Broker: Maybank Research Pte Ltd
Date of Report: May 22, 2025
ISOTeam Set for Growth: New Contracts, Drone Tech, and Strong ESG Positioning Point to Bright Future
Overview: ISOTeam Positioned for Significant Upside After Singapore Elections
ISOTeam Limited (ISO SP), a leading Singapore-based construction and estate upgrading company, is gearing up for a robust period of growth after the recent general election. With the ruling party maintaining its majority, the market anticipates a wave of contract awards for Housing Development Board (HDB) public projects. ISOTeam’s current order book is already a healthy SGD188.7 million, and it is well-placed to benefit from upcoming HDB build-to-order (BTO) and upgrading projects.
Key Highlights
- Expected New Contract Wins: ISOTeam is expected to secure SGD20-30 million in new orders imminently, with potential for even larger projects down the line.
- Drone Technology Deployment: The company’s proprietary AI-powered drone painting solution—an industry first in Singapore—could slash costs by 30-40%, boosting margins and cementing ISOTeam’s technological leadership.
- CEO Confidence: Recent share purchases by ISOTeam’s CEO underscore management’s confidence in the company’s outlook and recovery trajectory.
- Valuation and Rating: Maybank maintains a BUY rating on ISOTeam, with a 12-month target price of SGD0.104, implying a substantial 41% upside from current levels.
ISOTeam: A Leader in Estate Upgrading and Maintenance
With over two decades of experience, ISOTeam has established itself as a major player in Singapore’s estate upgrading sector, holding a 30% market share in government housing painting projects. The company’s expertise and track record make it a preferred contractor for large-scale public sector upgrades.
Share Price Snapshot and Performance
- Current Share Price: SGD0.074
- Market Capitalisation: SGD52.4 million
- Issued Shares: 708 million
- 52-week High/Low: SGD0.08 / SGD0.05
- Price Target: SGD0.104 (+41% upside)
- Recent Returns: 1-month +4%, 3-month +7%, 12-month +45%
- Relative to Straits Times Index: 1-month +1%, 3-month +9%, 12-month +24%
Financial Performance and Forecasts
ISOTeam’s financials reflect a turnaround story, with management expecting a strong FY25 on the back of a reinforced order book and improved margins.
| FYE Jun (SGD m) |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
110 |
130 |
146 |
169 |
195 |
| EBITDA |
(5) |
4 |
7 |
9 |
11 |
| Core Net Profit |
1 |
2 |
7 |
10 |
12 |
| Core EPS (cts) |
0.2 |
0.3 |
1.0 |
1.4 |
1.6 |
| Net DPS (cts) |
0.0 |
0.1 |
0.3 |
0.4 |
0.5 |
| Core P/E (x) |
16.8 |
20.8 |
7.4 |
5.4 |
4.5 |
| P/BV (x) |
0.7 |
1.0 |
1.1 |
0.9 |
0.7 |
| Net Dividend Yield (%) |
0.0 |
1.3 |
4.0 |
5.5 |
6.6 |
| ROAE (%) |
4.6 |
19.2 |
15.7 |
18.0 |
18.0 |
| EV/EBITDA (x) |
nm |
8.6 |
6.0 |
3.9 |
2.7 |
| Net Gearing (%) |
net cash |
net cash |
net cash |
net cash |
net cash |
Financial and Operating Metrics
- Revenue and profit have rebounded post-COVID, with management expecting a stronger FY25 following the completion of low-margin contracts and the introduction of higher-margin, tech-driven projects.
- Net gearing remains at net cash, with a strengthened balance sheet after a 2024 rights issue.
- Gross and net margins are trending upwards, with gross margin forecasted to reach 17% by FY26E.
- Dividend policy in place for FY24 and FY25.
- Positive operating cash flow and improved orderbook quality.
Competitive Advantage: AI Drone Painting Technology
ISOTeam’s AI-powered drone painting solution is set to revolutionize the local construction industry. The company is currently the only Singaporean contractor with such technology, which can reduce labor and material costs by 30-40%. The solution, developed in partnership with shareholder Nippon Paint, uses specially formulated paint for drone spray application.
