See: ISOTeam posts 39% decline in 2Q earnings to $1.9 mil
In a Tuesday report, analyst Edison Chen notes that the lower-than-expected revenue was largely due to weaker revenue recognition from the repairs & redecoration (R&R) as well as coating & painting (C&P) segments, which more than offset stronger revenue from addition & alteration (A&A) segment.
Chen nonetheless continues to like ISOTeam for its healthy order book of $87.2 million as at end-Jan, and believes its core segments will continue to be supported by government-led estate rejuvenation schemes.
“While ISOTeam has underperformed this quarter, we believe it can still catch up in 2H18,” says the analyst.
“Other than the public sector, ISOTeam’s also completed a high-profile multi-million-dollar private A&A project, involving the change of use of a restaurant on level 57 of Sands Skypark Tower 1. Along with its work at Resort World Sentosa, ISOTeam has established a track record of retrofitting high-end restaurants, opening more doors in the F&B market,” adds Chen.
“Through its participation in HDB’s floating wetland systems pilot project at Punggol Waterways, ISOTeam is optimistic of securing more large eco-projects in the future as HDB plans to introduce such systems at lakes and quarry parks.”
UOB has a target price of 45 cents, implying 10.4 times FY18 earnings.
As at 11.38am, shares in ISOTeam are trading 1 cent lower at 34 cents, or 1.4 times FY18 book.
