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Singapore’s Big Winner of the Week: Isoteam Ltd

Shares of Isoteam Ltd  (SGX: 5WF) have put on around 3% since last Friday to close at S$0.585 yesterday. The performance triumphs that of the Straits Times Index (SGX: ^STI), which moved by 1.4% in the opposite direction. This makes Isoteam a big winner this week.

Isoteam, which was founded in 1998, is involved in building maintenance and estate upgrading in Singapore. It has more than 15 years of experience in Repairs & Redecoration and Addition & Alteration. Its main clients include town councils, government bodies, and private sector building owners.

In the middle of last month, Isoteam said that it would be proposing a bonus issue on the basis of one bonus share for every one existing ordinary share held by shareholders. The bonus issue will, in effect, double Isoteam’s share count.

The reasons behind the bonus issue are as follows:

  1. To increase the share capital base of the firm, reflecting growth and expansion of its business;
  2. To recognise and reward loyal shareholders; and
  3. To improve the liquidity of its shares

Anthony Koh, the executive director and chief executive of the company, commented on the bonus issue:

“FY2015 was a year of many successes for ISOTeam and we are delighted to celebrate our achievements with shareholders with this proposed 1-for-1 bonus issue. The move will boost our share capital base, and with it, we hope to encourage greater market trading interest in ISOTeam as our business continues to grow.”

Revenue for FY 2015 (fiscal year ended 30 June 2015) rose 16.9% year-on-year to S$81.7 million mainly due to a “substantial increase in the Group’s Repairs and Redecoration (“R&R”) business segment and others segment”. Gross profit meanwhile, gained an even stronger 49.3% year-on-year to S$20.2 million as a result of the R&R business’s higher inherent profit margin. (Isoteam’s gross profit margin for FY2015 had increased to 24.7% from 19.3% a year ago.)

With the solid gross profit growth, Isoteam’s bottom-line had put on a good showing as well. Net profit increased 34.1% year-on-year to S$8.1 million.

Isoteam’s cash flow from operations also experienced a significant jump from S$6.7 million in FY 2014 to S$17.1 million in FY 2015. This helped build Isoteam’s strong balance sheet which, as of 30 June 2015, had S$32.3 million in cash and total borrowings (including finance leases) of just S$4.3 million.

It is not surprising to find that Isoteam had also substantially increased its dividend payout for FY2015 as compared to a year ago given the numbers we’ve just seen. A final dividend of 1.15 Singapore cents per share was proposed, an improvement from the 1.0 cent declared a year back. To address any potential confusion, the bonus shares that will be issued will not be entitled to the final dividend, however.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.