IPS Securex Holdings Limited - RHB Securities 2015-09-01: Share Split To Address Liquidity Concerns.

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IPS SECUREX HOLDINGS LIMITED 41E.SI

Share Split To Address Liquidity Concerns 

• IPS proposed a 1:3 share split to address its liquidity concerns. 
• Subject to approval from shareholders, this will increase their total number of shares from 162m to 486m; it could also be their second share split since listing. 
• With the USD50m Pepperball contract already secured, coupled with additional potential contract wins in the near future, we are bullish on IPS’s FY16 outlook. 
• Maintain BUY with a TP of SGD1.15 based on a 7.2x FY16 P/E. 

 Share split to address shares liquidity concerns. 

• With concerns from investors regarding its share trading liquidity, IPS management has decided to do another round of share split of every one share into three shares. Management believes the share split will broaden their shareholder base and each lot of shares will become more affordable, accessible and attractive to investors. 
• Subject to shareholders approval, this will increase their total number of shared from 162m to 486m while their issued and paid up capital will remain unchanged at SGD9.4m. 

 Total dividend payout unchanged. 

• IPS issued a SGD0.0075 final ordinary cash dividend for FY15. The dividend as adjusted for the proposed share split, if approved by shareholders, would be SGD0.0025 per share which means that the gross amount of dividends payable remains unchanged. 

 Exciting FY16 ahead – maintain BUY. 

• The spate of riots around the region and the growing dissent and distrust amongst the populace towards certain governments help to reinforce the need for more effective non-lethal weapons like PepperBall. 
• Being the best-in-class product for mid-range crowd-control, we believe PepperBall stands to benefit from the ensuing boost in demand following any increase in government budgets for such products. 
• In addition, we believe IPS will go ahead to secure more orders, especially from its Pepperball, Hyperspike and Cargo scanners related products with the expansion of six airports in Thailand. 
• With such a positive outlook ahead, coupled with a potential special dividend in FY16F, we Maintain BUY with a SGD1.15 TP based on a 7.2x FY16 P/E.

Jarick Seet | http://www.rhbgroub.com/ RHB Securities 2015-09-01

BUY Maintain BUY 1.15 Same 1.15