According to Seet in his Feb 12 report, the company has cornered a market share of around 30%.
As of Sept 6, 2024, the company has built up an order book of $202.4 million.
In the current FY2025, the company is seen to improve its profitability as it puts behind lower-margin contracts in FY2024.
“We believe FY2025 will be an inflection point for its profitability and the launch of its AI drone-painting solution on an HDB site in April and will be rolled out at more estates if successful,” says Seet.
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Seet points out that ISOTeam is the only local player with this drone-painting solution. “This should enable it to leapfrog competitors with 30% to 40% lower costs, aligning with the government’s push to reduce manpower,” he adds.
Seet estimates ISOTeam to enjoy better margins of 30% — up from 20% — by deploying the drones. This could, in turn, help the company bid and win for more contracts.
“With a general election in Singapore slated for this year, more government projects will likely come up for grabs, putting ISOTeam in a prime position to benefit,” says Seet.
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ISOTeam also has a 30% dividend payout policy, translating to a 4.7% yield for FY2025.
The analyst observes that the company’s key executives will also increase their respective stakes in the company by buying more shares so as to signal their optimism.
“Risks to our call include labour and raw material costs increase as well as execution issues on its drone project,” says Seet.
Swing factors noted by the analyst include improving margins and higher revenue from more project wins, drone technology advancement, the stock’s turnaround play and finally, ISOTeam as a potential beneficiary of the Singapore election in 2025.
Conversely, downsides include regulatory changes on foreign labour quota and a competitive tender landscape.
As at 3.20 pm, shares in ISOTeam are trading 0.1 cents lower, or 1.54% down, at 6.4 cents.
