Stock Review – REXIT (0106) (REXIT BERHAD)

 

Bursa Malaysia - 0106

Bloomberg - REXI:MK

Reuters -  REXT.KL

Webpage - https://www.rexit.com/

Yahoo - 0106.kl

Sector            : Technology

Sub Sector    : Software

Focus             : Software (Financial and Insurance)

Company Profile

Rexit Berhad (REXIT) is a company that focuses on delivering solutions and services to Financial Service Sector particularly the General Insurance Industry.

REXIT had three product namely:-

1. e-Cover - Enabling online insurance transaction

• Provides electronic link between insurance companies and Malaysia Road Transport Department (“JPJ”)

• Manage and operate the my Salam portal for eligible members, on 29 July 2019 amended agreement was signed to a five year term subject to regulatory authority approval. Initial approval from 1 January 2019 to 31 December 2020 further extension for 2 years after expiry.

2. e-PPA - Enabling online unit trust investment through EPF

• Industry platform for submission of unit trust investment and redemption applications which are settled electronically using the EPF member’s contribution.

3. InfoGuardian - Enabling online legal documentation

• Is an integrated workflow, case management and document management system specially designed for financial and legal services industries, to provide and facilitate an online information sharing environment for multiple users within and outside customer organication

• One local bank (RHB Bank) and international bank (Al Rajhi Bank) together with their panel of legal firms and property valuation firms is using the service.

Income Statement

	30 Jun 2020	30 Jun 2019	30 Jun 2018	30 Jun 2017	30 Jun 2016
Revenue	25,540,000	22.720.000	21,840,000	20,580,000	18,840,000
Cost of Goods Sales	6,930,000	6,420,000	5,750,000	5,610,000	4,930,000
Earning Before Tax	12,850,000	10,510,000	10,270,000	9,840,000	8,840,000
Nett Profit	9,520,000	7,890,000	7,860,000	7,550,000	6,860,000
5 Years CAGR of Revenue					6.27 %
5 years CAGR of Nett Profit					6.77 %

REXIT revenue and net profit had increased steadily for the past five years. However after look in the 2020 annual report  there is no revenue recognised at the point in time for year 2020. Revenue recorded in the income statement would only be recognised in the future.There is a risk that the customer is unable to pay to REXIT in the future. 

Asides that, 3 major customers had contributed 48.91 % of its 2020 revenue. REXIT is mainly focus in 2 countries Malaysia and Hong Kong, 81.20 % of REXIT 2020 revenue are from customers located in Malaysia while Hong Kong customers contributed 16.43 % of the revenue.

Balance Sheet

	30 Jun 2020	30 Jun 2019	30 Jun 2018	30 Jun 2017	30 Jun 2016
Account Receivable	6,204,306	5,250,035	2,734,900	2,520,588	2,641,530
Percentage of Account Receivable Past Due	50.80 %	68.76 %	18.95 %	10.20 %	29.20 %
Current Ratio	4.98	8.31	11.57	10.20	7.84
Cash / Current Asset	65.34 %	82.06 %	90.31 %	89.30 %	88.33 %

In 2019 there is a significant increase in account receivable from RM 2,734,900 in 2018 to RM 5,250,035 in 2019 91.96 % increase mainly due to the My Salam Portal. However the percentage of account receivable past due had also increase to 68.76 % in 2019 from 18.95 in 2018. In 2020, 76 % of account receivable are from 4 major customers.

REXIT had high current ratio and high cash / current asset ratio. In 2020 there is an decrease in cash / current asset ratio mainly because REXIT had invested in other investment which the management would like to hold for a longer term instead of cash fund. For the financial year ending 30 June 2020, RM 17,932,000 had invested into the other investment and only receive RM 63,216 dividend from the investment. Base on Quarter 3 2021 report,  the investment had increase its value to RM 18,775,000, 4.7 % increase. This unrealized gain would be recorded in other comprehensive income hence it would not effect the nett profit of REXIT.

Cash Flow

	30 Jun 2020	30 Jun 2019	30 Jun 2018	30 Jun 2017	30 Jun 2016
Cash Flow from Operation	8,780,000	6,020,000	7,850,000	7,140,000	9,500,000
Cash Flow from Investing	-17,730,000	-290,000	540,000	550,000	10,430,000
Cash Flow from Financing	-6,150,000	-6,470,000	-5,770,000	-5,730,000	-4,350,000
Free Cash Flow	8,450,000	5,020,000	7,590,000	6,940,000	9,230,000
5 years CAGR of Cash Flow from Operation					-1.56 %
5 years CAGR of Free Cash Flow					-1.75 %

REXIT had negative growth for cash flow from operation and free cash flow. Asides that, REXIT had constantly repurchased back its own share, in 2020 RM 865,728 had been spent for share repurchase and 15,071,500 shares (7.96 %) are held as treasury shares.

Per Share Analysis

	30 Jun 2020	30 Jun 2019	30 Jun 2018	30 Jun 2017	30 Jun 2016
Share Outstanding	174,260,000	176,000,000	178,100,000	178,660,000	179,250,000
Price 30 Jun	0.585	0.685	0.645	0.865	0.52
BV/Share	0.23	0.21	0.20	0.19	0.18
P/E	10.71	15.28	14.62	20.47	13.59
5 years CAGR of Price					2.38 %

REXIT had low P/E ratio. REXIT price is 2.54 times higher than its BV.

Dividend

	30 Jun 2020	30 Jun 2019	30 Jun 2018	30 Jun 2017	30 Jun 2016
Dividend Per Share	0.03	0.03	0.03	0.03	0.02
Dividend Payout	54,91 %	66.92 %	67.98 %	70.99 %	52.26 %
Dividend Yield	5.13 %	4.38 %	4.65 %	3.47 %	3.85 %
10 year Malaysia Government Bond	3.03 %	3.72 %	4.21 %	3.91 %	3.58 %

REXIT had high dividend yield higher than 10 year Malaysia Government Bond. For financial year 2021 REXIT had pay out RM 0.04 dividend.

Research Report

No recent research report

Peer Analysis

	REXIT	APPASIA	CENSOF	EFORCE
P/E	16.35	213.01	10.31	25.03
Dividend Yield	4.47	0.00	1.50	0.85

REXIT has a high dividend yield compared to others.

Technical Analysis

REXIT daily chart shows consolidation at 0.89.

Weekly chart show downward trend with support at RM 0.63.

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