Nicolas Van Broekhoven

Insight Provider

Equity Bottom-Up

<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 trading up recently (+61% YTD) on the back of strong oil prices (consistently above 70 USD/bbl) and expectations that its 1H21 report in August will show shareholders the significant cash flow which is being produced from its Oman assets.The deal to buy some of Repsol's Norwegian assets (see previous insight) also increases optionality for Rex's management to create value for shareholders should the SGX listing continue to trade at depressed levels. Rex has successfully completed a 60M USD bond sale to finance the transaction effectively reducing risk for equity holders.Historically, Rex owned around a dozen exploration licenses in Norway but the Repsol transaction means they will now become a producer with corresponding cash flow. Once the transaction closes later this year that creates the option to consider an IPO of its Norwegian assets on the Oslo exchange in 2022/2023. Norwegian investors are very familiar with oil producers/exploration companies and might give Rex's 90% owned subsidiary Lime Petroleum a better valuation. Rex would then hold a stake in the Yumna field (Oman) and a certain percentage in publicly listed Lime Petroleum. The eventual end-game has not changed: given the age of the principle shareholders we believe Rex will see a lot of corporate activity going forward. We are unsure of the timeframe and shape/form this takes (spin off, partial divestments, partial return of capital, one-off dividends, large share buybacks, 100% sale to different owners etc) but the latest Norway news increases the optionality for the better.

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Rex International Holding

Rex: Norway Oil Deal Increases Optionality to Create Shareholder Value