ISOTeam Ltd Set for Growth with Drone-Powered Facade Painting – Margin Expansion & Market Share in Singapore Construction 1

CGS International
September 17, 2025
ISOTeam Ltd Poised for Takeoff: Drone-Powered Margin Expansion and Market Share Growth in Singapore Construction

Introduction: ISOTeam’s Strategic Leap into Drone Technology

ISOTeam Ltd, a key player in Singapore’s construction sector, is gearing up for a transformational phase powered by its proprietary drone and robotics solutions. With a recent successful fund-raising effort and imminent commercial debut of its façade painting drones, ISOTeam is set to capture higher margins and market share in the competitive coatings and painting segment.

Capital Raise: Funding the Drone Revolution

In September 2025, ISOTeam announced a S\$10 million capital raise via placement (S\$7 million) and 3-year, 4% convertible bonds (S\$3 million). The funds are earmarked for:

General working capital for the drone project, including hiring drone pilots and software engineers (40%)
Purchase of approximately 60 drones for internal project commercialization (40%)
Final development and fine-tuning of drone technology (20%)

This allocation highlights the advanced stage of ISOTeam’s drone project and signals an imminent commercial rollout, with expectations for more coating and painting project wins in the next 6-12 months.

Drone-Driven Margin Expansion & Market Share

Painting accounted for about 30% of ISOTeam’s total work in FY6/25. The company projects that its new façade painting drones and indoor painting robots, deployment-ready by 1HFY6/26F, will reduce painting-related costs by 30-40%. This competitive cost structure, enhanced productivity, and increased workload capacity are expected to boost ISOTeam’s market share in the coatings and painting segment. The company may ramp up its drone fleet as early as 2HFY6/26F.

Commercial and Industrial Adoption: Singapore’s Tech-Forward Landscape

ISOTeam has been engaging commercial and industrial customers ahead of its scheduled demonstration for the Housing Development Board (HDB). Given Singapore government’s strong advocacy for technology and AI solutions, the adoption of façade washing and painting drones for public housing projects appears inevitable.

Financial Guidance: Upward Revisions and Valuation

ISOTeam’s recurring business model and anticipated margin recovery prompted CGS International to reiterate an “Add” rating. Gross profit margin expectations for FY27F/28F have been raised to 19.5%/22% (from 18%/19%) due to projected 50%/100% drone utilization. The target price has been increased to S\$0.11, based on an 8x P/E multiple, with a 24.9% upside from the current price of S\$0.088.
Key catalysts for further upside include orderbook growth and commercialisation of BuildTech solutions, offering new asset leasing revenue and geographical expansion. Risks include contract delays, lower-than-expected drone utilization, and challenges around foreign labor and subcontractor availability.

ISOTeam: Shareholder Structure, EPS Revisions, and Performance

Major shareholders:

ADD Investment Holdings: 19.9%
Taisei Oncho Co Ltd: 8.8%
Koh Thong Huat: 2.6%

Recent placement will increase shares outstanding by 12.2%. Full conversion of convertible bonds could raise the share base by ~17% by Sep 2028.

Year (FYE Jun)	Revenue (S\$m)	Operating EBITDA (S\$m)	Net Profit (S\$m)	Normalised EPS (S\$)	EPS Growth (%)	FD Normalised P/E (x)	Dividend Yield (%)	ROE (%)
Jun-24A	130.2	9.51	6.51	0.010	618%	8.56	0.91%	21.0%
Jun-25A	119.2	8.84	5.13	0.008	(19%)	10.58	0.91%	13.7%
Jun-26F	148.7	14.71	8.13	0.012	50%	7.06	2.73%	18.1%
Jun-27F	168.4	19.72	10.90	0.017	34%	5.27	4.68%	20.3%
Jun-28F	181.5	26.14	16.44	0.025	47%	3.58	7.06%	26.7%

Peer Comparison: Singapore Construction and Building Materials

ISOTeam stands out among Singapore construction peers for its ambitious technology adoption and margin improvement trajectory. Below is a comprehensive comparison of key listed peers:

