In the bustling REITs space, " high quality" counters including CapitaLand Integrated Commercial Trust  CapitaLand Ascendas REIT  and Mapletree Industrial Trust  could benefit from yield-seeking family office mandates.

Last but not least, the increased focus in local equities should drive flows to various small and mid caps such as CSE Global  Frencken Group  , AEM Holdings  and ISOTeam, says Wickramasinghe.

 

ISOTeam, a building maintenance and estate upgrading company, is collaborating with HOMA2U (H2U), a home improvement retail company from Malaysia on building material-matching and overstock solution platform.

 

H2U is a subsidiary of HOMA, a Malaysian company managing new materials and overstocks in the building material industry. 

 

The group explains that the collaboration is to reduce waste and add value to businesses in the construction industry. The platform that the two will collaborate on will provide an avenue for the sale of building materials and overstock. 

 

Both companies intend to leverage AI to create the platform. ISOTeam&rsquo s BuildTech, a wholly-owned subsidiary that is working to commercialise indoor painting robots, autonomous facade washing and painting drones, will provide network access to construction industry and market insights. 

 

The collaboration will take place for 12 months, and the profit sharing arrangement shall be 80%-20% between H2U and ISOTeam BuildTech respectively. The collaboration will be fully funded by HOMA. 

 

Maybank Securities analyst Jarick Seet has initiated coverage on ISOTeam with a &ldquo buy&rdquo call and 9 cents target price, on the premise that the painting contractor&rsquo s drone-painting system is a &ldquo game-changer&rdquo that can help generate better margins and win more contracts.

 

ISOTeam is known as a major contractor hired to give public housing new coats of paint. 

 

According to Seet in his Feb 12 report, the company has cornered a market share of around 30%.

 

As of Sept 6, 2024, the company has built up an order book of $202.4 million. 

 

In the current FY2025, the company is seen to improve its profitability as it puts behind lower-margin contracts in FY2024.

 

&ldquo We believe FY2025 will be an inflection point for its profitability and the launch of its AI drone-painting solution on an HDB site in April and will be rolled out at more estates if successful,&rdquo says Seet.

 

Seet points out that ISOTeam is the only local player with this drone-painting solution. &ldquo This should enable it to leapfrog competitors with 30% to 40% lower costs, aligning with the government&rsquo s push to reduce manpower,&rdquo he adds.

 

Seet estimates ISOTeam to enjoy better margins of 30% &mdash up from 20% &mdash by deploying the drones. This could, in turn, help the company bid and win for more contracts. 

 

&ldquo With a general election in Singapore slated for this year, more government projects will likely come up for grabs, putting ISOTeam in a prime position to benefit,&rdquo says Seet.

ISOTeam also has a 30% dividend payout policy, translating to a 4.7% yield for FY2025. 

 

The analyst observes that the company&rsquo s key executives will also increase their respective stakes in the company by buying more shares so as to signal their optimism.

 

&ldquo Risks to our call include labour and raw material costs increase as well as execution issues on its drone project,&rdquo says Seet.

 

Swing factors noted by the analyst include improving margins and higher revenue from more project wins, drone technology advancement, the stock&rsquo s turnaround play and finally, ISOTeam as a potential beneficiary of the Singapore election in 2025. 

 

Conversely, downsides include regulatory changes on foreign labour quota and a competitive tender landscape.