Brokers' take

Wing Tai

Buy

OCBC Investment Research, Aug 21

Aug 21 close: S$1.71

Target price: S$2.58

We see sales slowing in the months ahead due to the lunar seventh month and the elections, and the outlook for the domestic residential space remains fairly muted. This is particularly so for the high-end segment, and sales at Wing Tai's luxury projects will likely experience continued headwinds going into 2H15, barring a reversal of the additional buyer's stamp duty on foreigners. In order to conserve cash and further buttress its balance sheet, Wing Tai reduced its FY15 dividend to three Singapore cents from six cents last year. We believe the group is well positioned to ride out the current down cycle and see significant long-term value in its shares, now valued at 43 per cent of its book value.

IPS Securex

Buy

RHB, Aug 21

Aug 21 close: S$0.77

Target price: S$1.15

IPS announced a 0.75 cent dividend for 2H15, bringing total FY15 dividend to 1.5 cents, representing a 1.9 per cent FY15 dividend yield. Going into FY16, we expect IPS to have a 1,054 per cent surge in NPAT (net profit after tax) mainly due to the US$50 million PepperBall contract that is to be recognised in FY16. Management mentioned that it is keen to reward its shareholders with a higher dividend payout or special dividends if it delivers strong results in FY16, which we estimate to lead to a 6 per cent FY16F yield, based on a 30 per cent payout.

The spate of riots around the region, and the growing dissent against some 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 will benefit from the demand boost.

Ezion

Buy

UOB KayHian, Aug 21

Aug 21 close: S$0.57

Target price: S$1.40

EZION is expected to take delivery of six additional vessels in 2H15 and another six in 2016. This will increase its fleet of liftboats and service rigs to 29 vessels by end-2015 and 37 by end-2016, from 25 in June 2015.

Despite 2Q15's setbacks, we expect Ezion to redeem itself when earnings get back on track from 4Q15 onwards. Besides an earnings rebound on a margin recovery, Ezion's earnings will also expand as additional liftboats and service rigs become operational. Unit switching in 2Q15 and 3Q15 and current operational delays have merely deferred earnings recognition to 2017 and beyond. Ezion's contracts remain intact, customer demand is healthy and the visibility of its long-term revenue is intact. Our target price of S$1.40 is based on 2016F P/B of 1.01x (premised on Brent oil price at US$70 per barrel).

Compiled by Melissa Tan