Rex International

Rex International: 3Q results was largely in line, as net loss widened to US$4.9m taking 9M14 net loss to US$11.1m (9M13 net loss of $3.7m). No revenue was recorded during the quarter, as the group is still primarily involved in exploration and drilling activities. Meanwhile bottom-line was pressured by a 28% rise in admin expenses to US$2.1m, primarily due to the rapid expansion of the group’s operations, increase in professional and consultancy fees incurred in relation to the group’s business, and additions to headcount in the Singapore office. The group also recorded a FX loss of US$1.7m, due to the weakening of the SGD against the USD. Rex also saw the absence of a gain of dilution of interest in a jointly controlled entity from 3Q13, where the group’s interest in HiRex was diluted from 49% to 41%, resulting in a dilution gain of US$4.0m. Going forward, Rex guides that despite Brent crude prices reaching a four-year low, its technology services and oil exploration activities are less affected by the decline, given that lower oil prices will force players in the E&P industry to be even more cost conscious; thus effectively promoting the increased use of risk reducing tools such as its proprietary technology Rex Virtual Drilling. At the current price, Rex trades at 1.7x P/B.