ISOTeam has raised gross proceeds of about $10 million from its share placement and convertible bond placement exercise.

 

The convertible bond placement in the aggregate principal amount of $3 million which may be converted into 32.9 million conversion shares at approximately 9.1 cents per share was fully placed out to three bond investors, namely Asdew Acquisitions and two other private investors.

 

Meanwhile, the share placement of 86.2 million new ordinary shares at a placement price of 8.1 cents per share was fully subscribed. It attracted institutional investors including Lion Global Investors, Asdew Acquisitions, ICH Capital, Ginko-AGT Growth Fund, Areca Capital and Azure Capital.

 

The company, which is in the building maintenance and estate upgrading business, says that about 60% of net proceeds will be used for commercialisation and final development of drones.

 

The remaining proceeds will be used for working capital needs, including corporate expenses, hiring of drone pilots, software engineers and other related talent.

 

ISOTeam is seeking to raise $10 million through the proposed placement of new shares and convertible bond placements to support its drone initiatives.

 

The fundraising exercise will comprise the proposed placement of about 86.2 million new ordinary shares at 8.1 cents per share that will raise about $7 million, and a proposed convertible bond placement through the allotment and issue of 32.9 million conversion shares at 9.1 cents per share which will raise about $3 million.

 

SAC Capital has been appointed the agent for the share placement, while SooChow Singapore Capital Markets is the agent for the convertible bond placement.

 

The convertible bonds will bear an interest rate or 4% per annum (p.a.) with a maturity date of 36 months from the date of issue.

 

ISOTeam has been exploring drone technology since 2021 through a collaboration with a technology partner which has led to the use of AI-enabled drones for facade inspection works.

 

The group is now in the final stage of approval processes and commercial trials for its facade painting and washing drones, and funds raised will help it increase resources to evolve the technology until commercialization.

 

&ldquo What started as a project to resolve manpower supply issues during the Covid-19 pandemic is finally coming to fruition. The drones can work quickly and tirelessly with greater accuracy. This will reduce our reliance on foreign workers and result in time and manpower cost savings as well as enhanced work-site safety,&rdquo says Anthony Koh, CEO of ISOTeam.

 

Natalie Ong and Lim Siew Khee of CGS International have raised their target price for ISOTeam to 11 cents from 10.2 cents, following news that the company is raising $10 million to ramp up its drone deployment, meant to help the painting contractor capture more business efficiently.

 

The company plans to raise $7 million via a placement of new shares at 8.126 cents each, plus $3 million from issuing 3-year, convertible bonds carrying a coupon of 4%.

 

ISOTeam plans to allocate 40% of the proceeds to buy 60 drones, another 40% for drone-related working capital, including hiring and training people, and 20% for other drone-related development and matters.

 

" We believe the debut of ISO&rsquo s faç ade painting drone is imminent," state Ong and Lim in their Sept 17 note.

 

They are projecting 50% drone utilisation for the coming FY2027 and 100% in the following FY2028, which could lift margins.

 

The analysts estimate that the faç ade painting drone and indoor painting robots, which the company expects to be deployment-ready in 1HFY2026, will be able to reduce painting-related cost by 30-40%. Painting contracts accounted for around a third of ISOTeam' s total work as at FY2025.

 

" We believe ISO&rsquo s more competitive cost structure (vs peers), improved productivity and workload bandwidth would enable it to increase its market share, specifically in the coating & painting segment."

 

Besides painting public housing, the drones can be used for commercial and industrial properties as well.

 

" The Singapore government has been a vocal advocate for the adoption of technology and AI solutions to boost productivity and workplace safety," say Ong and Lim.

 

To reflect cost savings from deploying drones, they have raised their gross profit margin estimates, resulting in higher earnings projections. By applying the same 8x earnings multiple, they have derived a new target price of 11 cents.