SINGAPORE (Feb 15): RHB is maintaining its “buy” call on ISOTeam with an unchanged target price of 46 cents following the announcement of its proposed divestment of a 34.1% stake in its M&E arm for $3 million.
See: ISOTeam to sell 34.1% stake in subsidiary to Japan's Taisei Oncho
“The proposed agreement would allow ISOTeam to strengthen its mechanical & electrical (M&E) and energy management capabilities and further expand its services in the region, by leveraging on Taisei Oncho’s (TOC) M&E expertise and overseas network,” notes analyst Jarick Seet in a Wednesday report.
In particular, Seet expects the group’s 2H results to make up for the shortfall caused lower-margin projects in 1H.
See: ISOTeam posts 39% decline in 2Q earnings to $1.9 mil
This will come on the back of the centralisation of all of ISOTeam’s subsidiaries into its new premises in Changi, he adds, as well as one-off gains from the sale of its old office and divestment gains from the sale of its M&E arm.
“[ISOTeam’s] orderbook remains at a healthy level of $80.7 million, with the company still expecting to add on to its orderbook with a few larger project tender results to be announced in the next few months. As a result, we remain optimistic on ISOTeam,” concludes the analyst.
As at 10.39am, shares in ISOTeam are trading 1.5% higher at 34 cents, or 0.7 times FY18 book.
