SAC Capital analysts Daniel Ng and Matthias Chan have kept “buy” on ISOTeam with a higher target price of 8.4 cents from 7.3 cents previously following the company’s stellar FY2024 ended June performance.
For its FY2024, ISOTeam posted earnings of $6.5 million, surging 363.1% higher y-o-y. This was mainly due to significant improvements in the performance of its repairs and redecoration (R&R); additions and alteration (A&A); and coating and painting segments, which boosted revenue to 17.9% higher y-o-y to $130.2 million.
Ng and Chan highlight that ISOTeam’s order book stands at an “impressive” $193.1 million as at June 30, providing visibility and revenue stability until FY2027. The company also has a sustainable business model, where 70% of its business comes from Singapore government bodies, ensuring steady demand.
They also note ISOTeam’s early adoption of artificial intelligence and robotics, which positions it as a forward-looking player in the built environment sector while reducing reliance on labour as well as enhancing efficiency.
Lastly, ISOTeam has a favourable dividend policy, aiming for a minimum dividend payout of 25% of net profit. This underscores its commitment to delivering value to shareholders, Ng and Chan add.
Citing data by the Building and Construction Authority, the analysts point out that Singapore’s construction sector is expected to grow steadily until 2028, with public sector projects making up 55% of total demand.
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“Government initiatives such as public sector programmes and Green Plan 2030 are expected to increase demand for ISOTeam’s services, including works such as mandatory facade checks, estate upgrading, expansion of cycling paths, increased green spaces and expansion of solar energy capacity,” the analysts note.
SAC Capital’s target price is based on ISOTeam’s forward earnings per share against the average P/E ratio of 5.5x of its peers, reflecting the company’s strong performance and improved financial outlook.
As at 10.09am, shares in ISOTeam are trading at an unchanged 6.5 cents.
