Excerpts from analyst's report
RHB Research analyst: Jarick Seet
|ISOTeam has announced contract wins of SGD20.49m, comprising A&A and R&R works. The majority of jobs are from Singapore government bodies like town councils and the National Environment Agency.
We understand that c.SGD30m-35m of contracts have been utilised YTD and it is on track to enjoy a stellar FY16 (Jun). With a steady orderbook of c.SGD80m-85m on top of a potential expansion to Myanmar in December, maintain BUY and a SGD0.82 TP (41% upside).
» Bags SGD20.49m worth of contracts. ISOTeam has won a total of SGD20.49m worth of contracts, mainly from different Singapore government bodies like the National Environment Agency as well as town councils for various areas like East Coast, Ang Mo Kio and Nee Soon. The contracts include works for both its additions and alternations (A&A) and repair and redecorate (R&R) segments and will likely contribute positively to earnings in FY16.
ISOTeam has excelled in building up its orderbook especially with the general election confirmed in 2015. Its orderbook stands at an estimated SGD80m-85m, although about SGD30m-35m have been utilised in the first four months of FY16.
"These projects will progressively be realised over the next two years. We believe this provides good earnings visibility into 2016 and 2017, and is a reflection of the market’s belief in its proven track record." -- Jarick Seet (photo)
» Expanding into Myanmar by 2015. We understand that ISOTeam will be expanding into Myanmar with the help of its substantial shareholder and strategic partner, Nippon Paint, by the end of 2015.
Currently, ISOTeam is the exclusive applicator for painting works in the Housing Development Board (HDB) and town council sector for both SKK and Nippon Paint Singapore.
We think that there could be a high possibility of a similar arrangement overseas with Nippon Paint – which would be a key leap forward for ISOTeam’s expansion out of Singapore.
» Expect another stellar year. We expect another stellar FY16 ahead, coupled with more contract wins to come in the near future. With that, we maintain BUY on the stock with an unchanged DCF-backed TP of SGD0.82.
Full report here.