- Upcoming Milestone: Drone painting to begin testing on an HDB site in June/July 2025, with potential for wider rollout if successful.
- Industry Impact: Technology adoption aligns with Singapore government’s push to reduce reliance on manual labor and boost construction productivity.
ESG and Sustainability: Above-Average Performance, Room for Growth
ISOTeam is proactively addressing Environmental, Social, and Governance (ESG) issues and is recognized for its technological and operational advancements.
Environmental Initiatives
- ISOTeam supports the Singapore Green Plan 2030 and has installed 386 solar panels at headquarters, generating 157,365 kWh in FY2022—meeting 77% of its electricity needs.
- Collaborations with Sunseap Group include the installation of solar systems on 183 HDB blocks and a 5MW floating solar farm in the Straits of Johor.
- Active management of pollution and waste, with project waste segregated and hazardous materials disposed of by specialists.
- Energy consumption and GHG intensity metrics are improving year-on-year, though targets for full carbon neutrality have not yet been met.
Governance and Compliance
- Enhanced monitoring and compliance after a 2020 “Trade With Caution” alert by SGX RegCo due to unusual trading activity.
- Engaged external consultants to review and improve internal practices, boosting transparency and governance.
Social Responsibility
- Commitment to fair treatment and safety for workers, with increased healthcare and dental benefits, and progressive leave increments.
- Pursuing social bond issuance as a cost-effective way to finance socially beneficial projects.
ESG Metrics and Scores
| Parameter |
2021 |
2022 |
2023 |
Peer (SOIL SP) 2023 |
| Scope 1 GHG Emissions (tCO2e/million hour) |
NA |
1,311 |
1,257 |
3,288 |
| Scope 2 GHG Emissions (tCO2e/million hour) |
NA |
19 |
81 |
1,567 |
| Women in Workforce (%) |
10.0 |
26.0 |
30.0 |
11.0 |
| Employee Turnover |
91 |
78 |
18 |
484 |
| Average Employee Training Hours |
9.66 |
18 |
692 |
10.3 |
| Independent Directors (%) |
38 |
43 |
43 |
57 |
| Female Directors (%) |
0 |
0 |
0 |
14 |
ISOTeam’s overall ESG score is 53 (above industry average of 50). The company has robust frameworks and mid-to-long-term targets, but is encouraged to further improve quantitative environmental metrics year-on-year.
Risks and Opportunities
Upside Potential:
- More contract wins and improving margins via tech-driven solutions.
- Turnaround momentum continues post-COVID.
- Potential beneficiary of government policy and infrastructure expansion post-election.
Downside Risks:
- Margin pressure from rising labor or raw material costs.
- Exposure to regulatory changes, especially in foreign labor quotas.
- Highly competitive tendering environment.
Financial Ratios and Outlook
- Revenue growth projected at 12.2% for FY25E, and 15.5% annually for FY26E and FY27E.
- Core net profit growth forecast at 245.5% for FY25E, followed by 36.3% and 20.0% in subsequent years.
- ROAE to remain strong at 15.7% (FY25E), moving to 18.0% by FY26E and FY27E.
- Net dividend yield expected to rise to 4.0% (FY25E), 5.5% (FY26E), and 6.6% (FY27E).
- Healthy liquidity with current ratio improving from 1.5 (FY24A) to 1.9 (FY27E).
Conclusion: Strong BUY with Multiple Growth Catalysts
ISOTeam is well-positioned for a robust rebound and sustained growth, backed by a strong order book, innovative technology, and improving ESG credentials. The unique AI drone painting solution offers a margin expansion opportunity and competitive edge. With a positive sector outlook, management’s demonstrated confidence, and a projected 41% price upside, ISOTeam stands out as a compelling investment idea in Singapore’s construction and upgrading sector.
Contact and Research Coverage
For further information and detailed financial analysis, investors can reach out to the analyst Jarick Seet at Maybank Research Pte Ltd. The full research and sector coverage details are available through Maybank’s regional offices in Singapore and across Asia.
End of Report
