ISOTeam

[Bubbachuck]

I just realized there's no thread yet for ISOTeam. Let me start thread of this defensive growth company with a good FY2015 result.

• ISOTeam tops off landmark year with 34.1% growth in attributable net profit in FY2015 
  
• Posts healthy baseline growth despite incurring higher expenses largely relating to its active business acquisition and operations growth. 
  
• Growth driven mainly by strong performance of R&R segment and nine-fold revenue increase achieved by the Group’s newly expanded Others segment.
  
• Strong order book build-up in FY2015 with a project pipeline of S$84.7 million as at 30 June 2015
  
• Proposes final dividend of 1.15 Singapore cents per ordinary share for FY2015
  

FY2015 Result

<vested>

[Life is a game]

I just realized there's no thread yet for ISOTeam. Let me start thread of this defensive growth company with a good FY2015 result.

• ISOTeam tops off landmark year with 34.1% growth in attributable net profit in FY2015 
  
• Posts healthy baseline growth despite incurring higher expenses largely relating to its active business acquisition and operations growth. 
  
• Growth driven mainly by strong performance of R&R segment and nine-fold revenue increase achieved by the Group’s newly expanded Others segment.
  
• Strong order book build-up in FY2015 with a project pipeline of S$84.7 million as at 30 June 2015
  
• Proposes final dividend of 1.15 Singapore cents per ordinary share for FY2015
  

FY2015 Result

<vested>

hello Bubbachuck thanks for setting this thread. I like this company because of rising supply in SG housing and thus there will be a surge in maintenance of the housing which Isoteam is in a position to take advantage. one of SG richest is invested in this company too my last intrinsic value of this counter is 65 cents. vested

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[sykn]

I just realized there's no thread yet for ISOTeam. Let me start thread of this defensive growth company with a good FY2015 result.

• ISOTeam tops off landmark year with 34.1% growth in attributable net profit in FY2015 
  
• Posts healthy baseline growth despite incurring higher expenses largely relating to its active business acquisition and operations growth. 
  
• Growth driven mainly by strong performance of R&R segment and nine-fold revenue increase achieved by the Group’s newly expanded Others segment.
  
• Strong order book build-up in FY2015 with a project pipeline of S$84.7 million as at 30 June 2015
  
• Proposes final dividend of 1.15 Singapore cents per ordinary share for FY2015
  

FY2015 Result

<vested>

hello Bubbachuck thanks for setting this thread. I like this company because of rising supply in SG housing and thus there will be a surge in maintenance of the housing which Isoteam is in a position to take advantage. one of SG richest is invested in this company too my last intrinsic value of this counter is 65 cents. vested

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This is my best performing investment so far! The question is how much more of the R&R business is available for them to grab in order to sustain the explosive growth so far with ROE consistently of above 20% in the last 4 years?

[CityFarmer]

Yes, I have just started looking into company, due to "Nippon Paint"...

(not vested, and in the process to know more of the company)

[BlueDogMeow]

based on my valuation, isoteam is worth around $0.50 per share.

[Life is a game]

based on my valuation, isoteam is worth around $0.50 per share.

that... is really a low valuation. may I understand ur basis for the low valuation?

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[BlueDogMeow]

yeah sure. while it has a stable revenue line because it is very stable to the housing MUP, the margins aren't. current margins are enormous compared to historical margins. EBIT margins are ~6.6% on average since its inception, it is currently north of 12%. if one believes margins are cyclically high, you arent buying a 8.3x PE company, you are buying something close to 16x. The reason why I believe this is true is because this company has limited competitive advantage except capital to a small scale, and as anyone knows...competition will take a knife to ROIC.

Secondly, not only margins are cyclical, invested capital is also cyclical. many people forget about invested capital but it is a major point in the case of isoteam. The company's sales to capital ratio is ~3.2x which is very good. But it has historically been 2.6x. Doesn't seems much...but a rerate to 2.6x represents a substantial cash outflow on a no growth basis, and even worse on a growth basis.

combining this two factors, I get a valuation of 42c on a no growth basis and 55 cent on a growth basis. Or approximately a 50c average. I actually believe this is somewhat aggressive as it assumes the company has a ~18% ROIC on a 9% WACC at terminal....and since this is a company with limited competitive advantages, I believe ROIC is too high. Perhaps 14-15% is more logical.

I wont buy till it is closer to 30c.

[BlueDogMeow]

i would attach my model, but I cant because of reasons.

[Life is a game]

i would attach my model, but I cant because of reasons.

Hi Bluedogmeow. thanks for the feedback. my model is built upon eps, nav, roe, expected investor return in PE terms (using 12x at the moment) and dividend payout ratio. may I know the structure of your model if possible? if I push up the PE to 16x in my model then the intrinsic value is much lesser as you suggest. Your mos is indeed high at 30 cents

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[BlueDogMeow]

i used a firm based valuation method. so FCFF, ROIC, WACC.