IPS Securex Holdings - RHB Invest 2017-02-13: Heavily Focused On 2HFY17

IPS Securex Holdings - RHB Invest 2017-02-13: Heavily Focused On 2HFY17 IPS SECUREX HOLDINGS LIMITED 42N.SI

IPS Securex Holdings - Heavily Focused On 2HFY17

  • We believe the bulk of IPS earnings delivery would be heavily weighted towards 2HFY17, with the majority of revenue recognition only occurring then. 
  • We expect sales – comprising USD12m of PepperBall-related and USD3m of Hyperspike-related products – to be recognised in 2HFY17. 
  • In light of the higher opex due to the Yatai acquisition, we lower our FY17F NPAT by 15%. This results in our DCF-backed TP being lowered to SGD0.34 (from SGD0.40, 113% upside), which implies 13x FY18F P/E. However, we still remain optimistic on its outlook and maintain our BUY call on this counter.



Pre-payment plan in place. 

  • We understand that a customer for IPS Securex’s (IPS) receivables has signed an agreement subsequent to the year end for instalments to be paid from Aug 2016-Sep 2018. 
  • IPS received an initial payment of SGD700,000 in Aug 2016. This payment would allow IPS to pare down its trade receivables. 
  • At the same time, it would enable the client to place a larger order with the firm, which would drive earnings in 2HFY17 (Jun).


Contracts are more heavily weighted towards 2HFY17. 

  • We expect sales – comprising USD12m of PepperBall-related and USD3m of Hyperspike-related products – to be recognised in 2HFY17. As a result, the majority of IPS’ revenue is likely to be only recognised during this period. This would result in its earnings to be heavily proportioned in 2HFY17.


Maintain BUY, with a lower DCF-backed SGD0.34 TP (from SGD0.40). 

  • In light of the higher opex due to the Yatai Security & Communications Pte Ltd (Yatai) acquisition, we lower our FY17F NPAT by 15%. This results in our DCF- backed TP being lowered to SGD0.34, which implies 13x FY18F P/E. 
  • However, as we still remain optimistic on its outlook, coupled with a jump in earnings, we maintain our BUY recommendation on this counter.




Jarick Seet RHB Invest | http://www.rhbinvest.com.sg/ 2017-02-13
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 0.340 Down 0.400





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