A MEMBER OF THE TA GROUP
THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*
Rexit Berhad
Earnings Dragged by Higher Costs
Review
- Excluding a foreign exchange loss of RM0.4mn, Rexit’s IHFY25 core profit of RM3.9mn came in below expectations, accounting for 36.0% of our full-year estimate. The variance was mainly due to higher-than-expected manpower costs and depreciation expenses.
- YOY, IHFY25’s core profit dropped 39.6% to RM3.9mn while revenue stayed flat at RM15.8mn. The weaker bottom line was primarily due to higher depreciation, staff costs, and directors’ fees.
- QoQ, 2QFY25’s revenue fell by 0.9% to RM7.8mn, mainly due to lower software customisation service revenue. Coupled with higher cost of sales from implementing cybersecurity tools, a larger development team headcount, and higher administrative expenses, the group’s core profit declined 17.2% to RM1.7mn.
- Its balance sheet remains solid with zero debt and a net cash position of RM29.7mn as at end-2QFY25.
Impact
- Given the weaker-than-expected results, we cut FY25/FY26/FY27 earnings forecasts by 13.8%/12.7%/9.8%, respectively, after accounting for higher manpower costs and depreciation expenses.
Outlook
- Overall, we anticipate the group will continue delivering resilient revenue and stable growth, underpinned by the rising adoption of its eCover system by existing and new customers.
Valuation & Recommendation
- After revising the earnings forecasts, we revised the target price from RM0.72 to RM0.63, based on an unchanged PE multiple of 10x CY26F EPS. Maintain a Buy call on the stock.
Share Information
| Share Information | ||
|---|---|---|
| Bloomberg Code | REXI MK | |
| Stock Code | 0106 | |
| Listing | Ace Market | |
| Share Cap (mn) | 173.2 | |
| Market Cap (RMmn) | 85.7 | |
| 52-wk Hi/Lo (RM) | 0.92/0.495 | |
| 12-mth Avg Daily Vol (‘000 shrs) | 183.9 | |
| Estimated Free Float (%) | 30.0 | |
| Beta | 0.6 | |
Major Shareholders (%)
- Seow Gim Shen – 23.3%
- Metaco Asset – 18.0%
- Bemas Holdings – 11.9%
Forecast Revision
| FY25 | FY26 | |
|---|---|---|
| Forecast Revision (%) | (13.8) | (12.7) |
| Net profit (RMmn) | 9.2 | 10.8 |
| Consensus | ||
| TA’s / Consensus (%) | ||
| Previous Rating | Buy (Maintained) | |
| Consensus Target Price | ||
Financial Indicators
| FY25 | FY26 | |
|---|---|---|
| Net gearing (x) | Net Cash | Net Cash |
| CFPS (sen) | 0.1 | 0.1 |
| P/CFPS (x) | 6.8 | 6.9 |
| ROAA (%) | 16.0 | 18.1 |
| ROAE (%) | 0.3 | 0.3 |
| NTA/Share (RM) | 1.5 | 1.4 |
| Price/ NTA (x) | 2.0 | 1.8 |
Scorecard
| % of FY | ||
|---|---|---|
| vs. TA | 36.0 | Below |
| vs. Consensus |
Share Performance (%)
| Price Change | REXI | FBM KLCI |
|---|---|---|
| 1 mth | (12.4) | 4.5 |
| 3 mth | (13.2) | 3.1 |
| 6 mth | (33.6) | 0.1 |
| 12 mth | (44.7) | (2.6) |
(12-Mth) Share Price relative to the FBMKLCI
Source: Bloomberg
Table 1: Earnings Summary (RMmn)
| FYE Dec (RM mn) | FY23 | FP24F* | FY25F | FY26F | FY27F |
|---|---|---|---|---|---|
| Revenue | 27.3 | 48.3 | 32.9 | 35.5 | 37.6 |
| EBITDA | 14.7 | 22.2 | 14.0 | 16.0 | 17.7 |
| EBITDA margin (%) | 54.0 | 46.0 | 42.5 | 45.0 | 47.0 |
| Dep. & amortisation | (1.1) | (2.0) | (3.0) | (2.9) | (2.6) |
| EBIT | 13.6 | 20.2 | 11.0 | 13.1 | 15.0 |
| Net finance costs | 0.9 | 1.3 | 1.2 | 1.2 | 1.3 |
| PBT | 14.5 | 21.2 | 12.1 | 14.3 | 16.3 |
| Taxation | (3.5) | (4.6) | (2.9) | (3.4) | (3.9) |
| PAT | 11.0 | 16.6 | 9.2 | 10.8 | 12.4 |
| Core PAT | 11.0 | 16.9 | 9.2 | 10.8 | 12.4 |
| Core EPS (sen) | 6.4 | 9.8 | 5.3 | 6.3 | 7.2 |
| Core EPS Growth (%) | 20.9 | 53.4 | (45.4) | 17.4 | 14.7 |
| PE (x) | 7.8 | 5.1 | 9.3 | 7.9 | 6.9 |
| DPS (sen) | 4.0 | 7.5 | 5.0 | 5.0 | 5.0 |
| Dividend yield (%) | 8.1 | 15.2 | 10.1 | 10.1 | 10.1 |
*Change in Financial Year End from June to December – FY24 consists of 18 months performance.
