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ISOTeam shines in stock market

BullionStar

On 5 August 2016, ISOTeam announced that it has clinched 13 new private and public sector contracts worth $20.11 million. The listed company is a specialist in the eco-conscious Repairs and Redecoration (“R&R”), Addition and Alteration (“A&A”) and complementary niche services.

ISOTeam contracts

This is a winning streak for ISOTeam as the company has a reputation for securing contracts because of its excellent track record in project delivery and early adopter of green technologies for its projects. As Singapore drives environmental sustainability in the building and construction industry, companies like ISOTeam will continue to thrive and grow.

ISOTeam has also started to build new capabilities in the renewable energy sector. In early 2016, it has installed Grid-Tied Solar Photovoltaic Systems on roofs of 33 blocks at Tampines estate worth approximately $1.8 million. Recently, it has won a $0.20 million contract to install Emergency Fuel Cell Operating Power Systems as back-up power generators for lifts of a number of HDB blocks at Punggol. Wealth builders should note this green initiative because it is likely that this may be implemented in more public housing in Singapore, indicating a potential huge untapped market to penetrate.

ISOTeam shares

Of course, Singapore market is too small and is saturated with many players. Thus, ISOTeam has no choice but to pursue more business opportunities in overseas markets. To this end, it has bagged its first project in Myanmar worth $0.11 million – a painting project for the Yangon City Development Committee Staff Housing. This is a significant milestone and came on the heels of a joint venture with Nippon Paint (Singapore) Company Private Limited (“NPS”). Under the partnership, ISOTeam will be the preferred contractor for painting services in Myanmar, while NPS will supply the paint for the projects they undertake.

The Myanmar project will certainly pave the way and open more doors for ISOTeam to penetrate this emerging market. With Nippon Paint, ISOTeam has a strong partner and it will help the company to enhance its market share.

ISOTeam share price

Although not vested in this counter, I continue to like ISOTeam shares because of its upside potential. Before its announcement on winning these projects, the share price was trading at $0.31 in July 2016. Then following the announcement, the share price surged to $0.40. Given that the Group has also clinched a slew of other projects, ISOTeam shares is likely to continue to do well. According to ISOTeam, these contracts are expected to have a positive impact on the earnings per share and net tangible assets per share of the Group for the current financial year ending 30 June 2017.

Details of the projects secured are as follows:

Type Project No. of Blocks Customer Value ($’m) Expected Completion
A&A A&A works @ Hard Rock Hotel NA Resorts World at Sentosa Pte. Ltd. 1.86 Aug 2016
ID Interior design works NA Individual homeowners 0.11 Oct 2016
R&R Repair, refurbishment, repainting and improvement works to:

·         Praisehaven Complex; and

·         Market and food centre @ Jurong East Ave 1

NA  

·   M/S The Salvation Army

 

·   Seah & Lim Construction Pte Ltd

0.54  

·   Oct 2016

 

·   Nov 2016

 

Others Install Fuel Cell units in designated HDB blocks NA HOPE Technik Pte. Ltd. 0.20 Nov 2016
C&P Painting works in Myanmar NA Yangon City Development Committee Staff Housing 0.11 Nov 2016
R&R Improvement and cyclical works for National University of Singapore NA National University of Singapore 1.02 Dec 2016
C&P Supply and application of painting and coating works for the proposed:

·         New erection of a 5-storey development @ Junction West Ave 2 and Bulim Ave

·         3-storey single user factory @ Sunview Way

·         Erection of a-storey single user ramp up warehouse development with ancillary office @ Jalan Buroh

·         No. 1 Lorong Chuan

NA  

 

·   Tong Bee Construction Pte Ltd

 

·   Sato Kogyo (S) Pte Ltd

 

·   San Keong Construction Pte Ltd

 

·   Lendlease Singapore Pte Ltd

1.56 Between Sep 2016 and Jan 2017
A&A A&A works @ Bukit Timah Planning Area NA Individual homeowners 1.98 Feb 2017
A&A A&A works to Northpoint Shopping Centre NA W’ Ray Construction Pte Ltd 2.32 Jul 2017
R&R R&R works @ Punggol Central and Edgedale Plains 21 Pasir Ris-Punggol Town Council 3.67 Sep 2017
R&R Improvement works to multi-storey car parks – Zone 2 NA Housing & Development Board 3.91 Aug 2018
Others Supply and installation of softscape and landscaping works for:

·         Crowne Plaza Hotel

·         Proposed development of ancillary buildings for Changi East

NA  

·   Green Forest Landscape Pte Ltd

·   PBT Engineering Pte Ltd

0.33  

·   Nov 2016

 

·   Jul 2020

C&P Painting work to National Centre for Infectious Diseases (NCID) NA SKK (S) Pte. Ltd. 2.50 Feb 2018
Total   20.11  

My Strategy for ISOTeam

I like ISOTeam’s defensive and recurrent business model. Its growth story make a compelling case for investment and thus I will pay a premium for ISOTeam shares. Given the slew of latest contracts won, I would revise my entry-level upward and set it at $0.28.

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SG Wealth Builder

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Updated: August 12, 2016 — 3:22 pm
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