Photo: The Edge Singapore/ Albert Chua
When ISOTeam was listed on the Singapore Exchange in 2013, the company had two capabilities: repainting HDB estates and upgrading these estates.
Eight years on, ISOTeam has garnered the expertise to install floating solar panel farms and has even ventured into the pest control and bike-sharing business.
“After our listing, we equipped ourselves with more capabilities. We ventured into solar panel installation, home improvement programmes as well as installing solar farms in the sea. We have also acquired businesses in the electrical and landscaping spaces to combine different capabilities to take on more sizeable projects,” says CEO Anthony Koh in an interview with The Edge Singapore.
More importantly, thanks to the company’s early adoption of eco-friendly methodologies, ISOTeam is now well-positioned to capitalise on the Singapore government’s ambitions to build green infrastructure and generate renewable energy.
Indeed, during the early days, ISOTeam was better known for winning contracts to paint HDB blocks. While painting is still its main business segment, the company has steadily diversified into related activities such as estate upgrading and other forms of estate maintenance.
Since its inception, ISOTeam has undertaken more than 500 refurbishment and upgrading projects for over 5,000 buildings, making it one of the leading property maintenance and upgrading companies in Singapore.
Green thumbs
More importantly, ISOTeam successfully collaborated with HDB to develop floating modules at the Punggol wetlands area. Early this year, the company completed the installation of Singapore’s largest floating solar farm as a contractor for Sunseap, which it has been working closely with on the national SolarNova programme.
Supported by Singapore’s Economic Development Board (EDB), the recently completed offshore floating solar farm for Sunseap boasts a 5 megawatt-peak system that is expected to generate about 6,388 megawatt-hours of renewable energy annually.
In May 2017, ISOTeam invested some $5 million in Sunseap, representing 2.78% of the total share capital of the company, in its Series C funding round.
“ISOTeam has always been a strong advocate on sustainability and the environment by putting eco-friendly designs and products at the forefront of our work,” says Koh.
He claims that the company was the first to roll out the first zero volatile organic compounds (VOC) and eco-friendly paint to the market some 15 years ago. At present, ISOTeam is launching a “cold paint” that helps to lower the temperature in a building by 2–3°C.
Koh explains that these eco-friendly paints are no different from regular paint. In fact, they are much better to work with as they are 100% organic and there are no harsh smells.
In the business of building maintenance, ISOTeam is also venturing into the pest control space with its latest cockroach and odour (CnO) remover product.
“In 2017, we chanced upon a product that is organic, plant-based and chemical-free but kills cockroaches effectively. When we first discovered this, we thought this will revolutionise the pest control industry because never has an organic product been used to kill cockroaches,” says Koh, who adds that the product is also safe enough to be sprayed around food, humans, plants and animals.
Furthermore, the product will not contaminate the local water supply as it is safe enough to be eaten. ISOTeam aims to roll it out for commercial use by the end of this year.
Cycling trend
ISOTeam has also jumped into the business of bicycle-sharing with SG Bike, at present the largest operator in Singapore.
It was in 2017 that the company decided to venture into the business although there were too many competitors. But unlike the other operators, ISOTeam was the only one to work closely with town councils and the Land Transport Authority (LTA) to mitigate the problem of indiscriminate parking of bicycles, deploying a smart system to improve the sharing experience for all.
“When we first started this bicycle sharing business, it was with the view to solve the bike dumping issue in Singapore that was prevalent with the other bigger bicycle-sharing companies that were around then,” says Albert Teng, ISOTeam’s chief strategy officer and chairman of SG Bike.
“Luckily, our vision of an orderly way of using the bikes was supported by the government and that’s why we ventured into this business,” he adds.
SG Bike saw this as an opportunity and took the chance to acquire all 25,000 bikes from competitor Mobike when it decided to exit the scene, increasing its fleet of bikes and making it the largest operator. Another bicycle sharing operator Obike also exited the market due to insolvency.
“With more bikes, we can deploy more bikes to different parts of Singapore. The number of bikes we have now, including the additional 25,000 bikes, is still not enough to cover even half of Singapore. Hence, we have applied to LTA to request to bring in more bikes,” says Teng, who noticed that local demand for bicycle-sharing surged during the pandemic as people started becoming more aware of their fitness and cycling became a new hobby.
In 1HFY2021 ended December 2020, revenue from ISOTeam’s bicycle-sharing business more than trebled to $1.65 million from $350,000 in the same period a year ago.
In 1HFY2021, ISOTeam generated revenues of $9.81 million from “others”, making up 26.7% of revenue versus 21% in 1HFY2020. The “others” segment comprises commercial interior designing, home retrofitting, landscaping works, leasing service, waterproofing, green solutions business, mechanical & electrical engineering works, project management and handyman services.
Still, ISOTeam’s share price performance isn’t something to shout about yet. It had closed at 13 cents on June 2, unchanged year to date and valuing the company at $46.7 million.
Recovery play
In its last report on ISOTeam dated November 2020, RHB Group Research is upbeat on the company’s upcoming FY2021 financials. With the gradual resumption of construction activities after the lockdown, RHB analyst Jarick Seet has maintained his “buy” recommendation on ISOTeam with a lower target price of 21 cents from 24 cents previously as he expects profitability to rebound.
To be sure, the company had a tough FY2020 as the “circuit breaker” brought a halt to all construction projects and caused a delay in project completion.
“We had to shut down for six and a half months. No work was being done. But the management decided that this situation is none of the workers’ fault and we kept on paying the full salary with the intention of no retrenchments,” says Koh.
“We had almost no revenue and no activity during that period but we knew that once the lockdown was over, the business would start to recover so we will need t keep our staff, some of whom have been with the company for a long time. Hence, the company decided to bite the bullet and pay our staff full salary to maintain and keep our headcount to prepare for the upcoming recovery,” he adds.
In FY2020, ISOTeam recorded a loss of $19.6 million, compared to earnings of $6.8 million in FY2019. This was due to a 32.9% y-o-y drop in revenue to $91.7 million, caused by the closure of the company’s project sites from April 2020 as well as $0.5 million net loss attributable to Pure Group, the project and construction management services provider it had acquired in 2019.
As it was only until mid-October 2020 that projects resumed with social distancing measures in place, the drag continued into 1HFY2021 when the company recorded a loss of $6 million from earnings of $2.7 million a year ago. Revenue in the half year fell 42.4% y-o-y to $36.7 million due to weak performance across the group’s business segments, partially offset by other income due to gain on disposal of property and government grants.
“The coronavirus pandemic continues to undermine the global economy and business environment as some countries re-impose lockdowns amid virus resurgence. This will likely slow down the recovery of businesses,” says Koh.
“Against this difficult backdrop, we expect the pace of resumption of construction activities to remain slow even as we continue to face other issues such as manpower deployment challenges and higher costs of materials due to supply chain disruptions, as well as more time and resources needed to comply with Covid-19 safe management measures,” adds Koh, although he is confident of the group’s track record to win more project tenders.
Year to end May, ISOTeam has clinched $87.43 million worth of contracts. Currently, its order book stands at a record $188 million.
RHB’s stance on ISOTeam has yet to change but analyst Seet says, “I think things are rebounding for them before this lockdown and projects have resumed. They might be facing some cost increase with the hiring of workers and margins will likely be lower for new projects. Delays are also expected but I am confident that they will survive this and come out stronger like they have done so in the past.”
