■ Six airports in Thailand to undergo expansion and development works

Airports of Thailand (AOT TB, TAKE PROFIT, TP: THB251.00) has outlined plans to complete expansion and development works across all of its six airports within the next two years. We expect IPS Securex (IPS) to participate in tenders for supplying the US Transportation Security Administration (TSA)-certified machines in the baggage and cargo scanners space, which may potentially be worth up to USD250m. Typically, one machine may cost USD5m-10m and the gross margin is about 15-20%, followed by maintenance as its recurring revenue, which yields much higher margins. This may potentially add to IPS&rsquo earnings in FY16-17 if it is successful in the tenders.

 

■ Increased regional political instability could substantiate need

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.