Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

Insights across South East Asia

Equity Bottom-Up

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<li>
<a href="https://www.smartkarma.com/entities/rex-international-holding" target="_blank" data-smartkarma-citation="entities:17074:1" rel="noopener">Rex International Holding (REXI SP)</a> has announced further investments outside of its core oil&amp;gas portfolio both related to its major shareholder. A major red flag.</li>
<li>It is unclear whether these investments will bring real value to Rex as minority investors generally hate related party transactions without clear justification.</li>
<li>The latest drilling campaign in Oman again encountered operational issues giving fuel to the bears that Rex is not capable of successfully operating its own fields.</li>
</ul>

<ul>
<li>Rex reported a disappointing set of results mainly due to continued struggles in Oman. While Oman production was well over 10K bpd in 1H21 it deteriorated every month in 1H22.</li>
<li>Revenue was 99.45M USD (+31%) but we estimate it would have been closer to 149M USD if the Yumna field wouldn't have stopped producing for almost 70 days in 1H22.</li>
<li>YTD stock is -23% and can only reverse if management proves Oman is ready to rebound. Dividend payments will start on a quarterly basis as of October 2022.</li>
</ul>

<ul>
<li>Rex will soon close a disappointing 1H22 as equipment upgrades and maintenance hamper production in Oman. Recently production was halted again due to a small oil leak in its flowline.</li>
<li>Norway's production has been declining in 1H. Rebound hopefully in 2H. New bond financing was announced for more Norwegian M&amp;A. Malaysian assets to get the green light in 2H22.</li>
<li>Rex remains very cheap but needs to deliver on operational milestones to unlock value. YTD share price performance has lagged sector peers substantially.</li>
</ul>

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rex-international-holding" target="_blank" data-smartkarma-citation="entities:17074:1" rel="noopener">Rex International Holding (REXI SP)</a> will report results around 25/2/2022; we expect a major 2H21 performance inflection as the Norwegian Brage field cash flow is included from 01/01/2021.</li>
<li>According to a press release on 13/1/22 the company is actively applying to uplist from Catalist to the mainboard. We see no reason why SGX should not grant this application.</li>
<li>Rex's Oman production has disappointed in 4Q21 but cash flow-wise shortfall should be made up by higher oil prices and Brage. Maiden dividend announcement should be forthcoming.</li>
</ul>

<a href="https://www.smartkarma.com/entities/rex-international-holding" target="_blank" data-smartkarma-citation="entities:17074:1" rel="noopener">Rex International Holding (REXI SP)</a> has been a forgotten oil stock on the SGX. Last year we tried to highlight the opportunity to investors already <a href="https://www.smartkarma.com/insights/rex-int-from-virtual-drilling-tech-play-to-pumping-oil-in-oman-overlooked-bargain-m-a-candidate" target="_blank" data-smartkarma-citation="insights:41575" rel="noopener">Rex Int: From Virtual Drilling Tech Play to Pumping Oil in Oman; Overlooked Bargain + M&amp;A Candidate</a>.As we learned with our bullish drumbeat on <a href="https://www.smartkarma.com/entities/ug-healthcare-corp-ltd" target="_blank" data-smartkarma-citation="entities:254:1" rel="noopener">UG Healthcare (UGHC SP)</a> a few years ago sometimes Mr. Market can be a bit slow. Recall, we were bullish on UGHC all of 2018/2019 highlighting its massive undervaluation, and then... it went up 1,000%+ last year. Rex reminds us of UGHC in 2019. Rex is not guaranteed to go up 1,000% but it has a pathway there (think oil at 100 USD/bbl) and should AT LEAST double in 2021. This is a high conviction idea.Below the fold, we give the math of how increased production at its Yumna field in Oman should lead to massive cash flows and earnings from 1H21 onwards. Once market participants "get it" and see the cash gush in this has to lead to a re-rating. If Mr.Market remains asleep an industry player will almost certainly come to the table and acquire Rex outright. Given the age of the main shareholders, this is more a question of "when" rather than "if".

Singapore

Rex International Holding Limited is a production and exploration oil company with concessions in Norway, UAE, Oman, and the US.

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Rex International Holding (REXI SP)

Rex: Diversification or Deworsification?

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Preview Rex International: 1H22 Results

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Preview Rex International FY21 Results: Prime Beneficiary Of Rising Oil Price

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Rex: Oman Production Gaining Steam; Could It Really Trade at 1x 2021 Pre-Tax Profits?

Rex is a misunderstood oil company trading on SGX. Our calculations show the stock could be trading at +/- 1x 2021 pre-tax profits. There is wild...

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