RHB Securities 2015-08-31: ISOTeam - Stellar FY15.

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ISOTEAM LTD 5WF.SI

Stellar FY15 

• ISOTeam’s NPAT jumped 33.5% to SGD8.1m in FY15 (Jun), with gross margins growing to 24.7%. A dividend of SGD1.15cents was declared for FY15, higher than FY14. 
• Going forward, we remain positive on ISOTeam’s outlook, backed by a strong orderbook of SGD84.7m. 
• We also expect ISOTeam to continue to deliver a strong NPAT growth aside from securing more government and private sector projects. 
• Maintain BUY with a DCF-backed TP of SGD0.82. (8.7% WACC, TG: 1%) (41% upside) 

 Stellar FY15 results. 

• ISOTeam’s NPAT jumped 33.5% to SGD8.1m in FY15 (Jun), with gross margins increasing to 24.7%, and is in line with our estimates. The repairs and redecoration (R&R) segment contributed 66.7% of overall revenue, with a 12.7% increase YoY (FY14: SGD48.3m, FY15: SGD54.5m). 
• The other segments, which include home retrofitting and green solutions businesses, saw the highest revenue growth among all segments, which was mainly derived from the interior design works for the Aloha Loyang resort under the Public Service Division; a coatings and paintings project from Shimizu Corporation and a landscaping project from the Housing and Development Board of Singapore. 

 Strong orderbook. 

• ISOTeam has excelled in building up its order book especially with the general election confirmed in Sept. Its orderbook as of 30 June 2015 stands at SGD84.7m which included SGD55.9m worth of contracts secured in 2H15. These projects will progressively be realized over the next 2 years. 
• We believe it provides good earnings visibility into 2016 and 2017 and is a reflection of the market’s belief in its proven track record. 

 Maintain BUY with a DCF-backed TP of SGD0.82. 

• We expect ISOTeam to continue delivering a strong NPAT growth and secure more government and private projects. Management continues to expect to benefit from the general increase in public sector upgrades. 
• Going forward, we also expect ISOTeam to extend its services into other untapped sectors, including public sector projects such as education institutions and army camps, and non-public sector like industrial projects. 
• With a positive outlook, we maintain BUY with an unchanged DCF-backed TP of SGD0.82.

Jarick Seet | http://www.rhbgroub.com/ RHB Securities 2015-08-31

BUY Maintain BUY 0.82 Same 0.82