Wednesday, 24 May 2017

ISOTeam - Why I Like This Counter

ISOTeam has recently released its quarter results and there are many excellent articles online that discuss about the good and bad of this counter.

Hence I am not going to repeat the same thing. Instead I am just going to write about why I'm still vested and why I like ISOTeam.

Usually when a company caught my eye which led me to delve deeper into the good and bad, I would start with the macro environment and nature of business, and finally the several fundamental criteria which I look out for in a company.

Macro Environment

I like businesses that are in line with and that can leverage on the government's policies.

The outlook for the construction sector at least for the next two years looks promising with the push from our government.

Being in the construction industry though not directly as a builder, ISOteam is poised to benefit from the upgrading and A&A projects coming along as a result.

Nature of Business

Simply put, I like ISOTeam for its defensive and recurring business.

Being an environmental-conscious person, I also like the Green and Eco-friendly initiatives from the company such as the development of green products which could be a new source of income (E.g. enzyme-based pesticide).

Apart from their traditional core businesses, they are also constantly looking into building up other capabilities which ride with the trend around the world.

One example is their installation capability in renewable energy which is an area where the government is heading into (Synergy with government policies).

ISOTeam currently has an order book of more than S$94 million which will be progressively delivered in the next two years (Top line stability).

Looking at the list of current projects on their website (provided the list is updated), one can see that they have quite a number of ongoing projects that will contribute to the top and bottom lines in the near future.

The Management

One big plus for me is the bold and forward-looking management team of ISOTeam.

I like how they grow the company organically and inorganically (New products & services and M&As).

They have also proven to be unafraid to invest when the opportunity arises (Sunseap).

On the M&A side, they have also been aggressive when they deemed the target synergistic to IsoTeam.

One example is Rong Shun, which by the way has a profit guarantee as contribution to ISOTeam's bottom line.

Others

Mr Goh Cheng Liang is a substantial shareholder of ISOTeam. And he happens to be Singapore's richest man as well.

When you invest in the same company with an astute man as Mr Goh, you tends to feel safer.

I'm not saying things will go smoothly for sure. But at least this can makes me sleep more soundly at night. Knowing that my vested interest is the same as this man.

Lastly, there is also a dark horse in ISOTeam. And that is their Myanmar's venture (Growth catalyst).

In my opinion, this has the potential to be the biggest contributory factor in the performance of the company in the mid to long term.


If you believe in the fundamentals of a company and if you don't buy in during the bearish trend, then when?

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