CGSI sees revenue potential in ISOTeam with integration of BuildTech in unrated report

In ISOTeam’s FY2024, painting constituted around 30% of work undertaken, with management pointing out that painting drones could result in cost savings and reduced execution time. 

Since becoming a wholly-owned subsidiary in July 2024, the group sees BuildTech’s solutions as complimentary, with its artificial intelligence (AI) internet of things (IoT) platform solutions for smart building management systems possibly elevating the ISOTeam’s building and estate maintenance capabilities.

Ong and Lim like the highly recurring nature of ISOTeam’s business, which is supported by various government initiatives, with around 75% of contracts coming from the public sector leading to an order book-high of $191.3 million as at end FY2024, a 9.8% growth y-o-y.

“Gross profit margin (GPM) has recovered to 15.5% in FY2024, nearing its five-year pre-Covid average GPM 20%. In its response to shareholders ahead of its FY2024 annual general meeting, management said that it expects profit margins to improve due to new projects secured with better margins, and the deployment of autonomous drones.”

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Currently, ISOTeam trades at 5.8 times 12 months forward price-to-equity ratio (P/E), against its five-year historical average P/E of 7.3 times.

“According to the company, ISOTeam’s business model is relatively resilient to economic cycles but dependent on foreign labour and subcontractors. In its FY2024 annual report, management said it will prioritise cash conservation and cost management amid the still-high inflation/interest rate environment,” write the analysts.

As at 11.18 am, shares in ISOTeam are trading 0.1 cent lower or 1.72% down at 5.7 cents.