Table 2: 2QFY25 Results Analysis (RMmn)
| FYE Dec (RM mn’) | 4QFY24* | 1QFY25 | 2QFY25 | QoQ (%) | YoY (%) | 6MFY24 | 6MFY25 | YoY (%) |
|---|---|---|---|---|---|---|---|---|
| Revenue | 7.4 | 7.9 | 7.8 | (0.9) | 6.0 | 15.8 | 15.8 | (0.1) |
| EBITDA | 3.5 | 3.3 | 2.8 | (15.4) | (20.1) | 8.3 | 6.1 | (26.6) |
| Dep. & amortisation | (0.4) | (0.6) | (0.7) | 14.6 | 93.0 | (0.7) | (1.3) | 94.3 |
| EBIT | 3.1 | 2.7 | 2.1 | (22.1) | (33.1) | 7.6 | 4.8 | (37.2) |
| Net finance cost | 0.4 | 0.2 | 0.2 | (2.7) | (43.3) | 0.5 | 0.4 | (15.2) |
| EI | 0.0 | (0.1) | (0.3) | 198.1 | nm | 0.0 | (0.4) | nm |
| PBT | 3.5 | 2.8 | 2.0 | (28.9) | (43.2) | 8.1 | 4.8 | (41.0) |
| Tax | (0.6) | (0.8) | (0.6) | (29.7) | 0.4 | (1.7) | (1.4) | (22.0) |
| PAT | 2.9 | 2.0 | 1.4 | (28.6) | (51.5) | 6.4 | 3.4 | (46.2) |
| Core PAT | 2.9 | 2.1 | 1.7 | (17.2) | (40.8) | 6.4 | 3.9 | (39.6) |
| Core EPS (sen) | 1.7 | 1.2 | 1.0 | (17.2) | (40.8) | 3.7 | 2.2 | (39.6) |
| DPS (sen) | 0.0 | 2.0 | 0.0 | (100.0) | nm | 0.0 | 2.0 | nm |
| Profitability ratio | ||||||||
| P.p. | P.p. | P.p. | ||||||
| EBITDA margin (%) | 47.1 | 41.6 | 35.5 | (6.1) | (11.6) | 52.5 | 38.5 | (13.9) |
| PBT margin (%) | 47.4 | 35.4 | 25.4 | (10.0) | (22.0) | 51.5 | 30.4 | (21.1) |
| Tax rate (%) | 15.9 | 28.5 | 28.2 | (0.3) | 12.2 | 21.4 | 28.4 | 6.9 |
| Core PAT margin (%) | 39.8 | 26.6 | 22.3 | (4.4) | (17.6) | 40.5 | 24.5 | (16.0) |
*Change in Financial Year End from June to December
Sector Recommendation Guideline
OVERWEIGHT: The total return of the sector, as per our coverage universe, exceeds 12%.
NEUTRAL: The total return of the sector, as per our coverage universe, is within the range of 7% to 12%.
UNDERWEIGHT: The total return of the sector, as per our coverage universe, is lower than 7%.
Stock Recommendation Guideline
BUY: Total return of the stock exceeds 12%.
HOLD: Total return of the stock is within the range of 7% to 12%.
SELL: Total return of the stock is lower than 7%.
Not Rated: The company is not under coverage. The report is for information only.
Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.
Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.
ESG Scoring & Guideline
| Scoring | Environmental | Social | Governance | Average |
|---|---|---|---|---|
| ★★★ | ★★★ | ★★★ | ★★★ | |
| Remark | Rexit continuously reviews its carbon footprint across operations. Measures include migration of production data centre to data centre with Green Building certification index, and promotion of e-communication and paperless documentation | Rexit provides competitive remunerations packages and equal opportunities to all employees within the same category without gender discrimination. However, more disclosure can be made on corporate social responsibility initiatives. | Rexit has reasonable oversight in place, supported by established Code of Conduct and Ethics and Anti-Bribery and Anti-Corruption Policy. |
★★★★★ (≥80%): Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions.
+5% premium to target price
★★★★ (60-79%): Above adequate integration of ESG factors into most aspects of operations, management and future directions.
+3% premium to target price
★★★ (40-59%): Adequate integration of ESG factors into operations, management and future directions.
No changes to target price
★★ (20-39%): Have some integration of ESG factors in operations and management but are insufficient.
-3% discount to target price
★ (<20%): Minimal or no integration of ESG factors in operations and management.
-5% discount to target price
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.
As of Friday, August 22, 2025, the analyst, Chan Mun Chun, who prepared this report, has interest in the following securities covered in this report:
(a) nil
