ISOTeam Ltd’s Latest Earnings: What Investors Need to Know

ISOTeam Ltd (SGX: 5WF), which was established in 1998, is involved in the building maintenance and estate upgrading industry in Singapore. It has four business segments – Repairs and Redecoration (R&R), Addition and Alteration (A&A), Coating and Painting (C&P) and Others.

Last week, the firm announced its financial results for the third quarter and nine months ended 31 March 2018. Here are 10 things investors should know about the latest results:

1. Revenue for the quarter fell 10.6% year-on-year to S$14.7 million. All business segments, except the Others segment, posted lower revenue. R&R, A&A and C&P business segments were affected by lesser work performed for the quarter.

2. For the nine-month period, revenue rose 3.9% to S$63.6 million. ISOTeam said that the rise was mainly due to higher revenue at the A&A and Others business segments. This was partially offset by a fall in revenue at the C&P business segment due to lesser work performed.

3. Net profit for the quarter plunged 52% to S$480,000 while that for the nine-month period declined 23.5% to S$3.9 million.

4. Consequently, diluted earnings per share for the nine months ended 31 March 2018 came in at 1.36 Singapore cents, down from 1.78 cents a year ago.

5. Net profit margin for the latest nine-month period stood at 6.1%, down from 8.3% a year ago.

6. As at 31 March 2018, ISOTeam had S$12.5 million in cash and bank balances while total debt was S$23.4 million. This gives a net debt position of S$10.9 million. In contrast, it had S$6.0 million in net debt at the end of June 2017.

7. Operating cash flow for the latest nine-month period was S$2.1 million as compared to negative S$6.3 million a year back. With capital expenditure coming in at S$4.1 million, for the nine months ended 31 March 2018, free cash flow was negative S$2.0 million.

8. Looking ahead, the firm said that it is “optimistic that its established track record and multi-disciplinary capabilities in the built environment gives it a competitive edge when tendering for new projects in both the private and public sectors”.

9. Last month, ISOTeam finalised the link up with a Japanese firm, Taisei Oncho, with an aim to expand its mechanical and electrical engineering arm. This could create another separate business segment for the group. Also, operational efficiencies should improve after ISOTeam relocated to its new corporate headquarters in Changi recently.

10. As at 4 May 2018, ISOTeam had an order book of $84.4 million, which is expected to be delivered over the next two years. The company “expects to further build on the order book in the coming months”.

ISOTeam last changed hands at S$0.35 per share on Friday. This gives a price-to-earnings ratio of around 17 and a dividend yield of 1.9%.

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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 owns shares in ISOTeam Ltd.