Industry Comparison – Port Operation

Sector             : Transportation and Logistics

Sub Sector     : Transportation and Logistics Service

Focus : Port Operation

Industry Review

Base on Linear Shipping Connect Index  (LSCI) which measure the maritime connectivity base on five components annually

1. The number of shipping lines servicing a country

2. The size of the largest vessel used in services (in TEU)

3. The number of services connecting from one country to another country

4. The total number of vessels deployed in a country

5. The total capacity of those vessels (in TEU)

From the table published by UNCTAD, the LSCI around the world does not reduce despite the Covid 19 Pandemic. As of Q3 2020 Malaysia ranked 4th in the Asia region right behind China, Singapore and Korea while ranked 5th in the world behind China, Singapore, Korea and the United States of America.

Malaysia had 3 public listed company listed in BURSA Malaysia which is

1. Bintulu Port Holdings Berhad (BIPORT) - SARAWAK

2. MMC Corporation Berhad (MMCCORP) - Straits of Malacca and Saudi Arabia

3. Westports Holdings Berhad (WPRTS) - Port Klang

Business Diversification

Let look at the business diversification of the company by looking at the percentage of revenue obtained from port operational business.

Company	Revenue 2020 (Port Operation)	Percentage of Revenue (Port Operation)
BIPORT	RM 669,285,000	93.51 %
MMCCORP	RM 3,261,390,000	69.61 %
WPRTS	RM 1,974,968,000	100.00 %

From the table above MMCCORP had the highest revenue for financial year 2020 however MMCCORP had diversified into other business such as, energy and construction instead of just focusing on port operation. Both MMCCORP and WPRTS had operations in port klang while WPRTS had around 80 % of market shares in port klang. MMCORP had operated other ports located in Penang, Johor and Saudi Arabia asides port in port Klang.

BIPORT operated ports in Bintulu, Sarawak with 93.51 % of the revenue are from port operation while the remaining are from bulking service.

Operation

Operational margin ratio is calculated and use as a comparison. Companies with the highest operating ratio have more probability to survive in today's pandemic. The average operational margin ratio of the three companies for 2020 is 33.61 %

Company	Operating Margin Ratio 2020	Operating Margin Ratio 2019
BIPORT	25.52 %	31.82 %
MMCCORP	28.21 %	22.10 %
WPRTS	47.11 %	47.61 %

BIPORT operating margin had affected by the pandemic with a reduction from 31.82 % in 2019 to 25.52 % in 2020 which is 19.80 % reduced while the other two companies are not affected much from the pandemic.

WPRTS had the highest operating margin ratio compared to the other two companies in 2020 and 2019.

Sustainability

For the sustainability of the business, debt of the companies is being reviewed. There are two criteria to look at the interest coverage ratio which is use to determine how easy the companies able to pay off the interest of outstanding debt and debt to equity ratio. The average of interest coverage ratio for 2020  is 5.73  and debt to equity ratio is 0.62.

Company	Interest Coverage Ratio 2020	Debt to Equity Ratio 2020
BIPORT	2.43	0.68
MMCCORP	3.48	0.71
WPRTS	11.28	0.46

WPRTS have the highest interest coverage ratio and lowest debt to equity ratio for the year 2020.

Assets & Liabilities

5 years Compound Annual Growth Rate (CAGR) of assets and liabilities were calculated to make comparison.

Company	5 years CAGR of Assets	5 years CAGR of Liabilities
BIPORT	1.11 %	-1.12 %
MMCCORP	1.52 %	2.15 %
WPRTS	2.52 %	-3.76 %

Summary

From the above comparison WPRTS is worth further detailed analysis.

Summary of Stock Reviews

Summary of Industry Comparison

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.

Summary of Stock Reviews

Summary of Industry Comparison