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ISOTeam in a nutshell:
4) Good track record for more than 18 years. This is its trump card, which has enabled ISOTeam to win tenders occasionally even when its bid was not the lowest. |
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While R&R and A&A will continue to be its core businesses, ISOTeam is venturing into complementary areas which have the potential for aiding its growth. We gather the following from a briefing that ISOTeam's general manager, Richard Chan, gave recently to investors:
1. TMG Projects: It was acquired in Jan 2016. An established commercial A&A and architectural fitting out services provider for more than 20 years, it mainly executes asset enhancement jobs at shopping malls, hospitals, schools, car showrooms and factories.
Some of its ongoing and completed projects include the Aston Martin, Bentley and Jaguar car showrooms, Oasia Hotel and Cogent Holding Building.
| ♦ ISOTeam JV in Myanmar |
 "Our strategic partner and substantial shareholder, Nippon Paint, has informed us about its impending expansion plans in Myanmar with sizable capital investment to increase its market share and production facilities there. ISOTeam's strategy is to replicate its local business model to overseas markets." -- Richard Chan (photo), GM of ISOTeam. |
2. Myanmar foray: ISOTeam’s first overseas subsidiary, ISOTeam (TMS) Myanmar, was formed in April 2016 as a JV with Nippon Paint Singapore.
This 90%-owned subsidiary provides painting services to new property developments and old buildings in Yangon.
"It will be looking to capture a big market share in its service offerings riding on the development wave in Myanmar. We are currently looking to secure several painting jobs from sizable projects in the near term," said Mr Chan. "We also plan to relocate part of our access equipment fleet to Yangon to procure machinery rental business."
3. Installation for renewable energy projects: Singapore targets to have 350 MWp of solar power 2020. The country's second phase of tenders will be launched in July/August.
Given ISOTeam's vast experience in projects involving "live" buildings (which are populated), ISOTeam is well positioned as a preferred installer.
In February 2016, ISOTeam clinched a $1.8-million installation project for solar panels on HDB roof-tops. "We expect to secure larger projects for solar panel installation," said Mr Chan.
ISOTeam expects to secure other forms of renewable energy projects such as the installation of hydrogen fuel cells as back-up power generators for HDB lifts, which potentially can be an islandwide exercise.
The hydrogen fuel cells, which have exceedingly long lifespans, are expected to replace the existing lithium generators which have lifespans of only four to six years.
4. Untapped sectors: Opportunities continue to abound for ISOTeam in Singapore. Build-To-Order HDB flats have been launched at historically high rates. And the stock of buildings in the country continues to expand, which offers recurring business potential for players like ISOTeam.
| Stock price | 30 cents |
| 52-week range | 24.3 – 32.5 cents |
| PE (ttm) | 10.1 |
| Market cap | S$85.4 million |
| Shares outstanding | 284.7 million |
| Dividend yield (ttm) | 1.92% |
| Year-to-date return | 4.76% |
| Source: Bloomberg |
On top of that, it plans to expand its service offerings into untapped sectors such as education institutions, MOE, army camps and JTC facilities. Then there are further inroads to be made into private estate MCST (management corporation strata tile) and industrial/commercial projects.
Aside from R&R and A&A services, ISOTeam, through its four acquisitions in 2015, has added capabilities in interior fitting out works, specialist landscaping services, specialist coating services and access services.
Having such a wide range of services bolsters ISOTeam's competitiveness in tendering for some projects because competitors may have to seek third parties as partners.
5. Handyman service: ISOTeam launched its handyman service in August 2015, offering home maintenance services. It is developing a mobile app to complement its Internet portal.
"We hope to see exponential growth for this handyman service after the launch of the app," said Mr Chan.
"Our strong network with all the town councils and municipals in Singapore puts us in a strong position to capitalize on growing demand for home maintenance services."
| An investor asked how ISOTeam, as a contractor, has managed to make decent profits all these years. The question is relevant as under intense competition, contractors, even the big ones, do not earn much. ISOTeam is different because renovation or upgrading projects have to be completed within the agreed deadlines, lest the affected home occupiers' livelihood and welfare are impacted. ISOTeam has a good track record in this area -- it has not had to pay liquidated damages all these years (according to management), and having won contracts not always on price (as it has some credits with BCA for good past performance). ISOTeam must have good site managers to ensure projects are carried out in a timely manner and within budget. |
