SINGAPORE (Nov 13): RHB is maintaining its “buy” call on ISOTeam with a target price of 46 cents following the group’s positive 1Q18 results.
ISOTeam on Friday announced that its 1Q18 earnings were up 55% to $1.5 million from $1.0 million a year ago on higher revenue and lower expenses.
Revenue for the quarter was up 20.9% to $25.1 million from $20.8 million last year on higher contributions from its Repairs & Redecoration (R&R), Addition & Alteration (A&A), and Others business segments, offset in part by lower contributions from Coating & Painting (C&P).
General and administrative expenses dropped 12.9% to $2.7 million from $4.7 million the previous year due to lower staff-related expenses.
As at Oct 27, the group’s order book stood at $87.2 million.
See: ISOTeam posts 55% higher 1Q earnings of $1.5 mil
In a Monday report, analyst Jarick Seet says that the research house likes ISOTeam for its strong order book and strong growth from its both core segments – R&R and A&A.
In addition, the group completed the purchase of its new premises in Changi earlier in April, which would house its expanded operations.
The group expects to centralise its operations at the new headquarters by end-2017.
After which, the analyst believes that the group’s will likely be selling off its previous office, enabling it to enjoy a one-off gain of about $3 million, which will be booked in FY18.
Furthermore, Seet notes that the group’s Myanmar business has tendered for a few local projects and won a few. Hence, he expects more revenue contributions from this area in FY18.
“We expect the company to have a better FY18 ahead, as we expect more new contracts in the near term, with a recovering property sector outlook and contributions from its solar and Myanmar projects,” says Seet.
The group’s management has also ventured into a few new projects that would enable it to grow further, such as SG Bike venture and cockroach spray, which has been launched in Singapore.
See: ISOTeam jumps on bike-sharing bandwagon
As at 10.40am, shares in ISOTeam are trading 2 cents higher at 36 cents or 0.71 times June-18F book with a dividend yield of 2.5%.
