KGI Research Singapore

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Rex International Holding Ltd (REXI SP)

Company Update: 11 March 2022

Rolling like the good old times

  • Harvest time for oil & gas companies. On 28 Feb, Rex reported FY2021 net profit of US$78.9mn, a significant turnaround from the US$15.2mn loss in FY2020. This was on the back of US$67 per barrel average realised oil price in FY2021, almost double compared to US$34 it realised in FY2020.
  • Record free cash flows. In FY2021, Rex generated US$110.2mn in EBITDA. The group’s cash and equivalents and quoted investments totalled US$86.9mn as at end-2021, an 88% increase from US$46.4mn as at end-2020.
  • Good old times. Oil prices are now trading at levels when oil companies were partying like there was no tomorrow (2012 to 2014). However, most of the price increase in the past month was driven by supply disruptions due to Russia’s attack on Ukraine. We believe a more sustainable and healthy oil price should be between US$90-110 per barrel in order to avoid demand destruction.
  • We maintain an Outperform recommendation while raising our DCF-backed target price to S$0.54, mainly as we factor in higher oil prices of US$90 in our base-case.

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