Rex International - UOB Kay Hian 2023-03-21: Not The Oil Price Play That We Expected; Downgrade To SELL

• Rex International managed to only eke out a small profit in 2022 despite average oil prices jumping 42% y-o-y due to poor oil production performance.
• Importantly, Rex International’s two interested party transactions into drone and medical technology, both of which are unrelated to the company’s core upstream oil and gas business, may be of concern to investors.
• - Read this at SGinvestors.io -

A double whammy to REX; downgrade to SELL.

• Along with its poor 2002 results, Rex International (SGX:5WH) reported that it is diversifying into two unrelated sectors (drone and medical technology). To compound the latter issue, the diversification is via interested party transactions (IPT). As a result, we downgrade Rex International to a SELL rating and lower our target price to S$0.10, implying a 34% downside from current levels.

Moving away from oil and gas.

• - Read this at SGinvestors.io -
• These stakes were acquired from Rex International’s substantial shareholders Dr Karl Lidgren and Hans Lidgren (as well as Dr Lidgren’s brother, Lars Lidgren) and involve a commercial drone company and a medical technology company focusing on cancer therapy.

Barely breaking even in 2022 despite record oil prices.

• Read more at SGinvestors.io.

Llelleythan Tan UOB Kay Hian Research | Adrian Loh UOB Kay Hian | https://research.uobkayhian.com/ 2023-03-21 SGinvestors.io

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