Rex: Oman + Norway + Malaysia Is the New Trifecta; Stock Trades at 1.5x 2021 Earnings

1.5k Views20 Sep 2021 23:12
Nicolas has highlighted this Insight as a Top Pick

Rex International Holding (REXI SP) has fallen back from 0.25 SGD last month to below 0.19 SGD recently. This is despite oil prices staying around 70 USD/bbl and Rex reporting fantastic 1H21 results.

Rex also announced that after Oman and Norway it is studying to develop some oil fields in Malaysia. Rex is looking to diversify its production base so they are less dependent on one country. Cash is literally gushing in from its Oman assets and will accelerate in 2H21 as its Norwegian purchase of the Brage field will be accounted for in 2H.

Rex's stock is up 29% YTD but remains deep value on an absolute basis and relative to peers such as Hibiscus Petroleum (HIBI MK). We continue to believe Rex will at least double from current levels as at some point the growing cash flows can no longer be ignored by investors. The eventual end-game has not changed: given the age of the principal 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).

Get started on the Smartkarma Research Network with a complimentary Preview Pass to:
  • Unlock all research summaries
  • Follow top, independent analysts
  • Receive personalised alerts and emails
  • Access Briefings, Analytics, and Events

Upgrade anytime to our paid plans for full-length research, real-time analyst discussions, and more.

Join a thriving community of 45,000+ investors, including the top global asset managers managing over $13trn in assets.

Already have an account? Sign In Now
(Paid Plans Only)