SINGAPORE (Aug 28): RHB Research is maintaining its “buy” call on ISOTeam with an unchanged 50-cent target price after it recently concluded what the research house deems a tough FY17.
To recap, the repairs, maintenance and estate upgrading service provider last week reported a 30.1% decline in FY17 earnings of $6.4 million compared to $9.2 million a year ago as it was hit by one-off impairments, delayed revenue recognition for some of its projects, and lower repairs & redecoration (R&R) projects over the full-year period.
See: ISOTeam posts 30% drop in FY17 earnings
RHB is nonetheless expecting a better FY18F ahead for the group as it is expected to win more new contracts in the near-term, as well as benefit from a recovering property outlook and contributions from its Solar and Myanmar projects.
In a Monday report, analyst Jarick Seet notes that ISOTeam is likely to sell off its existing office, given its plans to centralise its operations at its new headquarters in Changi by the end of this year.
This would enable the group to enjoy a one-off gain of $3 million, says Seet, who is also expecting more revenue contributions in FY18 from the group’s latest projects which were won in Myanmar.
Furthermore, the analyst is positive on ISOTeam’s 51%-owned bike sharing project, SG Bike, which was launched last week on Aug 24.
See: ISOTeam jumps on bike-sharing bandwagon
“[ISOTeam’s] management ventured into a few new projects to enable it to grow further, such as the recently announced SG Bike and cockroach spray, which has been fully launched in Singapore. It is also in the midst of bidding for the upgrading project of 12 army camps worth up to $30-40 million. We also believe that a better outlook for the Singapore property market would help boost the private jobs market which would in turn benefit the company going forward,” says Seet.
“[SG Bike] would allow [ISOTeam] to broaden its revenue base and generate a new recurring stream of income. However, we do not expect this venture to have a positive impact on its earnings in the near future,” he adds.
As at 9.50am, shares in ISOTeam are trading flat at 34 cents.
