ISOTeam

ISOTeam released a stellar set of results as core FY14 earnings came in above estimates. FY14 net profit was up 0.8% to $6.1m, as bottom-line saw the absence of contributions from a one-off property plant and equipment disposal gain at $4.2m in 2013. Barring, which pre-tax profit for FY14 would have almost tripled to $6.7m. Revenue jumped 44.8% to $69.9m, largely due to the group’s Repairs and Redecoration (R&R) business segment, which soared 83.2% to $48.3m, derived largely from projects awarded by SKK, Moulmein-Kallang Town Council, Tanjong Pagar Town Council and Pasir Ris-Punggol Town Council. Meanwhile, sales contribution from the group’s Addition and Alteration (A&A) business segment decreased 6.4% to $20.4m, while contribution from the others business segment was up from $0.1m to $1.1m as the home retrofitting business continued to gain increased traction. Gross margin improved to 19.3% from 17% due to higher revenue contributed by R&R works, although bottom-line was weighed partially due to a 15.7% rise in general and admin expenses to $6.3m. Going forward, ISOTeam expects to benefit from the general increase in public sector upgrading, retrofitting and maintenance of buildings and facilities activities in Singapore and will continue to bid for these projects as well as projects in the private sector. The group has plans to extend its services into other untapped sectors, including public sector projects such as education institutions and army camps, and non-public sector projects such as Management Corporation Strata Title, industrial and commercial projects. ISOTeam’s order book of $73.2m is expected underpin revenue visibility over the two years. At the current price, ISOTeam trades at 8.0x FY14 P/E and is in a net-cash position $13.4m. The group has declared a first and final dividend of 1¢ per share, unchanged from the previous year.