That said, Seet is maintaining his “buy” call given several positive factors ahead.
For one, ISOTeam is likely to see more contract wins with management expecting the pace of project awards to pick up. “[This is] driven by public sector upgrading works to introduce more community spaces and senior friendly amenities for both public and private estates,” Seet writes in his Aug 28 report.
Based on the historical rate, Seet estimates that another $20 million worth of orders should come in October this year.
He adds that ISOTeam has an existing order book of $181.1 million, of which 80% is slated to be completed within 18 months.
See also: Aletheia Capital starts Info-Tech at ‘buy’, expecting $18 million ebitda in FY2025
ISOTeam, which is currently the only local contractor to work with drones, is set to test its new artificial intelligence (AI) drone-painting solution on several build-to-order (BTO) sites by the end of October. If successful, this will be rolled out to more estates.
The move, which could reduce costs by 30% to 40%, would “position it well in terms of technology, lower labour use and costs as the Singapore government has long-coveted the application of technology to reduce manpower”.
Despite the upsides, Seet has lowered his target price to 10 cents from 10.4 cents previously. His new target price is pegged to a blended FY2025/FY2026 P/E of 9 times.
For FY2026, FY2027 and FY2028, Seet has reduced his revenue targets by 16.2%, 14% and 0.8% to $137.4 million, $158.4 million and $182.7 million respectively.
Seet has also lowered his core net profit estimates for FY2026 and FY2027 by 23.4% and 10.1% to $7 million and $9.5 million respectively. In FY2028, however, Seet has raised his estimates by 18.5% to $12.5 million.
As at 11.57am, shares in ISOTeam are trading 0.2 cents higher or 2.5% up at 8.2 cents.
