M+ Online Research Articles

Rexit Bhd - Ended FY24 Within Expectations

MalaccaSecurities
Publish date: Wed, 28 Aug 2024, 09:33 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

All materials published here are prepared by Malacca Securities. For latest offers on Malacca Securities trading products and news, please refer to: https://www.mplusonline.com.my

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Summary

  • In-line with expectations. For 4Q24, REXIT recorded a core PATMI of RM2.9m (- 14.2% QoQ, -19.7% YoY), bringing the FY24 core PATMI to RM13.2m (+19.9% YoY). The results were in-line with our and consensus earnings forecasts, at 100.8% and 101.6%, respectively.
  • QoQ. Core PATMI dropped 14.2% QoQ from RM3.4m to RM2.9m, reflecting lower revenue due to reduced software customization service and higher administrative expenses. Although the core PATMI margin slightly declined to 39.8% for the quarter, the overall FY24 core PATMI margin remained stable at 41.2%, similar to FY23’s margin.
  • YTD. However, for FY24, core net profit rose by 19.9% YoY, driven by the increased in hardware, systems software sales and software sales and services. In line with the rising revenue, the PAT also grew by 19.9% YoY, reaching RM13.2m.
  • Outlook. We believe REXIT’s business operations remain sturdy, as demonstrated by the growth in both top- and bottom-line numbers, along with stable profit margins, which stood at 41.2% for the past two years. Earlier this year, REXIT appointed Mr Wong Tack Heng as COO, a seasoned professional with extensive experience in leading technology initiatives across various industries. Additionally, Datuk Seow Gim Shen, was appointed CEO,bringing strong leadership experience from both local and Nasdaq-listed companies.
  • Net cash position. As of FY24, REXIT’s net cash position stood at RM33.2m (21.0% of market cap), translating to a net cash per share of 19.2 sen.This strong cash position will support future capex needs and allow for shareholder dividends.

Valuation & Recommendation

  • Reallocating resources and cease coverage. Despite the stable outlook on REXIT, we terminate our coverage on REXIT due to a reallocation of resource. Our last rating on the stock was a BUY with a target price of RM1.16, pegged to a P/E of 14.0x applied to FY25f EPS of 8.3 sen. We also assume a payout ratio of 70.0% of its distributable income from FY25f, translating to dividend per share of 5.8 sen and a dividend yield of 6.4%.

Source: Mplus Research - 28 Aug 2024

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