ISOTeam - RHB Invest 2016-08-26: More Stellar Results Expected Ahead

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ISOTEAM LTD. 5WF.SI

ISOTeam - More Stellar Results Expected Ahead

• We expect contributions from ISOTeam’s solar renewable projects and business venture in Myanmar to underpin continued strong results going forward. 
• We also see ISOTeam potentially making a few more acquisitions to complement its business model, whilst maintaining its strong position in the bread and butter R&R and A&A space in Singapore (solid orderbook of SGD94.1m currently). 
• The company reported a stellar set of results for FY16 (Jun), registering record NPAT of SGD9.6m. 
• Maintain BUY with a higher DCF-backed TP of SGD0.54 (from SGD0.51, 26% upside).

More contracts from renewable energy. 

• We understand that the partnership between Sunseap Leasing Pte Ltd (Sunseap) and ISOTeam has progressed well since their initial project in 2016. 
• Going forward, we expect Sunseap to continue to pass on more solar panel installation projects to the company. As highlighted previously, we expect such new contracts to come on-stream soon.

Looking forward to contributions from Myanmar. 

• During our visit to Myanmar in May, we noted that it had tendered for a few local projects. We expect the tender results to be known soon, and believe ISOTeam has a high chance of winning some of these projects.

Record NPAT exceeded estimates. 

• Excluding the one-off amortisation charge of SGD1.5m (from its acquisition of subsidiaries in FY16), ISOTeam’s NPAT would have exceeded our FY16 forecast of SGD10.3m. 
• Going forward, with a solid orderbook of SGD94.1m currently, we expect it to continue delivering stellar results and are projecting another record breaking NPAT in FY17F.

M&A a possibility, maintain BUY. 

• We see ISOTeam potentially making a few more acquisitions to complement its business model, similar to what it did previously. 
• With a bright outlook ahead, we maintain our BUY call on the stock with a higher DCF-backed TP of SGD0.54, implying an FY17F P/E of 14x. 
• Key risks include an economic slowdown and changes to labour laws.

Jarick Seet RHB Invest | http://www.rhbinvest.com.sg/ 2016-08-26

RHB Invest SGX Stock Analyst Report BUY Maintain BUY 0.540 Up 0.510