Rex International - UOB Kay Hian 2024-03-12: Worse-Than-Expected 2023 Results; Disclosure Levels Need Addressing

• Rex International reported a large US$64m loss for 2023 with higher-than-expected depletion, and impairment of its oil & gas properties and interest expenses overcoming a slight recovery in its oil production.
• - Read this at SGinvestors.io -

Another year, another loss reported.

• Rex International (SGX:5WH) reported a 22% y-o-y increase in revenue that was 5% ahead of our estimates due to slightly stronger than expected production. However, its results were yet again negatively impacted by material increases in the depletion and impairment of its oil & gas properties.
• A near doubling of its interest expenses to over US$23m did not help its bottom line which recorded a loss of US$64m vs a loss of US$1m in 2022.
• - Read this at SGinvestors.io -
• As expected, Rex did not declare a dividend (2022: US$0.005).

Poor disclosure levels need to be addressed.

• Whilst a commendable practice to issue monthly production numbers, we highlight that Rex International did not disclose its total oil production for 2023 nor its realised oil price which is common practice with oil & gas companies globally during their annual and interim results.
• Although the company has two oil fields in Norway (Brage and Yme), it has chosen to disclose only an aggregate Norway production number from 4Q23. In addition, we were surprised that Rex International did not host a 2023 results briefing which may lead to some investor questions regarding its governance standards.

A number of impairments.

• Read more at SGinvestors.io.

Llelleythan Tan UOB Kay Hian Research | John Cheong UOB Kay Hian | Adrian Loh UOB Kay Hian | https://research.uobkayhian.com/ 2024-03-12 SGinvestors.io

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