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ISOTeam - RHB Invest 2016-08-08: First Myanmar And Fuel Cell Installation Contracts

ISOTeam - RHB Invest 2016-08-08: First Myanmar And Fuel Cell Installation Contracts ISOTEAM LTD. 5WF.SI

ISOTeam - First Myanmar And Fuel Cell Installation Contracts

  • ISOTeam has won another 13 contracts worth SGD20.1m. These are from: 
    1. The private and public sectors; 
    2. Its maiden project in Myanmar; 
    3. Its foray into fuel cell operating power systems as back-up generators for lifts at a number of HDB blocks in Punggol.
  • We believe these fuel cells may likely be implemented into more HDB blocks in Singapore going forward. 
  • With its bright prospects ahead and growth fuelled further by opportunities in Myanmar as well as the renewable energy markets, we maintain BUY with a higher DCF-backed SGD0.51 (from SGD0.41, 21% upside), implying a 12x FY17F P/E.



13 contracts worth SGD20.1m secured. 

  • ISOTeam has won another 13 contracts worth SGD20.1m from both the private and public sectors. The bulk of these works is scheduled to be completed by end-2016 and will likely contribute to its earnings for 1H17 (Jun).


First contract from Myanmar – more to come. 

  • ISOTeam has won its first contract, an initial paint job for the Yangon City Development Committee Staff Housing worth SGD110,000. 
  • With the development boom in Myanmar as well as the on-going construction of mega cities, we believe ISOTeam will likely secure bigger and more projects going forward. 
  • We understand from our visit previously that it is in talks with several parties over potential projects and close to securing some of these developments as well.


Foray into fuel cell operating power systems installation. 

  • ISOTeam was awarded a SGD200,000 contract to install emergency fuel cell operating power systems as back-up power generators for lifts at a number of Housing and Development Board (HDB) public housing blocks at Punggol under a green initiative by the Government. 
  • We believe that this may potentially be implemented in more blocks in Singapore going forward, given that the Government’s focus on going green remains strong.


More solar installations projects to come. 

  • Sunseap Group (Sunseap) has won a tender to supply solar panels for 831 HDB blocks and eight Home Affairs Ministry and Public Utilities Board sites by 2017. 
  • Due to the size of the blocks involved over a relatively short term, we think that ISOTeam is likely to get more similar contracts from Sunseap. This represents a huge potential for the firm. Assuming if it can potentially complete 200 HDB blocks pa, this works out to an additional SGD12m to topline annually for the next two years.


Maintain BUY with a higher DCF-backed SGD0.51 TP (from SGD0.41).

  • Going forward, we expect ISOTeam to secure more projects, both on the addition & alteration (A&A) and repairs & redecoration (R&R) front. In addition, we also expect more continuous solar installation projects from Sunseap. 
  • All in all, we are excited about its prospects and continue to have conviction on ISOTeam’s steady growth plans. 
  • Maintain conviction BUY with a higher DCF- backed SGD0.51 TP, implying 12x FY17F P/E. 
  • Changes in government regulations on labour laws and an economic recession are key risks.




Jarick Seet RHB Invest | http://www.rhbinvest.com.sg/ 2016-08-08
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 0.51 Up 0.410


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