ISOTeam - SAC Capital 2024-08-29: Stellar FY24 Performance With Strong Growth Prospects

• ISOTeam (SGX:5WF) delivered stellar performance in FY2024. Revenue grew 17.9% y-o-y to $130.2m, in line with our forecasted revenue of S$130.3m, fueled by strong growth in its R&R, A&A and C&P segments.
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FY24 net profit surged 476.8%

• ISOTeam's FY24 net profit surged by 476.8% y-o-y to S$6.6m, coming in at 153% of our net profit forecast. This was fueled by the rise in gross profit and a 24.0% increase in other income, primarily from a one-off subsidiary disposal gain and fair value gains on investments. Excluding the one-off gain, the group would have recorded a net profit of S$3.3m.
• Marketing and distribution expenses fell 10.0% y-o-y to S$0.7m due to reduced staff costs post-disposal, while general and administrative expenses grew 16.8% y-o-y to S$13.2m, driven by higher staff compensation and professional fees.
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Investment Merits.

• ISOTeam’s order book stands at an impressive S$193.1m as of 30 June 2024, providing visibility and revenue stability until FY2027.
• ISOTeam has a sustainable business model, where 70% of its business comes from Singapore government bodies, ensuring steady demand.
• ISOTeam’s early adoption of AI and robotics positions them as a forward-looking player in the built environment sector, while reducing reliance on labor and enhancing efficiency.
• ISOTeam’s favourable dividend policy, where it aims for a minimum dividend payout of 25% of net profit, underscores its commitment to delivering value to shareholders.

Positive Outlook.

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Ng Ming Ci, Daniel SAC Capital Research | Matthias Chan SAC Capital | https://www.saccapital.com.sg/ 2024-08-29 SGinvestors.io

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