Alfie Yeo of RHB Bank Singapore has raised his target price for ISOTeam from 7 cents to 8 cents, as he has become more positive on the company's earnings outlook.
"We see it benefiting from and riding on more government projects ahead of the parliamentary election due by the end of 2025," says Yeo in his March 21 note.
Upcoming projects that ISOTeam may go for include new hawker centres, upgrading of coffeeshops, additional facilities in housing estates. There is also the move to apply heat-reflective pain on all public housing by 2030 - a market ISOTeam is already in.
"As such, we expect construction activities to ramp up, ahead of the upcoming polls and beyond. These should benefit ISOTeam, as it could garner more orders and record stronger revenue recognition going forward," says Yeo.
For the current FY2025 to FY2027, Yeo has raised his earnings estimates by 11% each, as project timelines are seen to accelerate. In addition, Yeo figures that ISOTeam will enjoy better gross margins.
The company, as an indication of its earnings visibility, has recently introduced a new dividend policy of a 30% payout ratio going forward, which raises Yeo's estimated dividend yield to 5% from 4%.
See also: Lim & Tan Securities increases CNMC Goldmine’s target price to 48 cents after FY2024 results
Revenue, of course, is underpinned by Its $188.7 million order book as at Feb 11.
ISOTeam changed hands at 7.6 cents as at 9.40 am.
