining and production of copper-based products. Its
business model is similar to Belgium-based Cumerio (mkt cap: 602.2m, FY07
PE: 12.5x). Cumerio sources copper from concentrates, anodes, scrap and
cathodes. It operates an integrated copper smelter and refinery in Bulgaria and
a refinery and copper product facility in Belgium.

We have raised our FY07 and FY08 net profit forecast by 5.6% and 28.2%
respectively due to strong demand for copper coils at TTM Industries. Reiterate
BUY with target price at S$1.50 based on FY08 PE of 12.5x.