ISOTeam – Vote of confidence from strategic business partner

Maintain BUY but with the target price lowered to S$0.62, as we factor in the enlarged share base following the new share placement to Nippon Paint.

ISOTeam (ISO) has proposed to place out 2.8m new ordinary shares to Nippon Paint (Singapore) Company Pte Ltd (Nippon Paint) at S$0.50/share.

Upon completion of the placement and proposed acquisition of Industrial Contracts Marketing Pte. Ltd. by ISO (as announced on 27 Oct 14), Nippon Paint will hold, about 5.93% of the ISO’s enlarged share…
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ISOTeam – Recurrence, yes. Scalable, maybe

Backed by favourable regulatory requirements, ISOTeam is in a prime position to leverage on upgrading initiatives by the government and earn recurring building repainting revenue. Yet, a low profit margin and lack of longer term scalability may point towards inorganic expansion to streamline operations and expand into new markets.

We estimate a fair value of 42.9-48.2 Scts (EPS: 6.5- 7.3 Scts) based on 6.6x CY15 P/E. This represents an upside potential of 5%- 18% from its current price of S$0.41. The…
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