Company	Ticker	Rec.	Price (lcl curr)	Target Price	Market Cap (US\$m)	P/E CY25F	P/E CY26F	EPS CAGR (%)	P/BV CY25F	ROE CY25F	EV/EBITDA CY25F	Dividend Yield CY25F
ISOTeam Ltd	ISO SP	ADD	0.09	0.11	49	16.0	8.2	85.4%	1.28	8.3%	7.8	1.8%
Boustead Singapore Ltd	BOCS SP	ADD	1.80	1.40	692	16.3	N/A	N/A	1.59	10.0%	10.5	2.2%
Wee Hur Holdings Ltd	WHUR SP	ADD	0.77	0.91	550	18.3	39.8	8.3%	1.13	5.9%	-0.2	1.8%
Soilbuild Construction Group	SOIL SP	NR	2.78	N/A	363	7.9	6.2	N/A	3.48	43.2%	6.5	2.2%

Building material peers show healthy metrics, but ISOTeam’s forecasted EPS CAGR and cost efficiency stand out.

ESG Leadership and BuildTech Innovation

ISOTeam’s commitment to ESG is evident through its green product offerings, adoption of solar energy, and comprehensive emissions disclosure. The company has received the Green and Gracious Builder Award by SCAL for several years and is a member of the Singapore Green Building Council. Initiatives include:

Renewable energy installation services
Heat-reflective paints
Eco-friendly products, such as flake epoxy coatings
Extensive Scope 1 and 2 emissions reporting, with plans to disclose Scope 3

BuildTech adoption is expected to improve profitability and reduce workplace injuries, further enhancing ISOTeam’s ESG profile.

Detailed Financials: Profit, Loss, Cash Flow, and Balance Sheet

Metric	Jun-24A	Jun-25A	Jun-26F	Jun-27F	Jun-28F
Total Net Revenues (S\$m)	130.2	119.2	148.7	168.4	181.5
Gross Profit (S\$m)	20.2	19.1	26.0	32.8	39.9
Operating EBITDA (S\$m)	9.5	8.8	14.7	19.7	26.1
Net Profit (S\$m)	6.5	5.1	8.1	10.9	16.4
Total Cash Generated (S\$m)	6.84	12.98	19.71	7.05	39.85
Shareholders’ Equity (S\$m)	42.91	48.04	61.33	68.96	80.47

Key Ratios and Operational Metrics

Operating EBITDA Margin rises from 7.3% (Jun-24A) to 14.4% (Jun-28F)
Net Cash Per Share improves to S\$0.009 by Jun-28F
BVPS grows from S\$0.061 (Jun-24A) to S\$0.097 (Jun-28F)
Gross Interest Cover increases sharply to 10.63 by Jun-28F
ROIC jumps from 10.0% (Jun-24A) to 33.5% (Jun-28F)
ROCE increases from 8.6% (Jun-24A) to 18.3% (Jun-28F)
Segment EBITDA Margins: Coating & Painting segment expected to see notable margin expansion, from 0.3 (Jun-24A) to 0.5 (Jun-28F)

ESG Trends and Impacts

Fuel data tracking now includes generators and machinery at worksites, leading to an 8.5% increase in Scope 1 GHG and 28% rise in energy emission intensity for FY6/24.
Water usage increased 12.8% YoY, tied to higher revenue.
386 rooftop photovoltaic panels at headquarters generated 51,308.21 kWh, covering 20.8% of ISO’s electricity needs in FY6/24.
Continuous improvements in emissions disclosure and potential for future ESG ratings.

Investment Ratings and Recommendations Framework

ISOTeam Ltd: “Add” rating – total return expected to exceed 10% in 12 months.
Sector and country ratings definitions provided for clarity: overweight, neutral, underweight.
Distribution: Add (70.6%), Hold (20.5%), Reduce (8.9%) for the quarter ended June 2025.

Legal and Regulatory Information

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Conclusion: ISOTeam’s Pivotal Moment in Singapore Construction

With its bold move into drone-driven painting and robotics, ISOTeam Ltd is positioned to capture outsized gains in margin, productivity, and market share. The company’s strong ESG credentials, innovative BuildTech solutions, and robust financial outlook make it one of the most compelling stories in Singapore’s construction sector for 2025 and beyond. Investors should monitor key catalysts and risks as the commercial rollout of drones begins and ISOTeam seeks new growth avenues domestically and overseas.