Excerpts from RHB report

Analyst: Jarick Seet

Business As Usual; Keep BUY
AnthonyKoh1.19CEO of ISOTeam Anthony Koh. NextInsight photo Keep BUY with a new DCF-based SGD0.24 TP from SGD0.31, 100% upside with 4% FY20F (Jun) yield.

The bulk of ISOTeam’s business is in Singapore.

We understand from the group that it is still business as usual, as projects like the Home Improvement Programme (HIP) are still ongoing.

However, with the prevailing market uncertainties, we increase our WACC assumption to 6% from 5.3%, resulting in the new TP.



ISOTeam
Share price: 
12.2 c
Target: 
24 c

We remain optimistic on ISOTeam, as we believe this is one of the few businesses that is more resilient and least impacted by the current macro environment.

At present, we understand the group has not been impacted much by the travel restrictions imposed in China and Malaysia. ISOTeam has also provided accommodation for Malaysian workers opting to stay here.

As for the handful of Chinese nationals that have returned, they are back to work upon the completion of their leave of absence.

Projects have to continue

JarickSeet3.18"The projects undertaken by the group have to continue, as they relate to residents’ living conditions. 

"We do note the possibility of a supply chain delay, given that some of ISOTeam’s shipments come from China.
However, as the COVID-19 situation there has improved significantly, and the shipments are back in operation, this may lead to a slower revenue recognition.
Apart from that, we believe there exists no reason for any business disruption.


-- Jarick Seet (photo)
analyst, RHB Research

♦ No change in the investment thesis. Our outlook for ISOTeam remains unchanged, as the group is one of the beneficiaries of Singapore’s upcoming general election.

While the date for the latter has not been set yet – depending on how the COVID-19 situation pans out – it will most likely be held this year, in our view.

The Government has rolled out several initiatives – eg HIP and the Neighbourhood Renewal Programme – which provides ISOTeam with an abundance of opportunities.

Coupled with a robust SGD133.3m orderbook, we maintain our earnings forecasts, barring any other unforeseen circumstances. In addition, there are profit guarantees of SGD3m and SGD5m from the Pure Group acquisition for FY20 and FY21.

Changes in market conditions. While we keep our forecasts unchanged, we raise our WACC assumption to 6% from 5.3% as a result of the higher equity risk premium.

As such, we lower our TP to SGD0.24, implying 8.7x FY20F P/E.

ISOTeam is trading at 0.6x price/NTA value, which may present a good opportunity to accumulate.

Key risks: An economic slowdown, lower margins, decreased contract wins, and business disruptions if COVID-19 worsens.

Full report here

You may also be interested in:


You have no rights to post comments

Counter NameLastChange
AEM Holdings2.380-0.050
Best World2.480-0.010
Boustead Singapore0.945-
Broadway Ind0.133-0.001
China Aviation Oil (S)0.915-0.010
China Sunsine0.400-0.005
ComfortDelGro1.460-0.010
Delfi Limited0.910-0.005
Food Empire1.320-0.010
Fortress Minerals0.310-0.010
Geo Energy Res0.3200.005
Hong Leong Finance2.480-0.010
Hongkong Land (USD)2.870-0.080
InnoTek0.500-0.020
ISDN Holdings0.295-0.005
ISOTeam0.039-0.001
IX Biopharma0.043-0.003
KSH Holdings0.250-
Leader Env0.048-0.001
Ley Choon0.042-0.002
Marco Polo Marine0.068-
Mermaid Maritime0.143-0.002
Nordic Group0.315-
Oxley Holdings0.088-0.001
REX International0.142-0.003
Riverstone0.780-0.025
Southern Alliance Mining0.475-0.010
Straco Corp.0.485-0.010
Sunpower Group0.210-0.005
The Trendlines0.074-
Totm Technologies0.021-0.003
Uni-Asia Group0.810-0.020
Wilmar Intl3.380-0.110
Yangzijiang Shipbldg1.8100.030
 

We have 886 guests and no members online

rss_2 NextInsight - Latest News