CGS International
Report Date: September 17, 2025
ISOTeam Ltd: Poised for a Drone-Powered Breakout – In-Depth Financial and Strategic Review
Introduction
ISOTeam Ltd, a Singapore-based construction and maintenance specialist, is making waves with a bold move into drone technology. With a recent S\$10 million capital raise, ISOTeam is set to revolutionize façade painting and washing in the city’s built environment. This comprehensive analysis explores ISOTeam’s financials, strategic initiatives, peer landscape, ESG performance, and the outlook for investors in the coming years.
ISOTeam’s Capital Raise: Funding the Future with Drones
ISOTeam recently completed a S\$10 million capital raising exercise, comprising:
- S\$7 million from a placement of 86.2 million shares at S\$0.08126 per share
- S\$3 million from 3-year, 4% coupon convertible bonds (due September 2028, convertible at S\$0.09126, with a floor of S\$0.08126)
The proceeds are earmarked as follows:
- 40% for drone-related working capital, hiring of drone pilots, software engineers, and specialist staff
- 40% for purchasing approximately 60 drones for internal commercial projects
- 20% for final development and fine-tuning of the drones
This signals the imminent commercial debut of ISOTeam’s façade painting drones, with additional project wins anticipated in the next 6-12 months.
Drone and Robotics: Margin Expansion and Market Share Growth
Painting comprises roughly 30% of ISOTeam’s total work as of FY2025. The new façade painting drones and indoor painting robots, expected to be deployment-ready by 1H FY2026, are projected to reduce painting-related costs by 30-40%. This cost advantage, along with enhanced productivity and bandwidth, is set to boost ISOTeam’s competitiveness in the coating & painting segment. The company may further expand its drone fleet as early as 2H FY2026.
Notably, although the demonstration for the Singapore Housing Development Board (HDB) is pending, ISOTeam is actively engaging commercial and industrial customers. The Singapore government’s strong push for tech adoption and AI solutions in construction further bodes well for drone-driven public housing projects.
Financial Projections and Key Forecasts
ISOTeam’s robust recurring business model is expected to drive profit and margin recovery, especially as drone utilization scales up. The report raises the FY2027F and FY2028F gross profit margin forecasts to 19.5% and 22%, respectively, on the back of 50%/100% drone utilization. The target price is now S\$0.11, reflecting these enhancements.
| Financial Metric |
Jun-24A |
Jun-25A |
Jun-26F |
Jun-27F |
Jun-28F |
| Revenue (S\$m) |
130.2 |
119.2 |
148.7 |
168.4 |
181.5 |
| Operating EBITDA (S\$m) |
9.51 |
8.84 |
14.71 |
19.72 |
26.14 |
| Net Profit (S\$m) |
6.51 |
5.13 |
8.13 |
10.90 |
16.44 |
| Normalised EPS (S\$) |
0.010 |
0.008 |
0.012 |
0.017 |
0.025 |
| Dividend Per Share (S\$) |
0.001 |
0.001 |
0.002 |
0.004 |
0.006 |
| Dividend Yield (%) |
0.91 |
0.91 |
2.73 |
4.68 |
7.06 |
Valuation and Shareholder Structure
- Current price: S\$0.088
- Target price: S\$0.11 (24.9% upside)
- Market cap: S\$62.24m (US\$48.68m)
- Free float: 67.6%
- Key shareholders: ADD Investment Holdings (19.9%), Taisei Oncho Co Ltd (8.8%), Koh Thong Huat (2.6%)
- Post-placement, share count could rise by up to 17% if all convertible bonds are exercised
Key Financial Ratios and Operational Metrics
| Key Ratio |
Jun-24A |
Jun-25A |
Jun-26F |
Jun-27F |
Jun-28F |
| Operating EBITDA Margin |
7.3% |
7.4% |
9.9% |
11.7% |
14.4% |
| ROE |
21.0% |
13.7% |
18.1% |
20.3% |
26.7% |
| Net Gearing |
60.3% |
60.8% |
16.8% |
4.8% |
(9.5%) |
| EV/EBITDA (x) |
9.22 |
10.84 |
5.52 |
3.78 |
2.50 |
| P/BV (x) |
1.45 |
1.45 |
1.14 |
1.01 |
0.90 |
Peer Comparison: How Does ISOTeam Stack Up?
ISOTeam stands out among Singapore construction and building material companies for its forward EPS growth and margin potential, especially as drone technology gains traction.
| Company |
Ticker |
Rec. |
Price (local) |
Target Price |
Market Cap (US\$m) |
P/E CY25F |
P/E CY26F |
EPS CAGR (%) |
P/BV CY25F |
P/BV CY26F |
ROE CY25F |
EV/EBITDA CY25F |
Div. Yield CY25F |
Div. Yield CY26F |
| ISOTeam Ltd |
ISO SP |
Add |
0.09 |
0.11 |
49 |
16.0 |
8.2 |
85.4% |
1.28 |
1.07 |
8.3% |
7.8 |
1.8% |
3.7% |
| Boustead Singapore Ltd |
BOCS SP |
Add |
1.80 |
1.40 |
692 |
16.3 |
n/a |
n/a |
1.59 |
n/a |
10.0% |
10.5 |
2.2% |
n/a |
| Wee Hur Holdings Ltd |
WHUR SP |
Add |
0.77 |
0.91 |
550 |
18.3 |
39.8 |
8.3% |
1.13 |
1.06 |
5.9% |
-0.2 |
1.8% |
1.8% |
| Hock Lian Seng Holdings Ltd |
HLSH SP |
NR |
0.465 |
NA |
186 |
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
Peer averages (excluding outliers) indicate ISOTeam’s forward P/E ratios and margin expansion are highly competitive.
ESG Initiatives and Green Credentials
ISOTeam is committed to ESG excellence, as seen in its:
- Green product offerings and eco-friendly solutions (e.g., heat-reflective paints, renewable energy installations, flake epoxy coatings)
- Use of solar panels at HQ, generating over 51,308 kWh (about 20.8% of its electricity needs in FY2024)
- Comprehensive Scope 1 and 2 emissions reporting, with plans to disclose Scope 3 emissions
- Multiple Green and Gracious Builder Awards (2014–2020) by the Singapore Contractors Association
- Membership in the Singapore Green Building Council
The company’s adoption of AI-powered robotics for inspection, washing, and painting enhances workplace safety, minimizing risky work-at-height activities and improving profitability.
Key Risks and Catalysts
Potential Catalysts:
- Faster-than-expected orderbook growth
- Commercialization of BuildTech solutions, unlocking new asset leasing revenue and geographic expansion
Risks:
- Project completion delays
- Lower-than-forecast drone utilization
- Rising costs or limited availability of foreign labor and subcontractors
Share Capital Changes and Earnings Revisions
The recent placement and convertible bond issue will increase the share base by up to 17%. The expanded share base led to an 8% reduction in FY2026F EPS, but drone-driven margin expansion raised FY2027F and FY2028F EPS by 8% and 21%, respectively.
Conclusion: ISOTeam—A Technology-Driven Transformation Story
ISOTeam is on the cusp of a significant transformation, with drone and AI-powered technologies set to drive margin expansion, market share gains, and sustainability leadership in Singapore’s construction sector. The company’s strong recurring revenue base, robust financials, and proactive ESG stance make it a compelling pick for investors seeking exposure to innovative growth in the region’s built environment. With a 24.9% upside to the target price and improving fundamentals, ISOTeam is a stock to watch closely in the coming quarters.
